4 Types of Insurance Every Household Needs in Pakistan

Alifiya Aun Ali
October 14, 2020

Things that we across each day, not all of them are planned and not all of them are what we are expecting out of our everyday life. Life is that way, so as we lightly put in the phrase “When Life gives you lemons, make lemonade”.

It means that you can do things and take opportunities and capitalize on what you are being offered in life.
While we usually can’t prevent the unexpected from happening, sometimes we can get some protection and coverage to manage the risks, be it the known risks or the unknown risks. Insurance is meant to safeguard and protect us, at least financially and sometimes even emotionally, should certain things happen to you or someone. But there are several insurance options and many financial experts and counsellors that will say you need to have them all (means you should have all the needed policies, which you might need in your life). It can be difficult to determine what insurance you really need and what you can do away with.

Purchasing the right kind and amount (sum-insured) of insurance is always determined by your specific situation. Factors and characteristics such as children, age, lifestyle, and employment welfares play a significant role when you’re building your insurance profile. There are, however, four types of insurance that most financial experts recommend we all have: life, health, car, and travel.

Life Insurance

When we talk about life insurance you always believe that life is important and at the same time the people you leave behind is equally important. When you are together you don’t realize the impact you have on them and once you have to leave them on their own, it can be difficult for them to survive when they cannot just be left at own devices. Life insurance is a cushion for your family which means, “Thamey rakhey apney ko haath, apney janey k baad, life insurance k saath”.

The supreme benefits of life insurance include the ability to cover your funeral expenses and provide for those you leave behind when you leave them initially and they just cannot handle anything due to the grief. This is especially important if you have a family that is dependent on your salary to pay the bills. Insurance Industry experts suggest that an ideal life insurance policy that covers 10 times your yearly income that you earn. The issue with that is the life policy that covers 10 times your earning is not a number that everyone can easily afford.
When estimating the amount and coverage of life insurance protection you need, remember to factor and take into account. Not only the funeral expenses but also daily living expenses and things needed for survival. These may include bank loan payments, outstanding personal loans, credit card debt, taxes that you need to pay, child care, and future college costs and children marriage cost and many other expenses that may arise with time.

Well, life insurance is not only effective in the scenario of death or anything. Life insurance pays off the benefit when the policy reaches its maturity as when your policy duration is completed. You are paid out the amount which has been promised by the insurance provider at the time procurement. Usually, as we know life insurance investment plans are policies that require long time commitment and patience so the reaped benefits are also greater.
These investment plans can be your life target-specific as well, for instance, you can buy a particular investment plan for your children marriage, the future education of children or even the income that you look forward to post-retirement that can be the fuel to your post-retirement milestones. So these investment plans play a vital role in securing your future financially and make you not dependent on anyone around you be it your brother, sister, mother, father or any friends or extended family. It ensures your payment is paid out on time and you can enjoy the fruit of perseverance with peace and relaxation, that nothing equates.

According to a 2018 study by LIMRA, formerly known as the Life Insurance and Market Research Association, one in three families might not be able to meet their day-to-day expenses within a month of the primary breadwinner’s death. The impact of your loved one being lost can have a grave effect not only on your lifestyle but also on your mental well-being. Life insurance does not only provide a financial cushion to your loss but also gives you the courage to deal with the loss and grief in a befitting manner.

There are two basic types of life insurance plans in the broader category that can help you decide for your future. The first one is the traditional whole life and term life. Simply described, whole life can be used as a returns tool as well as an insurance instrument. As long as you continue to pay the monthly premiums, whole life covers you until you die or the period you got the policy for matures. In that case, you are paid out completely, which means whatever benefit which has been promised by the provider is paid out with usually 300 per cent over the originally invested amount.

Term life, on the other hand, is a policy that covers you for a set amount of time for instance term life can be procured through smartchoice.pk for the period of one year. If the insured dies in case of an accident or natural death the sum insured shall be given the beneficiary who has been named in the policy. There are other substantial differences between the two types of insurance (whole life and term life), so you may want to seek the advice of our life insurance expert by reaching out to us on our UAN-021-111-212-212 before you decide and make the final which is best for you and your loved ones. Factors that are needed to be considered include your age, occupation, and the number of dependents children.

You can also purchase life insurance plans from Smartchoice.pk while being informed the educated regarding the policy that you aim to purchase. Having the right understanding of the policy is supreme as its long term investment and once invested it would be messy to retrieve. Call us on UAN for a complete walkthrough to acquiring your desired life insurance plan.

Health Insurance

Health insurance is a cushion towards the increasing medical expenses; we all understand that piling medical bills can be a source of tension and worries. The fast pace of life and the things happening with it have made it difficult for everybody to meet their expenses. To overcome any of the hurdles that might be brought by unforeseen health expenses, this hand can be easily dealt with a health plan which is procured keeping because of the needs and requirements of the individual or a family.
Statistically speaking, you and your family are just one serious illness away from bankruptcy,
according to a research study published by the American Journal of Public Health in 2019. According to the Journal’s survey of more than 900 Americans who filed for personal loans and applied for help between 2013 and 2016, medical problems from bills, to income loss due to illness, or both contributed to two out of three bankruptcies.

