The transfer of risk is the basis of all insurance. What risks? The risk of significant potential loss or financial consequences in exchange of a premium. Who takes on the risk? Hence insurance companies act as the intermediaries to pool premiums together to insure against a specific loss. For instance, businesses can insure their premises against fire and theft, individuals can insure themselves for death or disability.
In most circumstances, insurance protection forms the safety net of a financial plan. However, is it entirely necessary to have insurance to cover yourself? The answer is no. Most of us have a “natural form of insurance”, which are our parents, siblings, relatives or friends. But the question is, how much can they help without financially impacting their own lifestyle? Hence, having adequate amount of insurance can also be seen as a social responsibility. And insurance is the only known product that serves this purpose, in exchange for premium depending on the risks involved.
In a highly competitive insurance market, more and more sophisticated products are evolving, like early stages of critical illnesses, dental insurance, loss of wallet, hospitalization income for HFMD etc. However, some of the most basic forms of insurance remain largely unchanged, like protection against Death, Total Permanent Disability, Critical Illnesses, Hospitalization and Surgical expenses.
In the next few articles, I will present my opinions on the different type of Life Insurance, like Term, WholeLife and Investment-Linked Policy, and their pros and cons.
To end off the article, do find some interesting quotes that I had come across.
“You don’t have to believe in Insurance, it is not a religion.”
“Why die for free?”
“You win if you lose.”
“You don’t buy life insurance because you are going to die, but because those you love are going to live.”
“You don’t buy when you don’t need it, but when you need it, you can’t buy.”
© Wee Khai
Wee Khai is an avid soccer player, who is also a finisher of 12 half-marathons and 3 full marathons.
Wee Khai 