Insurance in Singapore: From Buying To Making A Claim, Here Is What You Need To Know
Planning early for an important component for future financial success, may at times call for insurance coverage. That said one may ask how do insurance products work? What product does one need to buy? And when and from whom should one buy them?
Getting it right, on the first insurance policy you buy might seem like an uphill task. However, it should not be the case.
Buying Insurance Cover In Singapore
Before you venture into the world of insurance in Singapore, you should first have a clear idea of the kind of cover you need. There are three main types of insurance covers:
1. Life Insurance
A life insurance is designed to pay out a specified amount of money, known as the sum assured, under certain specified terms. The sum may be paid if the insured is permanently disabled or critically ill. The sum may also be paid to beneficiaries or next of kin upon the death of the insured.
Life insurance is ideal for people who have dependents such as children, aged parents or a non-working spouse as it provides cover in case the inevitable happens and the insured is not able to provide financially.
There are a number of different types of life insurance products popular among Singaporeans: Whole life insurance, Term life insurance, and Investment Linked Insurance Plans.
Create a MT5 demo account to start trading, or sign up for a seminar by Phillip Futures to learn more.
2. Health Insurance
Health Insurance cover provides coverage in case of an accident, illness or disability leaves the insured with some financial losses. The amount paid out is designed to help the insured or family cope with the expenses that may arise as a result of health scares.
A health insurance policy is highly recommended for any young Singaporean who has just started working.
3. General Insurance
This type of insurance provides financial coverage against a range of events or losses. These can be a loss of belongings, damage to a car or house etc. General insurance may include, home insurance, travel insurance, car insurance or education insurance.
Tips for Buying Insurance
While buying insurance cover, be it for a car, holiday, home or even a pet, going for the cheapest option might not be the right call. Below are some of the things to look out for when buying any type of insurance cover.
Do Your Homework
Prior to entering into any contract with an insurer, it is important to first consider the replacement costs of an item you wish to insure. One of the biggest mistakes that people make when taking cover is undervaluing or overvaluing the contents they wish to cover.
Undervalued items come with low monthly premiums. However, when it comes to making a claim, the payout would most of the time end up not being the true reflection of the actual value of the item. Overvaluing, on the other hand, leads to high premiums that with time may exceed the actual value of an item.
It is thus important to carry out a clear-cut analysis of an item to be insured, to ascertain its value to get the best deal from an insurance company.
Determine the amount of cover you need
The cheapest cover might not be the best cover. It is important to determine the amount of money you would need should an adverse event occur to an item covered. To determine the proper amount, there are online calculators that help ascertain the true value of an item to be insured.
Understand The Cover
Having a clear understanding of what is covered by an insurance policy and what is not covered is important, prior to signing any agreement. Never buy an insurance cover just because you feel confident. It would be catastrophic to pay premiums only to discover later that the cover is not right for you.
If you don’t understand the fine print, it would be wise to seek advice from impartial professionals. A professional will, in this case, be able to analyze whether the proposed cover meets your financial considerations, needs, and family needs.
Choose a Provider Wisely
An insurance cover is as good as the company behind it. While choosing products wisely is important, the company providing the products should also be a reputable provider with an impressive track record.
You want to take cover with a company that will be around as long as you need them and one that is capable of investing premiums in a prudent manner to ensure they pay policyholders claims.
What Insurance Coverage Do You REALLY Need?
The three are just a brief description of the main insurance covers available, from which other types of insurance products crop up, depending on needs or financial position. Insurance companies develop insurance products because different people have different needs and want.
To get the ‘best’ insurance product it is important to speak to an insurance agent who will be able to give advice on what is adequate depending on needs, wants and financial position.
Talk To an Insurance Agent
While most people may advise on avoiding insurance agents as a plague, at times they can be a source of vital information in the insurance world. If you have no clue of where to start, it would make a lot of sense to sit down with an insurance agent to discuss all your needs when it comes to insurance coverage.
Insurance agents give a comprehensive overview of insurance products available. However, there is no excuse of not reading the actual policy and comparing notes with other agents before settling on the final insurance product
It is also important to remember that an insurance agent may try to get you to sign up for a product. Avoid the temptation of signing up before having a grasp of what other providers are offering as well as their terms.
Understand how the Insurance Policy Works
Once you narrow down your search to a few prospective insurance products, it is important to delve into the finer details in a bid to understand how each one of them works. Some of the things to look at when analyzing an insurance cover include, deductibles and co-payments.
