The Truth About Insurance
There is much misunderstanding and many misconceptions about insurance. This article will look at the most important types of insurances and address some common misconceptions:
Medical Insurance
Quality medical insurance is something everybody should consider. Nobody wants to have an $180,000 medical bill, which is possible after a situation such as being airlifted to Thailand for treatment after being involved in a serious accident. Although Cambodia is becoming safer, but is still undoubtedly a dangerous place, with frequent traffic accidents and diseases prevalent. The main reason for buying medical insurance is to insure against events which can cost tens or thousands of dollars. The cost of medical insurance is very reasonable for anybody under the age of 35, and relatively affordable for most people.
Life Insurance
Anybody who has children or dependents such as elderly relatives, should look towards life insurance as a good inheritance and income protection tool. Cambodia and most Asian countries do not have basic social security, and even in the US and UK the level of support given to the unemployed is not enough to sustain a comfortable living standard.
Life insurance is something everybody should consider, especially those of a younger age. There are two types of life insurance – term and whole of life.
- Term life insurance is purely insurance; there is no investment component. Therefore, the money cannot be cashed in whilst you are alive. The money is given to relatives or friends when a death occurs. The sum insured is high.
- In comparison, whole of life insurance is a mixture of investment and insurance, which means that you can cash in the money you have put in. However the sum insured is much lower.
To illustrate the differences in these two insurances, we will use an example of a 30-year-old. The following figures are an illustrative example only, and differ depending on companies used, and many other things. A $200 per month premium will give the 30-year-old client about $500,000 of worldwide, international standard, life cover. But the money cannot be cashed in until death. A 5 per cent annual (and optional) increase in premiums per year, will guard the $500,000 from inflation.
Whereas, the same 30-year-old will only get about $235,000 from the whole of life policy, but can cash in the money and not make a loss after 10-20 years. For clients in their mid-twenties, the sum assured is much higher, thus it is always better to insure yourself at a younger age.
Income protection/critical illness
Sometimes we lose our income due to injury or illness. Income protection insurance is a good tool to insure your wages/profits in case of serious accidents or illnesses. For as little as $50-$100 per month, you can guard against threats if you are unable to work.
Misconceptions about insurance
There are many misconceptions about insurances:
- Insurance firms don’t insure people who have pre-existing conditions. Not always true. This depends on the products and the insurance company, but for basic health insurance no medical questionnaire or exam is required.
- A medical exam is needed for life cover? Not always true. Some international firms allow those aged the under 40 to get as much as $550,000 of life cover with no medical exam and medical insurance.
- Insurance companies have a bad record of paying out. Some do, which is why brokers such as Imperium Capital are very selective about which one they choose to represent. The vast majority of international insurers are very clear about what is covered and for what price, and the process that needs to be undertaken to make a claim.
- Insurance is dead money. Often true if nothing happens, but not always so.
To make an appointment with Adam Fayed, heading Imperium Capital’s operation in Phnom Penh, please email – adamfayed@imperium-capital.biz.