4 essential insurance questions to ask your agent

[SINGAPORE] Life is filled with uncertainties—we never truly know what the next hour or day may bring. Yet, despite this unpredictability, most of us do our best to chart a path forward and prepare for the future. One critical step in that preparation is securing insurance, a financial safety net that helps protect against unexpected events and losses.

As you craft your long-term financial plan, consider including insurance policies that can cover hospital bills, critical illnesses, and other essential needs. Start by conducting research and seeking guidance from trusted insurance providers to identify the most suitable plan for your lifestyle and goals.

Here are four key questions to ask your insurance agent:

1. What Type of Insurance Do I Need?

In Singapore, the distribution of insurance is governed by the Insurance Act, which mandates that only licensed or authorized entities may conduct insurance business. Insurance agents, under this regulation, are tasked with facilitating insurance contracts and collecting premiums, among other responsibilities.

Choosing the right insurance depends heavily on your personal situation and future plans. For instance, if you have dependents, life insurance could be crucial to ensure their financial stability in the event of your untimely passing. Entrepreneurs, meanwhile, might prioritize business insurance to safeguard their ventures.

Insurance policies come in various forms—endowment policies focus on savings, while protection-type policies shield you from life’s uncertainties. Before meeting with an agent, it's wise to review your own financial position. This preparation allows for deeper discussions about policy differences. Don’t hesitate to ask your agent to explain the specifics of health versus life insurance. With the range of options available, some initial confusion is understandable.

2. Do I Have to Pay More When Making a Claim?

Health insurance often comes with certain out-of-pocket costs, even though it helps manage major hospital expenses. Two key terms to understand here are deductibles and co-payments.

A deductible is the initial amount you must pay in a policy year before your insurer begins covering expenses. Co-payments, on the other hand, refer to the shared costs between you and the insurer after the deductible has been met.

These structures differ across policies. Some may offer low deductibles but high co-payments, while others do the opposite. Understanding how these costs are structured is vital to selecting a plan that fits your healthcare needs and financial capacity.

Also, keep in mind that not all procedures or conditions are covered. For example, cosmetic surgeries are often excluded from standard health insurance plans. Make sure to clarify the policy’s scope and exclusions with your agent before committing.

3. How Much Will the Insurance Cost?

Whether you're purchasing car, health, or life insurance, it's crucial to compare your options and choose a plan that aligns with your budget.

Generally, insurance premiums are based on risk. Those in high-risk occupations—like construction workers or factory employees—may face higher premiums due to a practice called occupational loading, which is particularly common in personal accident insurance.

Additional factors affecting premium costs include your health, lifestyle habits (such as smoking), and the level of coverage selected. Higher coverage typically translates to higher premiums but offers greater protection in return.

If you're concerned about affordability, talk to your insurance agent. They can help prioritize your coverage needs and recommend a plan that strikes the right balance between cost and protection.

4. How Often Should I Update My Insurance Policy?

Life changes—and so do your insurance needs. That’s why financial experts recommend reviewing your insurance coverage annually. Major life events such as marriage, having children, or purchasing property can significantly impact the type and amount of coverage required.

Keeping your policies up to date ensures that you remain adequately protected as your circumstances evolve. Over time, you may also want to gradually increase your coverage to prepare for potential health issues or other unexpected expenses that may arise as you age.

Seek advice from your insurance agent or a financial planner to determine when and how to make these adjustments. Regular reviews are key to ensuring that your insurance continues to meet your needs over the long term.