It’s impossible to eliminate all risks from a single insurance plan. However, layering your personal finances with a handful of essential covers immensely help with risks.
So what are the important insurance types you need to protect yourself and your family?
- HEALTH INSURANCE
There is a multitude of insurance plans to help you with the cost of healthcare. Health insurance takes care of hospital costs when you’re sick or in an accident. Most will acquire this type of insurance through an employer. Self-employed individuals will have to get this from the open market on their own.
Pro-tip on what to consider:
– Cost of premium
– The amount of deductible (out-of-pocket cost before the insurance comes in)
– Co-payment amount (the amount paid for a particular visit)
– Co-insurance (cost divided between you and the provider)
– Cap out-of-pocket cost (maximum cost before the insurance starts)
An important thing to remember when shopping for health insurance is that you should be aware of your anticipated health needs so that you can check if it’s part of the plan. So if you have a history of heart condition in the family or cancer is involved, be sure to find a plan that will assist with the cost of those specific conditions.
- LIFE INSURANCE
There are two main types of Life Insurance:
(1) Permanent Life Insurance – covers your lifetime
(2) Term Life Insurance – covers a certain period of time (e.g. 30 years)
Pro-tips: Term Life Insurance is generally more cost-effective because it protects you for a period when you’re least likely to die. This is, of course, if you get the plan at an early age.
In terms of the cost (how much you need to have covered), Village Insurance will always advise clients to consider their annual income. So if you need to replace your entire income, then you will need 25x your annual salary which is understandably a substantial amount. A positive outlook while thinking of that amount is that your family can withdraw around 4% from that amount for as long as the insurance is in place. If you want to replace an amount that covers certain things such as the mortgage, then you’ll need less.
- DISABILITY INSURANCE
This insurance plan also comes in two variants:
(1) Short term – for medical emergencies that prevent you from working (e.g. having a baby)
(2) Long term – for events that inhibit you from making a living for months or years.
Pro-Tips: Short-term disability becomes quite handy when your employer doesn’t offer paid maternity at work. To determine how much you need, make a budget plan for the amount you’ll need while you’re unable to work.
Also, keep in mind that long-term disability insurance has a 3-4 month waiting period before it begins replacing lost income. On top of running through a budget plan for how much you’ll need, check if your plan is subject to taxes as well as your condition’s impact on your social security disability income.
- DENTAL INSURANCE
Health insurance plans do not automatically cover dental. Dental care can be quite expensive especially in Hong Kong. Treatments beyond preventative procedures can cost thousands of dollars. Teeth implants and other restorative treatments are often overlooked but once they’re there, you’ll be glad to have dental insurance when you see the cost per visit.
Pro-tip: Get dental insurance before you actually need it, meaning, get it while you’re young. Premium will cost less. Also, like some insurance covers, there may be a waiting period for expensive treatments so add that into consideration when scheduling your appointment.
- HOMEOWNER’S/RENTER’S INSURANCE
Homeowner’s insurance covers both the house and all its contents. On the other hand, renter’s insurance covers what’s inside the rented space.
Renter’s Insurance is a must-have in Hong Kong. Some landlords may even ask for additional liability insurance from renters to cover the entire building in case of damage.
Pro-tip: There are plenty of reasonably priced renter’s policies in the market (some as low as $20 monthly). Village Insurance recommends getting this so you won’t have to worry about damages to the apartment that are beyond your control such as a fire.
For homeowner’s insurance, check your policy if it covers the current value of the property or the replacement value. You may also look for a plan that has add-ons to cover the cost of high-value items inside the house (e.g. jewellery, computer equipment).
Again, layering your finances with different insurance policies to take care of anticipated needs is the best way to protect you and your family from extreme loss of income.
Get in touch with us if you need help finding specific personal as well as business insurance while you’re staying in Hong Kong.