A deductible is the amount of one you must have paid before making a claim. For example, if your health insurance has a S$500 deductible, it means you must first pay the amount before the remaining S$500 is paid on a bill of S$1000.
A Co-Payment, on the other hand, is the percentage of a bill that one must pay any claim. For example, if a policy requires a 10% co-payment it means one must pay S$50 before making a claim on an S$500 bill.
Before signing up for any cover it is important to ensure you can afford the premiums. There are policies whose premiums tend to rise with time, which with time make an insurance cover extremely expensive.
Over insurance is another phenomenon that one must avoid at all costs. Over insurance occurs when the total amount of premiums one ends up paying, exceeds the payouts than one would be entitled to in their lifetime.
How to Make an Insurance Claim
When making an insurance claim, you are simply notifying the insurance company that you have suffered a loss or damage covered in the policy for which payment should be made. The Insurer is tasked with the responsibility of reviewing a claim to see if the event or circumstance is covered by the policy.
Making an insurance claim should be simple and stress-free if the following steps are followed:
1. Have Good Records
Having all the necessary records in order is key to having a stress free insurance claim process. It is thus important to ensure all the records and agreements signed before the first premium is made are kept in a safe place for easy retrieval.
Receipts for things insured as well as policy documents should always be kept somewhere safe. When making a claim you may need to proof financial loss under the policy, provide proof of ownership of claimed items as well as police and medical records depending on insurance coverage.
2. Report The Incident
The claim process begins with reporting an incidence that led to losses to the police and the insurance company. Most policies come with time limits for reporting things which, one must adhere to.
While reporting, be clear about what exactly happened, tell the story factually and consistently without missing any details. Some of the things to look out for include, exact times and date when an incident occurred, what happened as well as what you are claiming and for how much
3. Check Your Policy
Once you have reported what has happened to the police and the insurance company, it is important to go through the policy to make sure whatever has happened is covered in the insurance policy.
Once a claim is made, an insurance company is obliged to assess all of the claims that are made and pay out all the claims that are covered as per the agreed terms in a policy.
Tips for Negotiating With an Insurance Company
Once you submit a claim to an insurance company, negotiating for what you believe you deserve depending on the damages caused is important. During the initial stages of negotiations, you and the adjuster are required to make points about the strengths and weaknesses of your claim.
The adjuster will most likely make a settlement offer that is lower than what you might have demanded in your claim letter. Never accept the initial offer but instead set up a meeting to make a case for why you deserve more based on the damages incurred and premiums paid.
Below are some of the things to consider when negotiations with an insurance provider
· Don’t Settle Too Fast
Insurance companies are in the business of making profits, and if they can squeeze as much money from their clients, the better for them. That said, it is important not to settle on the first offer regardless of how sweet it is.
Even if the offer is reasonable it is important to make a counteroffer that you believe perfectly fits the damages caused. A little bit bargaining here and there could get you a final settlement that is fair.
· Have a Settlement Amount in Mind
Here is where online calculators come in handy. Before engaging in any negotiations with an insurance adjuster, it is important to have an amount in mind that you believe is a true reflection of what you actually deserve.
Always have minimum settlement figure you will accept and never reveal it to the adjuster. However, you do not have to cling to the figure, given that the adjuster might point out some facts that you might not have considered in your evaluation.
· Push the Adjuster to Justify His Offer
It is common practice for insurance companies to begin their negotiations with low offers. Taking the adjuster to task to justify their offer is crucial for any positive outcome. While the adjuster gives specific reasons as to why their offer is low, it would be important to make notes.
It would be wise to respond to each of the factors that the adjuster mentioned in their offer in writing. Only adjust the amount you would be willing to take once the adjuster responds to your analysis.
· Hire an Attorney
If you are not conversant with how the insurance world works, hiring an attorney would go a long way in ensuring you receive a fair settlement offer. Having an attorney on your side will also make the adjuster take you more seriously.
· Going To Court
If you believe, you have a strong case after advice from your attorney, it would be a good idea to go to court should the insurance company deny your request for a higher payout. However, it is also important to note that the settlement may be reduced, in case of a weak case.
An important parting note
Never buy an insurance cover just because you feel confident. Instead, buy a well-thought cover from a reputable company that you are sure will meet your financial needs when you need them.
Want to learn more about what type of investor are you? Take the Schroders’ InvestIQ test now.