Do you have insurance?
The daily news of distant wars, a virus that threatens mankind's existence, chemically-tainted food and more ways to die than the west ever knew, all make today's world the perfect setting for a dystopian, post-apocalyptic novel. Unfortunately, unlike a novel where a reluctant hero always saves the day, in real life we are left to our own devices. Thus, seeing the chaos around us, now is a good time as any to prepare. And the best way to prepare is to insure yourself.
Most developed countries have already understood the importance of insurance and thus have made it an integral part of everyday living, with paying premiums akin to paying taxes. However, Bangladesh has yet to give insurance its due credit, with the invincibility that youthfulness breeds deceiving many into thinking that it is a useless expenditure. On the contrary, insurance is the wisest form of investment. Its many benefits do not just end with the policy holders but also have a socio-economic impact. One effect is the decreased amount of money the government has to spend for every individual that has Life, Health, Pension or Education insurance, allowing them to allocate resources where they are really needed.
Of course, the concept of insurance is an easy one to sell. Select a policy you like, pay a percentage on the face value of however much you are insured for as premium every month for an agreed amount of time and when the unforeseeable happens, the insurance company will cover your expenses up till the agreed amount. So if you took out a Medical Insurance worth 50,000 taka, you will pay a premium on that 50,000 taka at the premium rate that suits you best. And if you have to pay a visit to the hospital, the insurance company will cover the cost till 50,000 taka. This can be a huge help as emergencies tend to drain our finances, so being insured allows you to escape the brunt of a large medical bill.
However, in application, insurance is as tricky as credit cards. There are fine prints that need to be read, hidden clauses clearly discussed and of course every claimant needs disreputable proof, as the 'utmost good faith' does not strictly apply to the insurance companies. The insurance company is taking as much a risk as the one who buys the insurance. The insurance company collects the premium from all its holders and then pools the money together. This pool of money is used to meet future claims for policy-holders, whilst a portion can also be legally invested. If the insurance company did not scrutinise each claim, it would have to pay out tremendous amounts of money for every claim, soon being in a position where they may fail to pay off a claimant who actually may need the insurance money. Thus, even before selecting or buying any form of insurance, thoroughly understand the terms of the policy.
If you take the time to shop around, consult some independent insurance agents and generally look through the more well-known organisations; you will gain an idea of what you need. The most common policies are life insurance policy, life assurance policy, health insurance, education insurance and pension plans. Depending on your circumstances, you can avail one, a combination or all of the insurance. Before taking off on your own though, ask the organisation where you work whether they offer group insurance policy plans. Group insurance policies cost less, as insurance companies find it a safer bet to insure an entire organisation, knowing that it would most certainly take in more than it pays out. Thus, as the risks are less, the premium is less too. For instance, Delta Life Insurance company, one of the biggest insurance companies in Bangladesh, has Group Health Insurance plans starting from 25,000 taka. For this coverage, depending on your age and health condition, you will have to pay between 600-3100 taka as premium. On the other hand, individual health insurance policies are said to be some of the most expensive.
Another insurance worth undertaking is one involving overseas medical care. Most of the leading insurance companies offer overseas treatment plans that insure up till a certain amount, depending on the policy selected. Not only does this help to not drain your reserves too much, but also helps with visa applications. However, although such health insurance policies cover many instances, there are numerous scenarios where your insurance doesn't count. For instance, psychiatric disorder, treatment for pre-existing but undeclared conditions, self inflicted wounds and in some cases even war injuries. Thus, it's always wise to check what your insurance covers and what it doesn't and then decide on which policy to take.
Every insurance company designs their own policies to an extent. But there are a few common ones, which are widely used. The most common insurance policy is the endowment plan which comes with or without profit. After selecting an amount for which you'd like to be insured, you begin paying premium on that particular amount for an agreed period of time such as 10 years, 15 years, 25 years etc. If the policy-holder dies during the term, he is paid the full amount as agreed upon or he is paid the money at the end of his term. This policy allows one to be insured and save at the same time. If one goes for the plan without profit, then he or she pays the premium, and receives the grand total in the end. For the plan with profit, the money paid as premium is invested and the risk undertaken yields rewards. Pragati Life Insurance has such a policy while Delta Life Insurance also has one such Endowment Plan, among many other insurance companies.
Apart from life insurance and medical insurance, another important insurance is the education insurance. This is undertaken to ensure the availability of funds when your child finally reaches the age to enrol in a university for higher studies, or earlier if you wish. Since education becomes more expensive every year, it is impossible for those in middle income and even higher middle income groups to afford university tuition fees. Thus, it's prudent to plan for much earlier. Metlife Alico Bangladesh, one of Bangladesh's most renowned insurance companies, has quite a number of insurance policies on offer but their Education Protection Plan is most relevant here. The plan with flexible terms ranging from 10 to 25 years, ensures that your child receives the face value of the policy plus bonus on the maturity of the term. The policy also has contingency plans built in, where in the event of the parent's sudden demise, the child is paid 1% of the face value every month for his or her education till the maturity of the policy. A disability clause can further be inserted in the insurance to protect against even more future accidents.
Insurance is, as said, one of the wisest investments to make. And with every reason. But like any investments, unless you are wary, there are a number of risks involved. Thus, always, always remember to read the fine print. And if no reason above is to your fancy, remember that insurance is tax deductible and that is a big reason in and of itself. The other important reason is your family; do you leave their fates to the gods or do you leave their fates to the gods along with a tiny but significant nest egg?
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