Practical Finance: 3 types of insurance everyone needs
Let’s be honest, a lot of people don’t like insurance companies or insurance agents. Some insurance companies always seem to be trying to weasel out of honoring their polices and a lot of agents act like annoying little conmen trying to suck every last cent from your wallet and once they get it, they disappear like a politician after elections.
The customers aren’t exactly blameless either. A lot of people purchase insurance without understanding the terms of their policy contract. As a result, a lot of people believe insurance is a scam and only have it (motor) because they are required to by law.
Insurance is not a scam. Insurance does two things, it provides protection and transfers timing risk. It protects against huge losses you couldn’t foresee but the second part is where the true value is. As an individual you can decide today that you don’t need insurance, that you can put aside the same funds in case you have a fire at your home, need medical treatment or you decided to walk across Trinidad in this oppressive heat and perish unexpectedly. Over time you definitely may be able to build a significant buffer. However, if any one of those circumstances were to happen tomorrow what would you do? That’s where insurance comes in.
There are all types of insurance, some you absolutely need and others you can live without. For instance, I recommend having homeowners insurance, including insuring some of your more valuable contents, as you never know when you might have a fire or sticky fingers Pete might pass through and help himself to your bloomers…..but you can probably live without it.
These are the three types of insurance that I think everyone absolutely should have.
Life insurance - the benefits of this is not for you. The purpose of life insurance is to replace your lost income and help support your family in their time of need. I mean if you don’t care what happens after you volley the bucket well…sucks for your loved ones. Now when it comes to life insurance there’s Whole Life policies which protect you for, yup you guessed it, your whole life, while there are Term policies that protect you for, yup a certain term (up to 75, 80 or 100yrs old). Whole life polices are typically more expensive because they usually include a savings component but personally them returns ain’t nothing to write home about. You can get protection at a cheaper price with just a Term policy. Do the maths!
Health insurance - if you read the newspapers you know you need this, unless you like playing the public healthcare system game of “will you survive?!”. Health insurance helps cover routine and emergency medical care costs, including vision and dental services. Most people have group health insurance through their employer but some people have individual plans. Individual plans are way more expensive as you’re not part of a group to help spread the risks. The key to this one is knowing what is or isn’t covered and at what quantum. Read your schedule of benefits. You don’t want to go spend $40,000 on a baigan enlargement only to find out it wasn’t covered.
Critical illness - this one is the most….critical. lol. This policy pays a lump sum amount if you are diagnosed with a critical illness that has been predefined in your policy. You can use this money for life saving treatment or to go to the casino and put it all on black, or to travel the globe until you keel over on a cruise ship, it’s up to you. Critical illnesses usually covered are heart attacks, strokes, cancers, organ failure, organ transplants, blindness, coma, major burns, alzheimer’s etc. Nobody wants to contemplate having to face this reality but life is uncertain and doesn’t care what you’re comfortable with. It is always good to be prepared. However, make sure you know what’s covered.
Listen, allyuh feel I like seeing the amount I pay in premiums leaving my account every month? I keep trying to find the best way to get the most protection for the least amount of money. Right now life is out here trolling people and you have to protect yourself as that bugger doesn’t care about you. He will burn down your house this week, burst your appendix the next week and strike you down with the plague while you’re in the hospital. Proteck yuh neck!!
TANA
Disclosure: just so allyuh know, none of the views expressed here are the views of my employer, who happens to be an insurer (no I ain’t no agent). I am not recommending any specific company or products. Talk to your agent or financial advisor before making any purchases.