The 5 Essential Types of Insurance (That Everyone Must Have)

There are so many types of insurance plans and riders in the market. So how do you determine which types are the ones that are most important to your financial protection? Here are 5 of the most essential coverages that one must possess:

Death Insurance

If you have started your own family, you will definitely know the importance of this. Upon one’s demise, it is important to leave sufficient money behind to ensure that the surviving family members continue to enjoy the same standard of living, to have the future that they were supposed to have, and not to be laden with debts left by the deceased.

You can be financially protected against death by purchasing a life insurance policy, and supplementing it with a term insurance policy. One’s assets (cash, investments, CPF funds) will also contribute to the deceased’s estate, which will help in alleviating the family’s financial needs.

Disability Insurance

Our greatest asset is the ability and capacity to earn an income. Should a disability strikes, our income stream will trickle to a halt. Therefore it is important to be protected against income loss in the event of a disability.

A great and affordable way to insure against disability is through a lesser-known type of insurance cover known as disability income insurance. It provides a annual income in the event of a disability, usually up to the age of 65. This will ensure one continue to have an income stream to replace the lost one.



Critical Illness Insurance

Upon being diagnosed with a critical illness (such as cancer, heart disease, stroke, kidney failure, etc), a person may have to stop working for months, or even years. Without working, the individual will also lose his/her income stream. Living expenses and financial commitments will quickly deplete one’s hard-earned savings and very soon, he/she will be broke.

Critical illness insurance aims to provide an emergency fund to help the insured pay off any living expenses, financial commitments and debts, without the need to dip into his/her savings. In another words, critical illness insurance is a form of asset protection.

Last quarter, Prudential launched PruEarly Stage Crisis Cover. PruEarly Stage Crisis Cover provides a lump sum payout in the event of early stage, intermediate stage and critical stage illnesses. A total of 70 medical conditions are covered under this plan and is currently the most comprehensive of its kind in the market.

Medical Expense Insurance

Beside protecting your savings from being dried up by living expenses, it is also vital to insure yourself in the event of high hospitalisation and surgical expenses. With the Medisave, one can use a portion of it to purchase a Medisave-approved private medical insurance plan. By adding on a cash rider, one can be protected for the full medical expenses, and addressing one of the foremost concern on one’s mind.

Personal Accident Insurance

Personal accidents (PA) policies and riders covers the assured in the event of death, disability or dismemberment due to an accident. The keyword is dismemberment as normal disability insurance covers total and permanent disability, either requiring one to be unable to work in any occupation, or lose the use of 2 limbs, 2 eyes or a combination of 1 eye and 1 limb. PA policies covers for dismemberment such as loss of fingers, toes, 1 limb only, 1 eye only, etc, and is therefore is an important element to a complete insurance portfolio.

Have you got all 5 elements of insurance in your portfolio?