Life has a lot of uncertainties, but we have a choice to get covered in case of an emergency or a personal tragedy that would otherwise cost us a fortune. To prepare for and ease the impact of life’s unfavorable turns on our finances is, essentially, what insurance is all about.
If you ever find the word ‘insurance’ too intimidating to even consider getting, this guide is for you. Let us walk you through it in the simplest terms.
Understanding how insurance works
Insurance is a legally binding agreement between the insured or policyholder (i.e., individual or group seeking insurance) and the insurer (i.e., insurance company).
Insurance is a formal agreement between you (or a group) and an insurance company. You pay them a certain amount, and in exchange, they agree to help you out with money if something unexpected happens. It's a way to make sure you're financially covered when you need it.
For a set period, the insured agrees to pay the premium (fixed amount paid annually, quarterly, or monthly) in exchange for monetary compensation when an accident, loss, illness, or emergency happens.
All the important information about the insurance — including the specific events or situations covered, the terms and conditions, the amount of premium to be paid, and the maximum amount the insurer can disburse — must be detailed in the insurance policy or contract. It is the responsibility of the representative of the insurer (an agent or a financial advisor) to thoroughly explain the contents of the policy and give the other party sufficient time to go over it.On the other hand, it is the responsibility of the would-be insured to fully understand the policy before signing up for it.
When an accident, loss, illness, or emergency occurs during a period covered by the policy, the insured may file a claim with their insurer. The latter will then examine the details of the claim to assess if it meets the conditions set in the policy. The insurer may also request supporting documents (e.g., medical records, photographs) relevant to the claim.
Once a claim is approved, the insurer releases the compensation to the insured. The compensation is according to the terms and conditions detailed in the policy and may cover entirely or partially the financial setback brought about by an unforeseen event. In either case, having the foresight to get insured could save you money and sanity down the road.
Some would say that in getting insurance, you’re paying for your peace of mind. Will an emergency and personal tragedy happen while you’re covered by insurance? Maybe. If it doesn’t happen, it’s all good! If it does happen, you won’t completely be caught off guard. You would be in a much better position to deal with it knowing you’re financially equipped – at least this part is taken care of, as there could be physical, psychological, emotional mental aspects to an unfavorable situation.
Unforeseen events such as a car accident or a medical procedure can have a huge impact on your finances. Having insurance means you won’t have to worry about the expenses, or worse, dip into your savings, when the unexpected happens.
Choosing the right insurance for you
There are various kinds of insurance offered by different insurance companies. From general(e.g., life and health insurance), specific (e.g., home and car insurance), to short-term ones (e.g., travel insurance), there’s coverage for your every need.
If it’s your first time getting any kind of insurance and don’t know which one to prioritize first, it would make sense to start with a basic policy that offers all-around protection with insurance and an investment plan, such as AXA MyLifeChoice. This already covers life, accidents, critical illnesses, and investment opportunities.
It is important to note that although most companies offer group insurance and health management organization (HMO) benefits to their employees, often the coverage isn’t as comprehensive. These would, however, be a good auxiliary to the primary insurance policy you’d be getting for yourself.
Priorities and needs vary per individual, that’s why it’s best to consult a financial expert or advisor if you need guidance specific to your situation. In general, though, you may consider the following questions before deciding on a policy to avail an insurance company to trust.
- How much can I allocate to insurance? Most insurance policies require several years of continuous premium payment. It’s a long-term commitment. As such, make an honest assessment of how much you can afford to set aside for it depending on the payment period specified in your insurance policy.
- How comprehensive is the coverage of the insurance? As mentioned earlier, it is the would-be insured’s responsibility to read through the sales proposal of the insurance product that you are intending to purchase. Do not sign up for anything you don’t understand. Do your due diligence, by seeking clarity from your financial advisor on items in the sales proposal that are not clear to you.
- How credible is this insurance company? Aside from the policy itself, it’s equally crucial to assess the credibility of the insurance company offering it. Is it an internationally recognized and well-established insurance company? AXA Group, the parent company of AXA Philippines, is a worldwide leader in insurance and asset management, serving 95 million clients in 50 countries and territories. With a trusted partner, your insurance indeed comes with assurance.
Now that you have a clearer concept of insurance, the next step is identifying the most suitable policy for you according to your needs and goals. The sooner you act, the better.It’s the same as what they say about savings: the best time to get insured is yesterday. The next best time is today.
Game plan your future with the right insurance for you. Contact an AXA financial advisor to discuss your options.
