#adulting: How to Get Started on Insurance
In our adulting journey, many of us learn to take on responsibility for ourselves and others. Especially as the year draws nearer to an end, we look forward to the festive season, gifting, and spending time with loved ones. Many of us also take this time to contemplate and acknowledge how important our loved ones are to us. Cherishing our loved ones is not just giving them gifts and being present, it is also about ensuring that they are taken care of and protected where they need help. Insurance can be seen as a gift of protection – it serves as a safety net for us, our loved ones and things we care about.
Not quite sure how it works? Here’s a good explanation on how insurance works:
Types of Insurance Products
Stepping into the world of insurance can be daunting for many of us. One way of looking at insurance is by dividing the products into categories based on the risk they cover. Here are some broad categories:
How To Get Started
When deciding which insurance product to purchase, there are a few consideration factors you can start with:
1. Understand yourself and your adulting needs
Start by identifying your financial objectives and needs.
Are you saving up for something big, perhaps a house, that is only likely to happen many years later? In this case, endowment insurance might be a money management tool you can consider. Typically, they require regular payments for at least 10 years and then pay out a lump sum on maturity. Endowment insurance tend to give a better return than savings in the bank. Each of your monthly payments will bring you a step closer to achieving your adulting goals.
If you are needing to get certainty around unexpected health expenses, having coverage in health insurance can help tide you through financially during such emergencies. Illnesses or accidents are often unforeseen, and may sometimes require large sums of money. This is one most of us will look to begin with as we become adults.
Referring to the infographic above, you can get all types of insurance. The key here is prioritization according to what you deem is necessary and in an order that works for you. It may be useful to consult your financial planner or insurance agent to seek opinions on what products to get. You could also ask a trusted family member or friend about their plans and opinions to get alternative perspectives.
In considering your insurance policies, remember that you do not have to buy everything that is recommended to you, or get the most popular plan out there. Different people have different needs and what is important is that your objectives and needs are met.
2. Go for insurance plans you can afford
After deciding on the type of policy, you may find many plans that meets your needs available for choosing. The most expensive plan may not be the best.
After all, we still want to be able to enjoy some luxuries rather than be stricken with huge sums of monthly premiums. Money management and financial independence also includes purchasing within your means. Your plans can be customized according to not only your needs, but also your financial budget. Consider affordability and start small if necessary. You can always increase your coverage as your earning power increases. This way, you could still enjoy the small luxuries in life without being too financially constrained.
3. Check your existing insurance plans
Your parents might have bought you insurance when you were younger, or your company’s insurance policy may cover accidents. Remember to check what plans you have and where you have been covered before purchasing a plan! Look for plans that could complement your existing ones. They could either cover areas that you are not covered in yet, or provide extra coverage in existing ones.
You Do You
Remember that you do not have to rush into buying your first insurance policy. You can always shop around just like how we visit different stores or websites for the best deals. Purchasing insurance hastily could in fact cost you more when you end up terminating early or having to purchase a new plan.
The insurance journey is a marathon, not a race. It is a life skill that brings you closer to self growth and financial independence. Take your time to understand the product before purchasing, and you can always upgrade your plans along with your income bracket.