Insurance is a form of risk management that is used to hedge against the possibility of loss of assets. It transfers the risk undertaken by an individual or organisation to the insurance company (or insurer) that has taken on the risk. In other words, the insured receives a monetary payment from the insurer should the loss insured occur. There are many different types of insurance available, including but not limited to life, medical, travel, fire, property, motor or even mobile devices. In Singapore, the various Central Provident Fund (CPF) schemes such as Medishield and Eldershield are examples of medical insurance policies that have been implemented for Singapore citizens and permanent residents. CPF also has other insurance policies such as the Home Protection Scheme (HPS) which is a mortgage reducing insurance which insures CPF members and their families against losing their homes should members become physically or mentally incapacitated or pass away before their housing loans are paid up.
Insurance policies can be paid for either monthly or annually, usually with a small discount for annual payments. How much a person pays can depend on various factors such as age, income and lifestyle. Here are some brief descriptions of insurance types available in Singapore:
Life insurance gives a payout in the event of the insuree’s death. This is especially important for people who contribute a significant percentage of their family’s income and have dependents.
Travel insurance is bought when one goes overseas. They typically cover loss of luggage, flight delays or cancellations and medical expenses incurred. Usually, travel insurance is only bought for the duration of the trip.
Medical insurance can be bought to cover outpatient and hospitalisation costs. In Singapore, employers are required by the Ministry of Manpower to purchase and maintain a minimum medical insurance coverage of $15,000 per year for each Work Permit holder for inpatient care and day surgery. This includes hospital bills for conditions that may not be work-related.
Motor insurance is compulsory in Singapore. Some policies will cover Malaysia and Thailand as well. Motor insurance will usually help pay for repairs, replacement parts and either a replacement car or transport allowance for the time the insured vehicle is unavailable.