Those numbers alone should motivate you to acquire health insurance or appraisal and possibly increase your current coverage and benefits in the present policy. In Pakistan historically there has been low penetration of insurance in the Pakistani markets. With time companies like smartchoice.pk are playing their said role to increase the awareness amongst the masses regarding the importance and benefits of having these insurance plans. These insurance not only help in figuring out the budget but also mitigating the risk factor. Health insurance is not a luxury but a necessity more and more people can afford with multiple banks and financial institutions providing discounts and easy instalments plans. When you consider that the general average cost for one day in the hospital is PKR 15,000 in 2018, so even a minimum coverage policy is better than having none.

The best and slightest expensive option may be participating in your employer’s insurance program, but many smaller businesses do not offer this benefit. (Although it has been found through surveys and research those small businesses which offer such benefits have more employee retention and even better productivity).

The average yearly premium cost of an employee in an employer-sponsored (corporate) health care program starts from as low as PKR 4000, plans and coverage vary from insurance being purchased for an individual to family. The added benefits like maternity and OPD are something that can be easily incorporated in a corporate health insurance plan. Depending on the needs and requirements of the company the plans can be customized and provided with maximum benefit. If you don’t have health insurance through an employer, check with multiple retail insurance health coverage providers. The best way to find all the top of the line trustworthy providers is to log in to smartchoice.pk and just after few basic details you can access to the best health plans as per your needs and requirements with varying premiums and sum insured.

The plans available at Smartchoice for private health insurance are individual, family, and parents coverage. For instance, if you a young individual and have just started in life but don’t want to be bogged down with medical cost and expenses (remember life is unpredictable) individual health insurance plan would be nominal and with the sum cover the medical expenses of the day.
After getting married, there are added responsibilities and expenses which need to be catered, at the same time having children as important it is. It can also be financial stress for an individual. The family health insurance plan will cover husband, spouse and children up to 3 till the age of 18 in a single policy. It means that if there is a medical emergency the overall sum insured can be utilized for the whole family or the individual who has suffered injuries. So get family health insurance and Jio Zindagi Sukoon sey!

The other plan is for people who are over the age of 45, these policies and distinguished benefits. It’s an individual health insurance plan but also provides coverage for the pre-existing medical conditions to some extent. So while buying insurance makes sure that you do look at the sum insured as the older you grow the complex the diseases are.
There are other health insurance plans as well, known as critical illness plan and women diseases specific plans. These plans are specialized with lump-sum coverage and benefits that can be extremely useful in such cases.

Travel insurance

If you’re like an average Pakistani traveller, here’s how you prepare for a big trip: You pack way too plentiful, and then you realize your suitcase won’t close, and then you start taking stuff out. If it’s a beach or island the snorkel gear, the sarong, that second jacket… you don’t categorically need those. But there is one thing you definitely, absolutely need to keep it with you is: Travel insurance policy.
A lot of people weigh and need time to understand that the travel insurance, is it an additional expense and usually ask themselves or the travel adviser, “Is travel insurance worth it?” Most of the time, the answer is an all-caps YES. This is why.

Because travel insurance is a must and most of us can’t afford to lose our vacation investment.
Let’s say you pay PKR 200,000 for a once in a lifetime luxury cruise around the Mediterranean for your 25th wedding anniversary. The day before sailing, your mother suffers a severe accident and ends up in the hospital. When you call the cruise operators and explain what happened, they’re compassionate and understanding but you’re not getting your money back.

The business policy clearly states that there are no reimbursements and compensations if you cancel within 14 days of departure. Situations like these are why travel insurance is essential. When you have travel insurance with trip cancellation benefits, you can get reimbursement for prepaid, non-refundable trip costs when you must cancel for a covered reason. Covered reasons can include situations like the covered serious illness or injury of the insured person, a travel companion or a family member; the death of the insured traveller, travelling companion or a family member; a natural disaster or other events that renders your destination uninhabitable; etc.

We all know, when travelling, we carry limited supplies for everything be it funds or things and medical emergencies overseas can be really expensive. Consider this situation that driving on a tour through Europe, a truck slams into your hire charge car, leaving you with a broken leg and other severe injuries. When you reach the hospital, you beckon the strength to pull out your travel insurance policy. The staff just shakes their heads and accepts the policy after it being verified as valid. Your medical bills rapidly climb into the tens of thousands. If you require medical emigration, that cost can hit $20,000 or more, depending on the state you’re in and the juxtaposition to the nearest hospital. When you have travel insurance with emergency medical benefits, it can pay for losses due to covered medical and dental emergencies that occur during your trip.

