Disasters are a fact of life. No matter how careful we try to be, they strike inevitably, leaving us to deal with its consequences. When preparing against the unknown, there is one area that we can at least prepare for – the financial aspect of dealing with such disasters. Beyond having emergency funds, there is one cost-effective way to be prepared for these events – by buying insurance.
Insurance is something you buy that basically guarantees that you will be compensated in the event of a specified loss or damage. The important thing to note here is that you are insuring for the loss or damage of something that is specific. So for example, if you own two motorcycles, each one would have different insurance coverage, since insurance is not transferable.
Just as there are different types of insurance, the rates will also vary depending on many factors. If you are buying motorcycle insurance, for instance, the premium you will pay will depend on how much coverage you want. If you decide on a coverage of P100,000 if your motorcycle is damaged, you will have to pay a higher premium than the person whose motorcycle insurance coverage is only up to P50,000. The amount of coverage, on the other hand, is usually affected by the age, make, and type of motorcycle that you have.
Here’s a guide on the ten common insurance products available to help you protect yourself financially against disasters and emergencies:
1. Life insurance. The demise of someone, especially the family breadwinner, is a financially disastrous event. This is what life insurance is for. Upon the death of the insured, his assigned beneficiaries will receive a set amount. There are various types with all sorts of features, ranging from the straightforward term policies to fancier value-linked coverages. Ask a financial planner to help you know what is best for you.
2. Accident insurance. Permanent or temporary disability is another eventuality that you cannot foresee. You can purchase insurance against the possibility of being disabled or losing one of your senses as a result of an accident. Many accident insurance policies have riders that are added to life insurance or other policies, but you can also purchase one separately.
3. Car insurance. Cars may be stolen or damaged in an accident which is why auto insurance is very popular. It is usually required by financial institutions when you are buying a car using auto financing. When getting auto insurance, make sure to check what are covered in the plan. Some auto insurance plans, for instance, do not cover acts of God (such as damage from flooding and natural catastrophes). Get one that you think is most suited for your needs.
4. Motorcycle insurance. This is similar to auto insurance but is specific for motorcycles. As with auto insurance, make sure that you check out what the plan covers. Check out its provisions for acts of God before you finalize the purchase.
5. Third party liability insurance. There is always the possibility that your actions can cause death or injure a person, which is why there is third party liability insurance. Car owners are usually required to purchase a third party liability insurance so that they can cover the damages sustained on another person or vehicle in the event of an accident.
6. Fire insurance. This type of insurance protects a property against damage caused by fires. Insurers typically check out the materials used in the building to determine the premium. Your fire insurance plan may simply cover the property itself, or may also include its contents.
7. Home insurance with acts of God provision. Home or property insurance will let you claim compensation should your property be damaged by fire, theft, typhoon, earthquakes, flooding, and other causes which are referred to as acts of God. You have the option of including the contents of your home, or just the building the itself.
8. Credit card insurance. Did you know you can guard yourself against fraud in your credit card transactions? With credit card insurance, this will free you up from having to pay for bills that are fraudulently charged to your credit card. Credit card insurance can also be used to pay off your bills in the unlikely event of your demise or an accident that will keep you from working.
9. Travel insurance. These days, you get prompted about buying travel insurance when you purchase a travel ticket. This insurance covers a number of unforeseen events, but the most common is coverage for your death or sickness. Other variants may include payment in the case your trip is cancelled or when your luggage gets lost. It may also include the cost of medical evacuation. Some plans may cover the sickness of your traveling companion. Check out what the plan covers before signing up for one.
10. Health insurance. This covers for the cost of your hospitalization and in some cases, medical consultations and other related medical costs. Health insurance providers offer various plans and coverage options to match your need, so make sure to find one that matches your needs. Also check out which diseases are excluded by the plan, which may include pre-existing and congenital issues.
As the popular saying goes, “an ounce of prevention is worth a pound of cure.” You may think of insurance as an extra expense against an event that may not even happen, but none of us can see what will happen in the future. By just setting aside a small sum you can prepare for a tragedy that can profoundly affect you and threaten your and your family’s financial security.
Grow Your Money is an editorial partnership between News.abs-cbn.com and Citi Philippines to promote financial education and provide helpful information to Filipinos on how to better manage their personal finances.
Visit www.citibank.com.ph for more information.