Why is Insurance Important?

Understanding the benefits and types available

Nothing is more important than your life and your ability to earn a living. Therefore, it is sensible to seek insurance coverage for the most valuable of asset – you! As you go through life, finding a partner, raising a family, and taking care of aged parents, the need for insurance grows. That is because insurance provides a financial safety net for your loved ones that helps you take care of yourself and those you love when it is needed the most.

What is Insurance?

As a general concept, insurance is simple and can be explained in many ways. While the most basic insurance definition is an arrangement with a company to have guaranteed compensation for financial losses due to illness or untimely death. Some insurance policies, such as: https://www.metlife.com.bd/solutions/savings-investments/ also offer living benefits that allow you to access your funds when a qualifying life event occurs or as income in retirement. The policyholder typically pays an a fee, known as a premium, to the insurance company in exchange for protection from specified risks. This fee can typically be paid in different frequencies: annually, semi-annually, quarterly, or monthly , according to the policyholder’s needs. Policies that offer a living benefit, such as MetLife’s: https://www.metlife.com.bd/solutions/savings-investments/sdps/ call for a one-time premium payment. The premium amount is based on a variety of factors, including your age, gender, medical history, as well as the term and value of insurance you intend to purchase.

How do insurance benefits work?

The financial loss from the unfortunate death of the sole earner in a household can be covered by an insurance plan. The surviving family members can use the insurance payout to repay home loans or other debts and also help you cover your child's future expenses. Some insurance plans also enable long-term capital preservation that provides regular income to meet your needs during retirement. As a result, insurance presents many exciting opportunities for Bangladeshis who want to create a safety net and financial plan for the future.

How much insurance do you need?

Part of choosing an insurance policy is determining how much money your dependents will need. However, a valid question to ask is: how much insurance coverage is required? There are various ways to ascertain this number; however, the general thumb rule of thumb is to have a life cover of at least 10 times your current annual income. The intricacies of individual insurance plans, and determining which policies are the best fit for your needs, can be overwhelming. To get a sense of the options available, here is a breakdown of the different types of insurance plans you can purchase in Bangladesh.

What types of insurances are available?

  • Savings and investment: Certain whole life insurance policies offer the two-pronged benefits of protection and investment. While a portion of  your premium is paid toward insurance, the rest is invested in equity, debt or a combination of the two. This arrangement delivers protection from accidental death and sudden illness. You can make the most of this component by investing in funds that align with your investment goals and risk appetite. MetLife offers a variety of such plans based on your requirements. Learn more about the various options available here:: https://www.metlife.com.bd/solutions/savings-investments/.
  • Takaful: Takaful insurance is a scheme based on mutual assistance in compliance with the provisions of Islamic Shariah that provides financial aid and assistance to the participants in case of certain contingencies. The participants mutually agree to contribute to this common fund specifically for this purpose. With this type of insurance, like MetLife’s: https://www.metlife.com.bd/solutions/takaful-updated/, the insurance company invests the contributions collected in Shariah-compliant investment vehicles.
  • Health insurance: These plans protect you and your family from financial setbacks during a medical emergency. Having health insurance coverage like these https://www.metlife.com.bd/solutions/health-protection/ enables you to opt for the best possible medical treatment, without putting a strain on your savings. On your behalf, the insurer will either provide cashless treatment or reimburse the hospital for expenses incurred during an illness.
  • Education: With the cost of education on the rise, you can secure your child’s future by planning for their school expenses in advance. An education insurance policy guarantees a lump sum to cover their higher education expenses and can also be used for purposes other than education, if your child chooses, when the plan reaches maturity. Another key benefit of this policy (https://www.metlife.com.bd/solutions/education/) is that your child will still receive a monthly payment from the policy in the event of your death during the policy term and all future premium payments are waived 
  • Retirement plan: This insurance product helps you accumulate savings over a long period and provide financial stability in the golden years of your life. In a retirement plan (https://www.metlife.com.bd/solutions/retirement/) , the insured needs to contribute a specific amount regularly until the time of retirement. The accumulated amount is then given back to the insured as pension or annuity at regular intervals of time.
  • Group Insurance: This type of insurance policy delivers standardized coverage and competitive premium rates for employers to offer their employees or customers in the case of bancassurance plans. Employers can generally offer two insurance options to employees: one that is included free of charge in their benefits package or a group life insurance package that the employee can purchase. Group insurance benefits, such as the (https://www.metlife.com.bd/solutions/group-insurance/employee-benefits/) options provided by MetLife, protect employees and their families in the event of death and disability, provide medical insurance or provide coverage for accidents and health.

Life is full of uncertainties, which makes it very difficult to make decisions about a future that is yet to be realized. Insurance empowers you to plan for an uncertain future with confidence. You can never be too young to buy insurance and may even pay lower premiums the younger you are when you purchase the policy. Even a small policy offers the assurance that your loved ones will be protected in difficult times and be able to continue paying off debts, keep up with ongoing living expenses, and fund higher education for your children. Having the right insurance coverage eliminates the need to think about finances when times are hard so that you can focus on what matters.