Types of general insurance (Part 2)

4) Medical and Health Insurance

Medical and Health Insurance is an insurance policy which is designed to cover the cost of private medical treatment, which can be very expensive, especially with hospitalisation and surgery. This insurance also ensures that you won't have to worry about the cost of seeking treatment during emergencies. Besides, Medical and Health Insurance provides you with an income stream while you undergo treatment.

5) Travel Insurance

Travel insurance coverage is usually limited to the period of your travel. However, some insurance companies may offer various combinations of protection to cater to the specific needs of customers, including long-term annual policies for a frequent traveller. A travel insurance can be purchased for you or your family to insure against travel-related accidents, losses or interruptions, such as personal accident, medical-related expenses, loss of travel or accommodation expenses due to cancellation or curtailment of the journey, losing your baggage or passport, hijacking... ...

Types of general insurance (Part 1)

General insurance is basically an insurance policy that protects you against losses and damages other than those covered by life insurance. For more comprehensive coverage, it is vital for you to know about the risks covered to ensure that you and your family are protected from unforeseen losses. 

The coverage period for most general insurance policies and plans is usually one year, whereby premiums are normally paid on a one-time basis.

1) Motor Insurance

You need motor insurance when you buy a motor vehicle. Motor insurance covers your vehicle, be it a motorcycle, a car or a lorry, in case of accidents or theft.

2) Home Insurance

Home Insurance  is one of the most important insurance policies you can buy in your adult life. Your home is one of the largest financial investment you have made, and that's why it is so important to protect it.  There are three main types of policies which you can buy to protect your home:

a) Basic Fire Policy

This policy provides you with coverage against loss or damage to insured property such as  house, shop or factory that are caused by fire, lightning or explosion.

b) House Owners Policy

This policy provides additional coverage compared to the basic fire policy. It may include loss or damage due to flood or burst pipes.

c) House Holders Policy

This is a policy which covers your household contents and includes coverage for fatal injury to you as the insured. This policy does not cover damage to the house itself.

3) Personal Accident Insurance

Personal Accident insurance is an annual policy which provides compensation in the event of injuries, disability or death caused solely by violent, accidental, external and visible events. It is different from life insurance and medical & health insurance. 

You can either take a personal accident policy for yourself or a group policy for your family, protecting you and them anywhere in the world, anytime of the day. This insurance provides 24-hour worldwide insurance protection.

The scope of cover and scale of benefits differ between insurance companies and you should therefore ensure that you purchase a policy which meets your requirements. The types of coverage normally provided normally include accident death, permanent disablement, temporary total or partial disablement, medical expenses, corrective surgery, hospitalisation benefits and funeral expenses.

Types of insurance

All too often we hear about various types of insurance policies without really understanding what they are and more importantly, what they protect. The truth is, there are two main types of insurance, namely life insurance and general insurance which covers different aspects in your life.

1. Life Insurance 

Life insurance is an insurance coverage that pays out a certain amount of money to the insured or their specified beneficiaries upon a certain event such as death of the individual who is insured. The coverage period for life insurance is usually more than a year. So this requires periodic premium payments, either monthly, quarterly or annually. There are few types of life insurance too.

a) Term Life Insurance

Term life insurance is basic coverage that generally does not build life insurance policy cash value. Consumers typically buy term life insurance to provide death benefit protection for a specific period of time.

Premiums for term coverage are usually initially lower than other types of life insurance because the policy only provides a death benefit for a defined period. Later, some term insurance policies can be extended or converted into another type of coverage.

However, if you renew or convert your coverage, your new premium will probably be higher than your previous coverage, and can continue to increase as you grow older.

b) Whole Life Insurance

As its title indicates, whole life insurance provides a lifetime death benefit for a set premium amount and builds cash value you can use while you’re living.

The strength of a whole life insurance policy is that it provides guaranteed cash values and benefits in return for fixed premiums. A trade-off to consider is that a whole life policy may build cash value at a lower rate than alternative coverage options.

c) Guarantee Universal Life Insurance

Guarantee Universal life (GUL) insurance policies provide a death benefit as well as the opportunity to build policy cash value. This coverage is different from term and whole life insurance because, within policy limits, you can vary the amount and timing of your premiums. Typically, you can also increase or decrease your death benefit (based on your insurability). As long as you maintain sufficient policy value to keep your policy in-force, your policy’s flexibility enables you to pay premiums as your circumstances allow.

Your cash value in a GUL policy is determined by the amount of premiums you pay, the declared interest crediting set by the insurance company, and policy charges.

As a policy owner, you have more flexibility with GUL than with whole life, but you assume additional risk. GUL policies usually have fewer guarantees than whole life coverage, so you must carefully manage premium payments and any distributions taken to help ensure your policy will stay in-force. This type of life insurance policy usually offers a built-in no lapse guarantee that can last for the lifetime of the insured life or for a shorter period selected by the policy owner.

References : www.insuranceinfo.com.my

Takaful

Takaful is a protection plan based on Shariah principles. By contributing a sum of money to a common takaful fund in the form of participative contribution (tabarru’), you undertake a contract (aqad) to become one of the participants by agreeing to mutually help each other, should any of the participants suffer a defined loss. The types of takaful are Investment link takaful, Motor takaful, Medical and Health takaful, Personal accident takaful, Family takaful and Houseowner takaful.

Both insurance and takaful have similar basic principles. For instance, the insured, such as yourself, must have a legitimate financial interest in the risk you are insuring, meaning you must suffer a financial loss when the insured event occurs.

You can also buy more than one policy or plan to protect a particular risk but in the event of loss or damage, you can only make one claim. The amount payable will then be contributed by the insurance companies involved. As such, you cannot profit from your general insurance policy or takaful plan. If you suffer a loss, you will be compensated accordingly and no more than that. You will be paid or ‘indemnified’ to the position you were in before the loss. However, if you wish to cover your life, you can buy more than one policy.

Insurance

What is insurance? Insurance is a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium. When things go wrong it can be expensive and so, for many of these eventualities, insurance is there to take the financial risk on our behalf. A business that provides insurance agrees to take on risks on behalf of a company or individual, in exchange for a fee. It does this by providing the business or individual concerned with an insurance contract, sometimes called a ‘policy’. This policy will cover a person or business for many of the costs they have to meet as a result of a risk occurring and provides the policyholder with some security should the worst happen.

There are many types of insurance such as Medical and Health insurance, Retirement Annuity, Travel Insurance, Houseowner insurance, Investment Link insurance, Life insurance and Personal Accident insurance.

The word 'insurance' is quite familiar to all Malaysians. However, not everyone really understand the significance, types or advantages of insurance. Every one require an insurance. Insurance may provide us a guarantee because we could not estimate what will be happening next moment just like we never expect that earthquake will happen in Sabah, a place at the equator of Earth. 

In case of any tragic accident happens, we might face financial difficulties or other unexpected situation. Hence, we need insurance to protect ourselves against significant potential losses and financial hardship at a reasonably affordable rate. We say "significant" because if the potential loss is small, then it doesn't make sense to pay a premium to protect against the loss.