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Shopping for Health insurance

With medical costs these days, health insurance is a must. I used to work in an insurance company but in the IT department. All of us knew the importance of insurance. I already had an insurance policy that pays out upon my death or TPD (total permanent disability) so that my family need not suffer but realized that was not enough, so I started shopping around for health insurance, from other companies besides my employer for the best deal.

There are different ways of looking at this. If you just want pure insurance, then go for Term insurance. The rates are far lower than the other forms of insurance, but at the end of the day, if you do not require the insurance, you get nothing back. You are buying peace of mind so that if something should happen, your hospital bills and medical costs would be paid for.

If you want to lump in a savings plan, which was my original intention, then go for an endowment plan or something where part of the premium pays for the actual insurance (agents' commission and other costs as well) and the rest of the premium goes into your savings plan which would be invested by the insurance company on your behalf. At the end of the insurance period, you get back the money you put into the premiums (savings) plus some extra. The insurance company functions as a bank which helps you save and gives you higher returns than a normal bank account might. Should anything happen to you during that period, the insurance company pays up what is stated in the contract, so as long as you pay your premiums, you gain. The flip side is that if you do not pay your premiums on time and allow the policy to lapse, should anything happen to you during the period which your insurance policy is supposed to cover, the insurance company may not pay up as because the premium was not paid, you were not covered. Also, if you choose to close your insurance policy before the agreed date, there is a high chance you'd get back less than what you put in, so if you do get an endowment policy or a whole life policy, or any similar insurance plan, be sure you would be able to pay the premiums throughout the life of the insurance.

Another way is to treat your insurance policy as an investment. That's what I did in the end. It wasn't what I had intended in the beginning but that was the best I could afford and still get my money back at the end of it. In this case, your premium is used to by investment units, similar to the purchase of stocks and shares. Except that each unit is a basket of shares picked by the professionals in the investment arm of the insurance company. Every month, your premium, minus commissions and other fees, is used to by more investment units. When you cash in your policy, how much you get depends on how much those investment units are worth. You'd get back some money while being covered for health disasters that are mentioned in your contract.

The problem with insurance is that when you actually need it, no one might want to insure you, or if you do, they might exclude the condition you are suffering from or jack up your premiums to cover the insurer's risk. It is when you're healthy and don't think you'd need health insurance that you should buy it. At that point of time, your risk of getting those ailments is low, so the insurance cost would be much lower than later on in life. The earlier you buy health insurance, the lower your premiums would be.

I learnt that the hard way. I bought an endowment policy that only pays out upon my death or TPD, more because my mom advised me to get it as a savings method since I had a knack of spending every cent of my salary by the end of the month. We treated insurance as a form of forced savings. Decades later, when my health isn't as good as I had thought (I found some underlying health risks during a pregnancy checkup) I realized I needed more coverage. As a mom with kids, any major medical problem would put my entire family in dire financial straits so I decided to purchase a health insurance policy that would cover cancer and other illness. I was in for a rude shock. My preferred insurance company wouldn't insure me. Or rather, my agent advised me to try elsewhere as if I were to submit my application to that company, they would definitely slap on extra premiums because of my health condition and once that extra is recorded, all insurance companies would change me a lot more for any policy I might buy. I withdrew my application and finally got an investment linked policy instead of endowment.

One man's meat is another's poison and vice versa. Though I'd pick term as the last resort, there are others who would recommend you separate insurance from investment. Buying term insurance gets you just the coverage but at a far lower premium than any savings or investment plan that's added into an insurance policy. Those who are good at investing might want to do that instead - do their investments separately and buy insurance purely for coverage.

Health costs are rising. If you haven't yet got an insurance policy, I suggest you avoid making the same mistake which I did. My complacency cost me plenty, but would have cost me more should anything have happened to me before I bought the policy. Get your health insurance before you think you need it. That way, you'd avoid unnecessary cost.

Get a few quotes and study the differences in the contracts before you actually buy your insurance. Insurance is a long term commitment so you'd want to choose carefully. Pick one that meets your needs with a premium you can pay comfortably. Here are some you can start with.

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