We are exposed to different kinds of risks on a daily basis. Accidents, sickness, and calamities can happen at any time and can easily take down your current financial footing. Luckily, there is one good way to protect you and your loved ones from the burden of worrying about the future while saving you from any possible financial loss, insurance!
What is insurance?
Insurance is a contract or agreement between two parties; the insurance company and you, the policyholder. In case of any loss or damage, the insurance company will compensate the policyholder with an agreed amount. In return, the policyholder shall pay the insurance company with an agreed upon amount to cover for any expenses they will shoulder in case you need to make an insurance claim. The policyholder may also nominate beneficiaries who will be able to claim the benefits from the insurance in the absence of the policyholder.
Important terms to remember:
Insurance policy - the contract between you, the policy holder, and the insurance company. It is made up of several components namely, premium, policy limit, and deductible.
Insurance premium - the actual cost of the insurance plan. This is typically divided monthly and is determined by the insurer based on the risks each policyholder has.
Policy limit - the maximum amount you will pay under the insurance policy.
Deductible - the amount the policyholder must pay before the insurance company begins paying towards covered expenses.
Beneficiaries - the people policyholders nominate to receive the insurance benefit in case the policyholder passes away while on insurance plan.
How does it work?
The insurance company sets out an insurance policy that will protect the holder in case a risk occurs (i.e death, illness, calamity, etc.) in exchange for premium. Terms are set in the agreement regarding insurance premium, policy limit, and deductible. They require enough premium from the pool of insured participants to exceed the amount of money they need to pay out for insured losses.
Insurance companies base their charges on actuarial calculation of the risk they insure. This means, they assess each possible policy holder and determine which of them are most likely to make a claim. Hence, an individual who has a preexisting illness or works in a high-risk job may be charged more premium than another individual who’s healthy or working a normal 9-5 job.
Kinds of Insurance
There are several types of insurance that cater to different kinds of risks. Here are some of the most common insurance you can find here in the Philippines.
Life Insurance - guarantees the surviving family with an agreed upon lump sum pay in the even the insured person passes away or after a certain period of time.
Health Insurance - covers and reduces the healthcare costs of the policyholder and his dependents
Education Insurance - helps cover a child’s education expenses during college.
Home Insurance - otherwise known as property insurance. This helps protect policyholders financially in the event of loss or damage to their residential property
Car Insurance - financially protects policyholders from loss incurred from vehicular accident or theft.
Why do you need insurance?
Insurance protects you from any financial loss as it effectively helps you manage your risks. In a way, it’s a form of contingency plan against any unforeseen circumstance. This way you and loved ones can rest easy, knowing that you are financially prepared for whatever the future holds.
Getting insurance does not have to cost you an arm and a leg. Get FREE life insurance of up to P2,000,000 in your UpSave account! Maintain a monthly average balance of at least P100,000 to secure your family’s future. No need to pay for monthly premiums or get a physical exam. Open an UpSave account now!