This is true and sad!
I just met up with a client who is urgently interested to get a medical insurance plan because the company is offering some form of cash rebates (as a form of encouragement) when any of their employees decide to “upgrade” themselves.
The outcome is that I still went ahead with the application because the client does need that medical insurance because he does not even have the basic medishield plan under the CPF Board. This is despite the fact that the client still feels that it’s not a must to have that medical insurance because he is still young and that nothing will ever happened!
But I do hope that after my fair bit of explanation and persuasion, the client will still hold on to that insurance after the rebate is given…
If You Belong To This Category Of People…
There is nothing wrong if you belong to this category of people and to enjoy the rebates from the company. But as a Financial Planner, I do wish to highlight the rationale behind the company’s decision to offer the rebates and the importance of getting yourself well-covered adequately and early.
Rationale Behind The Rebates
There are still many people who are unaware of the importance of doing a proper Financial Planning and getting themselves covered adequately under an insurance plan. Therefore the rationale behind the rebates is to encourage their employees to be actively involved in knowing what they are covered and how to get covered.
This is precisely what happened to this client. He does not even know what are the insurance plans that he has till date. He even got mixed up that his Dependent Protection Scheme (DPS) has always been his Medishield Plan.
Because of this rebate, he decides to look for me as his Financial Planner and has all his insurance plans reviewed. Though there’s no financial needs analysis done for him, at least at that meeting, he does got himself covered under a proper medical insurance (which I believe is a must-have for everybody, irregardless of how much you do not trust insurance)!
There’s Certain Level Of Importance Behind An Insurance Plan
It does not matter how much you may not like Insurance, but there’s a certain level of importance of getting it. For instance, you can never be prepared on when a certain form of illness may just strike. You can have around $100,000 saved up but what happened if you need a medical treatment that costs $200,000 – that’s where your medical insurance will come in handy.
A Medical Insurance will help to take care majority of the $200,000 treatment cost and at the same time, you still get to keep most of your $100,000 for other areas of concern like Retirement. Even if you say that you still do need to pay – what I can really say is that the premiums you pay for your medical insurance will never exceed the $100,000 and is just a fraction of it. No claim at the end of the day? Congrats! And you still do get a peace of mind knowing that you have something that’s covering you in case of any emergency.
Feeling the pinch of paying? Then all I can say is that have you done any investments or some form of savings that’s helping your $100,000 to grow and to offset the premiums that are paid?
Insurance Is Not What You Get When You Need It The Most
Insurance is not like a type of medication that a doctor will prescribe to you when you need it the most or when you are willing to pay any high price just to get it.
Insurance works on the basis of combined efforts – having healthy customers pooling their contributions and when there’s really a time to help, the insurance company will make use of these pooled resources and together from the investments it has made from them to help out.
Therefore if an insurance company does allow you to get the insurance when you need it the most, it would mean that the insurance company has to make use of the pooled resources immediately – and what happened if there’s a lot of such similar cases? The Insurance Company may just have to force the healthy customers to make more contributions just to sustain the payout! This is not fair but you also do need to know that it takes time for any form of investments to bear fruit!
A Few Good Reasons To Get Your Insurance Done Early
Before I end off this post, I would like to share a few good reasons of buying your insurance plans early:
- You get to enjoy paying a lower rate of premium – for plans like Whole Life and Term Insurance
- You get to enjoy higher rate of return from investments and savings plan – you allow more time to do compounding on your returns
- Because you are healthy and you get your insurance plans early – Insurance Company will take on the risk should your health really turn worse in the future.
- You have lesser risk of getting rejected or loaded with extra premiums because of a slight change of health at the point of application (because of work, age and stress) and the Insurance Company feels that you have a certain level of health risk.
- You are not certain what may just happened in the future. Getting your insurance done early will give you a better peace of mind while you work on other important areas of your life.
Dexter, that was a great post. Thank you!