Many individuals continue to be underinsured.
Many policyholders pay little attention to ensuring that they have adequate protection because:
- They do not know how to determine what is meant by “sufficiently insured”
- People are driven by the affordability factor
As a result, many individuals continue to be underinsured.
What is a sufficient life plan?
“A sufficient life plan ensures that, upon the insured’s demise, the family or beneficiary does not suffer in making ends meet – the basics of food, living, healthcare and education expenses are taken care of by the policy money.”
Deteminants of an adequate life insurance coverage:
a) Insured’s marital status
b) Number of dependants
c) Current Lifestyle
d) Liabilities
e) Responsibilities
f) Premium affordability
Insurance companies recommend that unmarried individuals or childless couples to take up policies which at minimum, is equivalent (in value) to one year of insured’s income
Married with kids and liabilities It is also recommended that for married individuals with young children and liabilities to take up policies with coverage equivalent to 10years of the insured’s annual income
The formula above is a simple guideline only. The above formula may not fit everyone’s requirement, as different people may have different requirements and needs
Medical Insurance
1. Premium of medical or hospitalization and surgical policies are normally pre-determined
“Medical policies usually have three or four different packages available under one plan, and they differ in terms of coverage and premium sum. Higher premiums will generally mean better room and board facilities.”
In this instance, insured needs to check whether he is comfortable with the terms of the room and board arrangement.
2. Individual should try to complement existing medical insurance given by their employers
“ Individuals should also take into account the protection offered by group medical policies purchased by employers. They need to take into account what is already provided by the company and try to complement those benefits instead of replicating them.”
Personal Accident – Insurance
Protection offered under PA plans complements medical and life policies
“PA policies are competitively prices and easily obtained. The protection offered under such plans complements medical and life policies.”
“Furthermore, accidents happen when we least expect it, hence, it is better to have some form of PA coverage rather than nothing.”
To ensure sufficient insurance coverage:
Individual should review their existing policies annually
“ If individuals realize that they are underinsured at any point of time, they can purchase new policies or do a top up.
