Insurance Myths Debunked: Common Misconceptions in Singapore

While financial planning is essential, the provision of insurance is often misunderstood and can lead to decision-making that isn't aligned with one's actual financial situation. Even in a growingly financially literate society like Singapore, it's important to clear up the most common myths that can misguide people when it comes to making properly informed choices about what they actually need to take care of their and their families' financial well-being.

Myth 1: I don’t need insurance if I’m young and healthy.
Fact: Young and healthy people often think they don't need insurance. But life is unpredictable. Anyone can have an accident or a sudden illness, no matter how young or healthy they might be. Getting insurance when you are young and healthy often means lower rates because most providers base their premiums on age and health. Moreover, when you get coverage while you are young, it usually stays with you. You get to keep it, and you have it when you need it.

Myth 2: I can rely on my employer’s insurance coverage.
Fact: Although insurance from your employer can be a good start, it does not nearly cover what you need to protect you and your family. Group plans are more limited in benefits and coverage than individual plans. If you switch jobs or lose your job, you lose that coverage. Remember, these benefits are for those who hold the job. Vocational instability is a hallmark of the new economy, and the effects of this instability on health insurance are too often ignored.

Myth 3: All insurance policies are the same.
Fact: Not all insurance policies are created equal. In fact, they can differ quite a bit from one to the next in coverage, exclusions, and benefits. If you're looking to procure an insurance policy, you'd better believe that reading the fine print and understanding what each policy actually provides is of the utmost importance. Working with a knowledgeable financial adviser can help one find the right insurance policy to suit one's needs and the particularities of one's life situation.

Myth 4: Claims are difficult to obtain.
Fact: Though some people have had trouble claiming their insurance benefits, it's important to remember that many don't. Quite a few folks breeze through the benefit claims process. This happens when they provide the right kind of documentation and when their insurers fulfil their part of the bargain—that is, when the insurers pay what they're supposed to pay and pay it in a timely manner.

Myth 5: Life insurance is only for breadwinners.
Fact: Most individuals believe that only those who provide financial support to others need life insurance. However, life insurance can benefit a greater number of people than it seems. You can have significant financial responsibilities and be the non-primary breadwinner in your household. In this scenario, life insurance can still serve several purposes. It can cover funeral costs, pay off your share of any significant debts, continue to make your house payments, or provide a variety of other services that will keep your family or non-working dependants in a financially secure position as they deal with your unexpected absence.

Myth 6: Health insurance covers everything.
Fact: Health insurance does not pay for everything. Indeed, health insurance plans have exclusions and limitations. A plan may overall seem like a good deal, but many plans leave you holding the bag when it comes to paying for critical pre-existing conditions or elective surgeries (those not covered because they are deemed not medically necessary). It’s crucial to go over your plan with a fine-toothed comb to understand what is covered and what is not; otherwise, you are setting yourself and your family up for some serious financial risks.

Myth 7: I can wait until I’m older to buy insurance.
Fact: Not buying insurance while you’re younger can lead to you wanting to cry as you see the premiums you have to pay when you are older. The longer you put off buying insurance, the more it will cost you, or the more coverage you will need to secure if and when health problems arise. Waiting can also result in the possibility of denial of coverage if health changes occur after you’ve postponed buying insurance.

Conclusion
At the heart of proper financial planning is an understanding of the common myths surrounding different kinds of insurance. We have gone into detail to dispel some of the most prevalent misunderstandings consumers in Singapore hold about life insurance and the whole life policy. The most important takeaway from this is that engaging in meaningful conversations with insurance professionals can help you understand what policy will provide you with the coverage you need to protect yourself and your family from life’s curveballs.