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Insurance Awareness

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by

Samson Wong

on 28 September 2012

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Transcript of Insurance Awareness

- form of risk management primarily used to hedge against the risk of a contingent, uncertain loss.

- defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. INSURANCE Whole Life
- Life-long protection on Death/Terminal Illness, TPD, accelerated/additional Critical Illnesses.
- Premium whole life/ limited
- Sum Assured / Bonuses ( Par )

Term
- Temporary protection on Death/Terminal Illness, TPD, accelerated/additional Critical Illnesses based on Insured term
- Premium limited
- Sum Assured
- MRTA - Loan based insurance. SA reduced by years. Single premium

Endowment
- Protection and savings.
- Premium limited
- Sum Assured / Bonuses (Guaranteed (Non-Par ) / Non-Guaranteed (Par) Life Insurance Critical Illness
- 36 CI (heart attack, stroke, coronary artery bypass, most cancers, kidney failure, fulminant hepatitis,etc.
- Lump sum payment

Medical Expense
- Hospital and surgical reimbursement, Hospital Income
- Subject to annual / lifetime limit

Disability Income
- Income-protection during your disablement
- Coverage term, benefit payment term

Long Term Care
- Protection when fail to carry out basic daily activities

Personal Accident
- Death, TPD, Medical due to accident Medical Health Insurance - Combination of protection and investment
- Non-guaranteed cash values
- Fees, expenses and insurance charges deducted from premium / sale of purchased units
- Allocation Rates -> Purchase Units -> Deduction of IC from Units
- Bid / Offer price
- AR - 100% for SP
- Single / Regular Premium

PROS
- Flexibility - top up / withdraw / switch funds / allow premium holidays (subject to charges/ conditions)
- Choice of funds based on your risk appetite
- Diversification and potential return

CONS
- Investment Not Guaranteed
- Insurance charges Not Guaranteed (lower for SP)
- Units may not be sufficient to pay Insurance Charges Investment Linked Insurance Agents,
Financial Advisors,
Bank/Financial institution Who? - "Interest sensitive" whole life insurance
- Flexible premium structure - top up / withdrawal subject to charges and conditions
- Cash values earn at interest at a declared rate, (guaranteed a minimum interest crediting rate
- Cost of Insurance / policy fees / expenses deducted regularly Universal Life Insurance LIFE MHI ILP UNIVERSAL
LIFE ANNUITY Annuity - Lump sum payment at the beginning in return for monthly payouts
- Only received the benefit when you are alive
- Similar to Pension
- Deffered / Immediate
- Not much company is offering now due to the increase in longevity How? What? Establish and Define Your Goals / Gather Your Data
Analyse and Evaluate Financial Status, Fact - Find
Develop and Present Recommendations
Implement Recommendations
Review with Representative Periodically - Product Summary / Benefit Illustration / Brochure
- Return that is Guaranteed and Non-Guaranteed
- Sum Assured, Premium, Age, Policy Term
- Proposal Form, Health Underwriting What I received after buying? Things to Notice - Policy Contracts
- Policy Schedule 1) Free Look Period - 14 days - ROP less medical expenses
2) Period of Grace - 30/45 days -
3) Participating Policies - Shares in the profits of the company's life fund. Non-guaranteed and depends on the performance
4) Cash/Surrender value
5) Paid up value
6) Policy Loan
7) Automatic Premium Loan
8) Exclusions - Suicide, Pre-existing conditions BASIC / RIDER Should I or not should I ? - Think of what you have
- Think of what you want
- Think of what amount of coverage you should have
- Think of what is affordable Buying an Insurance is a long term commitment. Please don't end up regret paying a lot of money buying what you don't understand. Q & A Suggestion: Start up with Medical Insurance IMPORTANT Insurability - Large number of similar exposure units
- Definite loss
- Accidental loss
- Large loss
- Affordable premium
- Calculable loss
- Limited risk of catastrophically large losses Expected Claims Outgo Expenses + Commission + Investment Return Lapse Assumption
Inflation Assumption
Mortality Assumption
Interest Rate Assumption Premium + Profit Loading =
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