Everything you wanted to know about Insurance
Insurance has been an integral part of our society since a very long time. The Chinese and the Babylonian traders were one of the firsts to practice the various features of the insurance as we know it today. It was about 3000 to 4000 years back but since then the rise of insurance has been unidirectional, i.e. upwards. The first proper insurance company, as we know them was in the United States and was formed at 1732 in Charleston, South Carolina. Not surprisingly it was Benjamin Franklin himself who helped popularize the concept of insurance in those days. Today there are around 300 premier insurance firms based in the United States of America. Of which, insurance companies like Berkshire Hathaway Inc., General Electric Capital Corp, Metropolitan Life Insurance Co, United health Group, Medco Health Solutions Inc., American Express Company, Prudential Financial Inc., Caremark Inc, New York Life Insurance Co etc. are considered to be the market leaders.
If you are at all thinking about taking an insurance policy you would better have a rough idea about the types of insurances that you can avail. The first on the list are the auto-insurances, which as the name itself suggests, is related to the motor vehicles that you buy. Second is Home insurance, then comes health insurance, Accident, Sickness and Unemployment Insurances, Casualty insurance, Life insurance, Property insurance, Liability insurance, Credit insurance and various other types of insurances are available for you to choose from. All you have to do to procure any of the above mentioned policies is to deposit a monthly or an annual premium against the insurance policy that you buy. Yes, it is an investment but this investment saves you from greater tragedies and makes sure that you walk out of your loss unharmed.
There are many subsections and bifurcations of the insurance policies that we just talked about. They are just so interesting that a film called Double Indemnity was made on these policies by Mr. Billy Wilder and today it is considered to be the greatest Film Noir of all time. This film is about two insurance detectives and their quest for professional glory. Things get dark along the line as the femme fatale tries to ditch our ‘hero’ and the plot just gets better and better. Anyway, as we were talking about insurance, one must also be wary about the various catches that some dubious insurance companies use to lure the probable customers into their traps.
Whenever we purchase life insurances, we get an immense sense of relief. Though the premiums are always hefty, there is an assurance that our family members would be well paid and it would secure their lives even if we die or are paralyzed be some accident or illness. But there have been cases where the payout has been absolutely chaotic and it goes even worse if someone takes out insurance inside superannuation.
If you have an insurance of a sum greater than $1.24 million, your heirs might end up paying 48.5% of the excess as tax bill. This is the case only when you have left this money to your husband/wife, children still under the age of 18 or some other dependents. In any other case the tax is applied from the very first dollar itself. To save your loved ones from this trap always try and keep the super to below $1.24 million. It is also suggested that one takes out extra insurances to cover up the tax bills.
There may be times when the payout might stop unexpectedly. This is again a case of the super, this time it is in relation to the income protection insurance that guarantees you a pay even if you are physically or mentally unable to work. This policy is only helpful for the first two years of you disability as this is the nature of the income protection insurance policies. Thus, it is a no good policy if someone is disabled for life.
There are some policies like the TDP, i.e. the Total Disability Policy. According to this policy you have two alternatives to choose from. These are, disability to have ‘any occupation’ and the second one is the disability to have your ‘own occupation’. If you choose for ‘any occupation’, this means that you cannot do any kind of job but render you 20 to 30% less of what you would have got as payback. Further on, say if a sportsman meets an accidents were his legs are permanently disabled, he won’t be paid anything on the grounds that he can perform other clerical jobs. This policy works regardless of the pay that the policy holder gets. In these cases it is recommended that people take the ‘own occupation’ policy, since their original occupations involved specialized physical activities.
On the other hand, having an ‘own occupation’ policy requires that the trustee holds an ‘any occupation’ policy. Thus an even if the criterion meets with that of the insurer’s, it is not necessary that it would meet with that of the trustee. It is best advised that one holds his or her policy outside of the super and makes sure that the concerned person also holds income protection insurance.
There a few things as these that one must keep in mind before buying an insurance policy. Though the insurances are made to help you, they can prove really suicidal at times. It is best advised to the readers that they consult their legal advisers before they buy any kind of insurance policy and make sure that there isn’t any trap waiting for them around the corner. Always remember to read the fine prints and if in any kind of a doubt do not go ahead with the deal. Insurances are for your loved ones; do not make it a burden on them. And do watch the film I mentioned, it’s a classic.