4 Insurance policies everyone must have

It's not easy to find a good insurance agent. Most agents want you to over-insure on every possible policies there is. It can be too late after signing up and realising most policies are not what you imagined. There are cancellation fees and minimal period of lock in that make you feel helpless.

Nonetheless, it is important to filter out the really important policies and get some basic protection. For graduates who just started working, 2-4% of the annual income is a good gauge to spend on insurance premium. The plan is to gradually increase the coverage when you have dependents.

1. Hospitalisation policy

Everyone needs a hospitalisation policy if you can afford it. This insurance only has payout if you need to stay in a hospital for at least a day. So if you needed a day consultation, it will not be covered. In the event you are seriously ill and need to be warded in a hospital, at least you will not be too worried about the medical fees.

Most hospitalisation policies has a co insurance clause, where you pay 20% of the medical fees and the insurance company pays 80%. A rider can be added to having the insurance company pay 100%.

2. Death and disability policy

This type of insurance will have a payout to your family in the event the policy owner unfortunately passes away, or payout to the insurer a percentage of the policy payout when a disability occurs. The payout amount usually starts from 100k, then 200k etc. A small insurance amount is a good place to start, and then increase the payout which gets more expensive when you have dependents.

3. Accident policy

When an accident happens and you require a day surgery which can cost a few thousand bucks, you are caught in a limbo. It is not serious enough to be warded in a hospital so the hospitalisation policy does not kick in. This is when it is good to have an accident policy to cover you up to a few thousand dollars of insurance per annum.

4. Critical illness policy

A critical illness policy can be the most costly out of the 4 types of polices. It can be further broken down to early stage critical illness policy and late stage critical illness policy. This kind of insurance usually does not make financial sense unless you’ve got a fairly high income. So I would recommend getting the first 3 types and getting this coverage later.

Hospitalisation policy + Death and disability policy + Accident policy should cost less than 1500 SGD combined, per annum for a working adult less than 30 years old. Any more, you might want to find another agent who is not just commission hungry. So get yourself insured today to prepare for unforeseen circumstances.