Tips on how to Learn and Perceive Insurance Coverage Paperwork

Here's a life skill they should really be teaching in school: how to read and understand an insurance policy.

After all, there's no point getting top exam scores and being cooped up in a high paying job … only to lose hard earned money on a crappy insurance policy because you didn't know what you were getting.

Whether you bombed the PSLE ​​or are still lovingly looking back on your “glory days” decades later, it is never too late to update your knowledge. I promise it will be less boring than doing these mole calculations in chemistry or, worse, social science propaganda.

Without further ado, here is one 101 Guide to Understanding Insurance Policies.

List of insurance documents

For shorter-term policies, such as car insurance or home insurance, you may not receive any documents other than your application details and your policy.

However, when you take out a longer term policy, such as life or hospital insurance, you will usually receive some or all of the following insurance documents:

Insurance document

What it shows

Product overview

Features of the product

Illustration of the policy / benefit plan

Performance table

Bundled product information document

Comparison with runtime product (only for bundle or hybrid products)

Product highlights

Main advantages of the policy

Know your customer form

Confidential information form to fill in with your details

registration form

Copy of the form completed when applying for the policy

Policy contract

Policy details

Guide to Life Insurance / Guide to Health Insurance

Only for life insurance or health insurance issued by the life insurance association

Factsheet and checklist for direct purchase insurance

For direct purchase insurance only

While it is tempting to pretend these documents don't exist, it is in your best interest to go through them so you know what you are buying.

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Glossary of common insurance terms

Insurance policies may seem like gibberish at first, but fear not, once you get used to a few commonly used terms, you will find that they are always playing around with the same things.

Before you start reading, take a look at the terms you are likely to come across.

Benefit – The incidents and circumstances that you are protected against. When they take place, you will receive a payout from the insurer. For example, if your plan includes hospitalization benefits, you will receive insurance payout (s) when you are hospitalized.

Present Value – Amount of money accumulated over time through hybrid life insurance policies such as life insurance, endowment life insurance, and unit-linked insurance. You will receive the cash value of your policy when the payout date is reached or when the policy is returned.

Claim – A claim is made by you in order to receive the coverage provided by the insurance policy. For example, if you buy travel insurance for a trip and then your flight is canceled without a refund, you can claim the cost of your plane tickets.

Co-insurance – percentage of your bill that you have to pay yourself and that is not paid by the insurer. Most common in hospital insurance.

Terms – The duties and responsibilities of you and the insurer. Make sure you meet all of these conditions or you may lose your insurance coverage.

Deductible – amount of money that you must pay yourself before you can make an insurance claim. If you have hospital insurance with a deductible of $ 3,000 and incur a hospital bill of $ 10,000, you must pay the first $ 3,000 of the bill and then claim the remaining $ 7,000 (subject to any co-insurance that is required to be paid). from you on the remaining $ 7,000). Most common in hospital insurance.

Entry Date, Insurance Date – The date your insurance coverage begins.

Exclusions – Exclusions indicate situations where you will not be able to get insurance coverage. For example, if you have travel insurance that excludes you from extreme sports, it is advisable to avoid cliff jumping on your trip as you will not be able to claim medical expenses incurred in the process.

Policyholder – That's you, the insured person! Hello!

Premiums – The price you pay for your insurance policy.

Sum insured – the amount your policy pays out when the event for which you are insured occurs. If you have $ 500,000 in life insurance, your beneficiaries will receive $ 500,000 in the event of death.

Surrender Value – If you are submitting a cash value policy (such as life insurance, endowment life insurance, or unit-linked insurance), the surrender value is the amount of money you receive in return.

Termination – If your insurance cover is terminated, it will end prematurely.

How to read a summary of insurance products

Your insurance Product overview summarizes the most important features of your insurance in “a few” words.

It usually starts with a table on the first page, followed by a breakdown of the main categories of coverage. If you skip to the bottom of the document, you might find information about your rewards and other information like loyalty rewards.

Read this document every time you buy or renew a policy so you don't run the risk of making a claim when you could have. It can be helpful to highlight the titles of the main coverage categories so you can see at a glance what you can claim for.

How to read a perk / policy picture

Policy illustrations or Use illustrations Use tables to show the amounts of benefits you will receive in different situations.

This document is usually issued to life insurance policyholders and may contain information such as your estimated insurance premiums if you renew your plan (for term life insurance).

For cash value policies (i.e. hybrid life insurance), the benefits table shows how much you will be paying into your policy, as well as your projected non-guaranteed returns and estimated surrender value over time.

The policy illustration document can help you plan for the future by anticipating your future premiums or returns. So keep it handy when planning your finances. Take the numbers with caution, however, as estimates or non-guaranteed returns are not set in stone.

How to read an insurance premium table

The rewards table shows the rewards you will have to pay over time.

For example, if you have hospital insurance, the premium table shows how much you have to pay depending on your age, and you can anticipate the premium increase when you move on to the next age bracket.

Keep your premium table to hand for future planning, as it shows how our insurance costs increase with age. You can also refer to your premium tables when comparing insurances from other insurers, in case you are considering changing tariffs.

Read More: How Much Should You Spend On Insurance In Singapore?

Note the insurance exclusions!

It's always a good idea to review the list of policy exclusions to avoid nasty surprises.

You don't want to pay insurance premiums year after year only to find out in twenty years that your health insurance has excluded you from claiming a pre-existing condition in the first place.

Policy exclusions are also important when comparing plans. Two policies from different insurers may look the same, but one can contain far more severe exclusions than another.

Not sure? You have 14 days free notice to cancel it

Your agent may not want you to know, but you can actually cancel your policy and get a refund within 14 days of receiving your policy documents.

So before you toss your insurance documents in the drawer where you keep all your old receipts and Singpass tokens so that you never see the light of day again, force yourself to look through them during this 14 day window.

If nothing else, you can at least get some bedtime reading material that will actually help you fall asleep faster.

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