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The Cons Of Having Many Of The Same Policy Types

This post is a response to one of the readers who has recently posted a comment on this post. Therefore I do hope that, with this post, I can help to bring out some pointers on the cons of having the many of the same insurance policy types…

When Are There Cons To Having Too Many Of The Same Policy Types?

The existence of cons depends on the terms and conditions stated by various insurance companies. So it is always better to check with the Financial Planners representing each of them. Things worth checking out:

#1 The Maximum Amount Of Insurance Coverage

Some insurance companies tie the maximum amount of insurance coverage against Death and/or Critical Illnesses against a factor of one’s annual income. For example, some insurance companies may set 16 – 20 times of annual income as the maximum sum assured for a whole life or term insurance. So if you are earning $100,000 per year, the maximum amount of insurance coverage that you can get may be set as $2,000,000. Any amount beyond that may mean that you are over-insured and insurance companies may just pay up to that limit.

If you are thinking that it’s unfair since you have the means to pay the premiums, but do think of people who may take advantage, e.g. a person deeply in debt and unemployed but has some savings to tide him over… he decides to get a $1 million dollars term insurance to cover himself and he decides to commit suicide after a year (of which the premium paid is just a few thousands). This will be unfair to the Insurance Company and to the pool of policyholders, do you agree?

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The Importance Of Having A Personal Accident Plan In Your Insurance Portfolio

Do you have a Personal Accident Plan included in your insurance portfolio? If not, do you know that you may not be adequately covered in certain aspects of your Financial Planning?

Recently I had two prospects coming to me, asking me if I could help them with their recent medical bills resulting from an accident. After looking through their portfolios, one of them have a simple Term Insurance that cover against Death, Total & Permanent Disability and the 30 Critical Illnesses. The other party has a lot of those fixed deposit plans with the banks and certain insurance companies, insurance coverage wise is just on death and total & permanent disability.

The only advice is that I can give is that they will not be able to claim from any of their current insurance plans, neither could they claim from their medishields because they were not warded and most of their treatments came from the clinical sides.

They were disappointed but they were not angry because they told me that they have never thought that they will meet with an accident and have always ditched the idea of getting a Personal Accident Plan because they feel that it’s a waste of money (no benefits until there’s a claim else money spent is down the drain)! They can only live with bearing the full medical costs on their own now!

The Importance Of Having A Personal Accident Plan

So what are the main benefits of getting a Personal Accident Plan? Let’s look at a few:

1. You Can Claim Reimbursements For Your Medical Bills For Conditions Resulted From Accidents

As long as you have suffered some form of injury because of an accident (there’s a proper definition to this so please do check against your product summary) and you have incurred a bill either from a hospital or from a clinic (yes, this is covered and it also include those TCM). You can actually claim from your Personal Accident Plan up to a certain limit depending on your plan type.

If the limits are high enough, you may be entitled to claim for future medical bills (especially follow-ups) for the current injury.

2. You Can Claim Compensation For Some Permanent Injury Suffered Due To Accidents

If, you do suffer from a permanent injury, e.g loss of an arm or an eye, you can also claim some form of compensations from your Personal Accident Plan.

3. You Can Get Some Cash Benefits Because Of Your Temporary Disablement

You may suffer from a broken arm that will result in you having to have a long medical leave and thus you are unable to go back to work. Your income may suffer as a result. Having a Personal Accident Plan may help to lessen the financial impact because most plans out there offer Cash Benefits (will never be high enough to cover your full month’s pay) to help you tide over the situations.

Why A Personal Accident Plan Is A Must-Have In Your Insurance Portfolio

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