In many travel insurance policies that you purchase in Pakistan for Schengen countries, there the reimbursement is cashless you don’t need to make any payment upfront, just make the claim and your insurance company would take care of the rest.
The upshot: When you’re questioning and speculating “is travel insurance worth it?” weigh the small asking price of buying travel insurance against the colossal costs of a medical emergency overseas.
The travel insurance is a must: You don’t want minor mishaps to ruin your trip. We all believe that a “vacation is really an investment in your happiness” that we all keen to make the most of it and create memories. If your vacation starts with a cancelled flight, a missed connecting flight, a missing luggage bag or another travel hitch, that happy travel feeling fades and takes to the abyss of sadness. Baggage delay benefits in your travel insurance policy can reimburse you for the sound additional purchase of essential items during your trip if your baggage is delayed or misallocated by a public carrier for 24 hours or more.

During the “NEW NORMAL” post-covid19, There are no if and buts when it comes to getting travel insurance it’s a must and a person cannot travel without it the embassies of multiple countries say so!
Post-Covid the world has changed drastically, travel insurance was an option before but now understanding the new normal people just cannot think of travelling without acquiring there corona medical protection embedded in your travel insurance policy. As without travel insurance, you might not be allowed to enter the country where you are travelling. Ensure that you have the right policy with the right coverage. For instance, if you are going abroad for your studies, you need to purchase a long term students travel plan, which offers long-term medical coverage, some fee solution in times of uncertainty and other circumstances (terms and conditions applied).

If you are a businessman and need to travel frequently, you can opt for multi-trip insurance for a whole year for your multiple trips, buying this insurance makes you free of the task of purchasing travel insurance before each time you travel and just buy tickets, pack your bags and fly stress-free. If you are going for a pilgrimage and want to secure any undue risks, you need to get the Ziyarat travel insurance to 100% focus on your ibadah and leave the worries “potli” at home and take your travel insurance with you.

There are multiple other plans available destination-specific which can help in tackling and solving your travel needs. Another thing is that it’s pretty easy to find affordable travel insurance.
Maybe thinking cost is probably the number one reason people don’t buy travel insurance. We understand and think! If you’re already paying hundreds and thousands for a long-awaited cruise or a beach or any kind vacation, is it too tough to spend even a little more on travel insurance? The travel policy will make just all well for you while you are in an alien country and remotely familiar with everything around you.

Here’s something a lot of people don’t know: Insurance can be really affordable. At smacrtchoice.pk you can get quotes from multiple travel insurance providers; we’ll present you with multiple coverage options as well, so you can pick the best one that suits your trip and your budget. A basic travel insurance plan, offers three key protections trip cancellation, trip disruption and trip delay benefits. The best method to find a low-cost travel insurance policy is to get a quote for your next trip and then compare plans.

Car Insurance

According to the reports, there were 6.7 million car accidents in the U.S. in 2018 alone, according to the National Highway Traffic Safety Administration in the US as per an estimate 38,800 people died in car crashes in 2019 alone. According to a survey and research report, the number one cause of death for the people in the US is between the ages of five and twenty-four was auto accidents. According to 2018 CDC data recorded over 2.7 million drivers and passengers were injured in 2018 during any vehicle crash or accident. The 2010 economic costs of auto accidents, including deaths and disabling injuries, were around $242 billion.

Having a basic car insurance policy is important and mandatory by law in Pakistan, as according to the regulations regarding financial responsibility in the event of an accident can be a matter of conflict and may require adjudication to minimize this issue third party damage insurance is compulsory in Pakistan. As a proof of insurance you can keep the acquired policy paper in your car at all times to effectively use it as and when required as the car insurance policy has the policy number which can be used in the times of accidental or any claim filing process.

If you drive without car insurance and have an accident, the government fines will probably be the least of your financial burden. If you, a passenger, or the other driver is injured in the accident, car insurance will cover the expenses and help guard you against any legal action and proceedings that might result from the accident. Car insurance also protects your vehicle against burglary/theft, vandalism or a natural disaster, such as a storm or other weather-related incidents.

You can compare and search multiple car insurance plans from different car insurance companies with varying coverage. The procurement of a certain policy depends on the need of the individual. For instance, the majority of people prefer “comprehensive coverage” this protection plan covers the car from bumper to bumper. It means any damage that a car could suffer, except any of the loss that occurs due to negligence in the due maintenance of the car.
There are multiple other plans for old cars, which covers old car means any car which is five years and more than five years old, can be covered in that policy. These cars have high depreciation rates but lower insurance rates.

There is another plan known as 3T which covers, theft, total loss and third party damage. This protection plan offers limited coverage and the premium is also less.
Visit smartchoice.pk today to know more about the car insurance plans being offered for all the other needed information for your insurance needs. Again, as with all insurance policies, your individual conditions and situations will determine the cost of car insurance. To make sure you get the right insurance for you, compare several rate quotations and the coverage provided.

The Bottom Line

Most experts agree that life, health, travel, and car insurance are the four types of insurance you must have. Always check with your employer first for available coverage in case you can avail it from him. If your employer doesn’t offer the type of insurance you need, obtain quotes from several insurance providers. The best marketplace is smartchoice.pk for all your aforementioned insurance requirements. Those who offer coverage in multiple areas you can purchase from them and also you may also be eligible for a discount if one is going on at that time around. While insurance is expensive, not having it could be far more costly for you and your loved ones.

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