• A Primer on Insurance for Parents

    Do you have insurance? It may not be something that you want to face right now but because you want the best for your family, you may want to think about it today.
    by Julian Vorpal .
  • Confused by insurance? Looking to understand the differences between various insurance products? Remember, not all insurance products are for everyone. As a parent, you have to find the product that best suits your needs and those of your spouse and your entire family.  Here’s a basic primer on insurance to help you figure out whether it’s for you:
     
    Life Insurance 

    This is the insurance that is all about attaching a financial value on human life. The right life insurance covers you if you die suddenly or enjoy an unexpectedly long life. Under life insurance, there are Traditional and Non-Traditional insurance policies:
    Traditional – These are standard life insurance policies that have followed conventional benefit and coverage programs for many years now.

    Term – This is also known as pure insurance. It is the kind of insurance policy that most people are familiar with. As long as you don’t fail to pay your premiums (regular insurance payments), you will be covered for the agreed value of the policy and your family will not have to worry in the event that you die. If you fail to make a payment, the policy lapses and you can say goodbye to all the money you sunk into it. Normally, people buy this insurance because the premiums are low.

    Permanent – These slightly pricier plans have guaranteed cash values and some come with non-guaranteed dividends. These plans don’t lapse even if you miss a payment. Endowment plans (long-term, regular savings plans with built-in life cover) fall under this category.  These are akin to pension plans—you benefit from them after a number of years and while you’re still alive.Non-Traditional – Lately, insurance companies have been tying up with banks and other financial institutions, and have come up with hybrid plans such as variable universal life insurance. This type of policy is tied to an independently managed fund (mutual, bond, equity, etc.) and provides both protection and the flexibility for you to decide where your premium payments are invested.     

     

    Non-Life Insurance

    These are other kinds of insurance that don’t fall under the Life Insurance category. Non-life insurance includes Property Insurance and Health Insurance.
    Property Insurance – Car insurance and building insurance fall under this type.  These policies behave like term insurance.  So, if you’re not paid up this year and you bang up your car or your house burns down, you have to pay for repairs out of your own pocket (ouch!).

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    Health Insurance – Its main purpose is to cover for expenses incurred for getting sick.  Normally, most Health Maintenance Organizations (HMOs) cover consultation fees of accredited doctors, some treatments and a degree of hospitalization.  Of course, the better the premium paid, the greater the medical benefits. Parents also consider health insurance that will cover not just themselves but also their children.      

     Overall, insurance is a kind of fund that you pay for regularly to help guarantee that your family will havemoney during any kind of emergency: your death, an illness that befalls you or your spouse, or an accident. It is an investment of money with a specific kind of benefit. As this primer on insurance illustrates, there are different money tools for you to build up funds as responsible parents and future retirees. Insurance is one specific way to build funds in a conservative, long-term way. It’s sort of like a forced savings plan laid away for emergency situations.



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