What is insurance?
Insurance is a form of financial protection from unexpected life events. Instead of footing the whole bill for repairs, legal fees, medical procedures, or loss, insurance covers a portion of the cost and saves you from taking a chunk out of your savings during emergencies.
So, what is insurance’s components? When looking at insurance policies, you’ll usually see the following:
- A premium – These are the periodic payments you’re required to make to get the coverage promised by your insurance
- A policy limit – This indicates the maximum amount your insurance will shoulder should an emergency occur. Note: Your insurance doesn’t cover all kinds of emergencies, so always read the terms and conditions before setting anything in stone.
- A deductible – This is an amount you’ll need to pay before the insurance policy covers the remainder of the bill.
In summary, when you agree to an insurance plan and consistently pay its premiums, an insurance company will help you pay the bills if you ever experience a loss of employment, an illness, accident, or any situation covered in their contract.
Now let’s see how an actual insurance plan looks like.
What’s an example of an insurance plan?
One example of an actual insurance plan is Sun Grepa First Aid Plus. According to Sun Life Grepa Financial, this policy “is an affordable health protection plan that provides cash benefits so you can worry less about costly medical bills due to hospital confinement or surgery.” You and your loved ones are also covered in case of “untimely passing, accidents, and disability.”
Let’s say you get sick and are confined in a hospital for three days. Upon discharge, you are billed ₱150,000. If your plan covers ₱100,000, then you’ll only cover about 33% of the cost instead of the whole amount. Of course, the actual cost of your cash benefits will still depend on the package you choose, but the blow to your wallet won’t be as hard as paying everything out of pocket.
In case of your passing, your family can also get back a portion of the premiums you’ve paid, so they have something to get by even if you’re gone. And on a more positive note, you can also earn back a part of your premiums if you live for longer than the insured period of 10 years.
So, if you’re wondering what insurance’s importance is, think of it as a way to cut your losses and protect your loved ones in case life throws you a curveball.
How do I get insurance?
If you’re ready to commit to an insurance policy, here are three steps to getting the right plan for you:
- Send an application – The insurance company will evaluate your profile and the risks you pose as a potential client. Based on your profile, they will set your premium.
- Pay your premiums – How often you pay your premiums will depend on your insurance policy. Usually, you pay monthly, quarterly, semi-annually, or annually. See what works for you and make sure to pay your premiums regularly and on time to stay protected.
- You’re covered – If you pay your premiums religiously, your insurance will cover you based on a set term or period. If things go well, you may never need to claim your insurance, but it’s good to hold on to something in case anything happens.
In case of an emergency that is covered by your insurance policy, you can ask for reimbursement or for them to foot the bill. This is called “filing a claim.”
When you file a claim, you will present documents proving your situation to your insurance provider. The provider will then investigate your claim and approve your request once they are sure it is valid.
But don’t go filing a claim for every mishap.
According to The Balance, “It’s not always worth it to file a claim with your insurance company. If you’ve suffered a loss of a few thousand dollars or less, you might consider paying out of pocket since your claim history is tracked and used to help price your future policies.”
Think in pesos or in the currency of your host country. Can you afford the bill? If it doesn’t hurt to pay for it yourself, go ahead. Better to be strategic with your insurance instead of paying higher premiums in the future.
Now you know how to get and claim insurance, but what type should you get? The answer is it depends.
Let’s look at the different types of insurance and see which one works for you.
What are the kinds of insurance?
When choosing among the different types of insurance, you’ll need to consider where you are in life at this moment and what you need. Think about the following:
- Your age – Are you planning for retirement, or are you looking to raise some money for a life milestone (i.e., buying a house or sending your child to university)?
- Your health – What illnesses run in your family? Are there health issues you’re dealing with now? Think about what you want to prepare in case you get sick.
- Your job and lifestyle – Are you a risk taker? Do you travel a lot? Are you running a business? The way you live will help you choose which of the different types of insurance you should get.
- Your family situation – Are you single or supporting a loved one? What do you want to prepare for the future?
Once you’ve identified your goals and needs, then you’ll have a better idea of which of these is best for you:
- Auto insurance – In case something happens to your car, and that issue is covered by your policy; you can get some financial compensation. Some auto insurances also cover another person’s expenses in case you are the cause of their accident or damage.
- Homeowners insurance – In case your home experiences theft, vandalism, or acts of nature, this insurance has you covered. You may also be required to get homeowners insurance before you can buy a house. If you’re renting, renter’s insurance can protect your property from similar emergencies.
- Life insurance – Getting life insurance leaves an amount for your beneficiaries after your death. Depending on your plan, life insurance can protect you and your loved ones for 10 to 20 years or for as long as you pay the premiums.
- Health insurance – This type of insurance covers your medical bills in case you get sick or hurt. Some companies even offer preventive packages so you can get tested or vaccinated.
- Disability insurance – If you’re sick or injured and can’t work for a time, disability insurance can help with some of the bills.
- Travel insurance – If you’re a frequent traveller, you can get this type of insurance in case you get sick or if the airport damages your belongings while in transit. If you’re renting a car or house, travel insurance can protect you in case anything happens to the vehicle or residence during your stay.
What is insurance’s value?
With all the different types of insurance in the market, you may be wondering if you even need to spend your hard-earned money on any of the plans we listed.
According to Investopedia, “Depending on the type of life insurance policy and how it is used, permanent or variable life insurance could be considered a financial asset because it can build cash value or be converted into cash. Simply put, most permanent life insurance policies have the ability to build cash value over time.
It will also be easier for you to get a car or buy a house when you’re ready to mark new chapters in your life.
But money is not your only concern. When you consider getting insurance, you’re also thinking about you your loved ones, their future, and how they can prosper even when you’re gone.
Sending money to the Philippines
As an overseas Filipino worker, building a better life for yourself and your family will be your top priority. That’s why it’s important to protect your savings.
Using a safe money transfer app like Kabayan Remit lets you pay your bills and invest in the future behind the shield of its bank-level security system. With the app, you can: