How Private Insurance Complements Government Initiatives

May 2, 2021 9:58:00 PM

People tend to view private insurance products with a fair bit of hesitation. After all, purchase of any private insurance, whether it’s for income protection, medical insurance, property insurance, and so on, essentially means putting money towards an event that may not even happen. However, the peace of mind that these insurance policies can provide can be priceless. They can be especially good to have when life takes an unexpected turn, and they are particularly useful for complementing aid provided by the government during times of crisis, such as sudden disability, natural disasters, or the global health emergency that is the COVID-19 pandemic. Here’s how:

Income Insurance

Income insurance or income protection insurance refers to an insurance product that is designed to protect an individual’s income in the event that they suffer a serious accident, illness, and with some policies, redundancy in the workplace. This allows policyholders to continue meeting their financial commitments even if they are unable to work. Depending on the policy, the amount paid out can be equal to the income that the individual is expected to receive, or only a portion of it. When a claim is accepted, the policy will pay out until the policyholder is able to return to work or retires from their job, or passes away, and also until when the policy expires.

This type of insurance can help someone who qualifies for it to survive a sudden, short-term financial crisis. In particular, it can help supplement the financial assistance offered by the government to augment the impact of the COVID-19 pandemic on businesses and livelihoods. Cashless disbursement solutions such as PayMaya Payout can make it easier for private insurance providers to release the funds to their policyholders who are entitled to payouts. Instead of having to pick their checks up personally, the money can simply be deposited directly to the client’s bank account or PayMaya e-wallet. Cashless insurance disbursements don’t just aid customers who may be physically unable to come and claim their checks due to their situation or medical condition, they also help mitigate the spread of the coronavirus by eliminating the need for physical contact. 

Medical Insurance

Medical insurance or health insurance refers to a type of insurance that partially or wholly covers a person’s risk of incurring medical expenses. These expenses can include costs related to treatments for sickness and injury, surgeries, prescription drugs, disability, dismemberment, and accidental death. Some medical insurance products can also cover dental expenses. 

In the Philippines, all citizens are eligible for national health insurance coverage provided by the government-owned and controlled PhilHealth Corporation. Through the social insurance program overseen by Philhealth, healthy citizens can pay for the care of the sick, and those who can afford medical care can help subsidize it for those who do not have the same privilege. The benefits are comprehensive: they include inpatient care, catastrophic coverage, outpatient surgeries, outpatient treatment for tuberculosis and malaria, and infant deliveries, among others. PhilHealth members who may have contracted or are confirmed to have contracted COVID-19 can also take advantage of the organization’s COVID-19 packages, which can partially or completely cover medical expenses incurred during treatment. 

However, the high cost of hospitalization and medical care in the country means that even those who have PhilHealth coverage will still need to pay out of pocket for certain expenses. This is where having private medical insurance can come in handy. Having individual private health insurance in place—along with having the benefits afforded by PhilHealth—can significantly lower, if not completely eliminate, the costs of treatment. 

Life Insurance

Life insurance is most often described as a contract between a policy holder and their insurance company. Put simply, this contract stipulates that, in exchange for your premium payments, your beneficiaries will be paid a lump sum, also known as a death benefit, after your death. This money can be used for whatever purposes your beneficiaries choose, but it is essentially put in place as a safety net to help cover their expenses when you’ve passed on.

Registered SSS (Social Security System) members in the Philippines are entitled to 2 types of death benefit: a monthly pension that is granted to the primary beneficiaries of a deceased member who had completed 36 monthly contribution payments before the semester of death, and a lump sum amount that is granted to the primary beneficiaries of a deceased member who had completed less than 36 monthly contribution payments before the semester of death. However, supplementing this death benefit with life insurance is always a good idea. Doing so doesn’t just help keep your loved ones and their quality of life secure; it can also be used to pay off any outstanding debts you may have or cover any final expenses you might not have settled. 

Despite the presence of robust government initiatives to cover the needs of the citizens during times of crisis, private insurance remains a sound investment for those who can afford it. It offers an unparalleled level of financial protection that can be reassuring to have during uncertain situations. 

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