How to choose insurances is quite a tricky problem for non-professionals, because many people are confused about the terms involved in insurance, the content of product coverage, and the comparison between products.

"How to buy insurance scientifically?" can be a common question of many people who want to buy insurance but do not know where to start.

Now we will start from several aspects to review how can one buy insurance without being "trapped"!

01 Five Principles of Buying Insurance

1. Adults before children

Parents are the greatest guarantee for children. If something happens to parents, the life and wellbeing of their children will sure be seriously affected. Therefore, we should never put the cart before the horse when buying insurance.

Some parents would love to equip their children first even if they themselves do not have insurance. This is true of love, but it is not a best option.

2. Amount insured before policy period

In the case of limited premium, priority should be given to those with high insurance amount, and then we consider the period of insurance.

3. Guarantee before financing

This can be very easy to understand since a healthy body is the foundation of everything. Only when health is guaranteed, can we create greater wealth and value.

4. Risk before probability

Prioritized consideration should be given to the ability to effectively resist extreme risks, rather than the probability of risk occurrence. Afterall, we buy insurance to have a guarantee, not to trigger the insurance to obtain the insured amount.

 5. Gradual configuration, overall planning

 Start with an overall situation, and then refine the details. That is to say, we should first make overall and long-term plans for the family. We will adjust our security plan when conditions change, so that we can maximize both the scope of funds and insurance coverage.

02 Four Types of Insurance:

Ø serious disease insurance

Ø life insurance

Ø medical insurance

Ø accident insurance

03 How to use insurance to build an efficient and secured system?

When buying insurance, we should first find out our family situation, and then consider our needs for prevention.

To build a secured system, we should consider the following factors:

1. Family structure (family of three, single income family?)

2. Income (marital income ratio)

3. Liabilities (total liabilities such as housing loans)

4. Assets (real estate and cash stock)

5. Budget (about 10% of annual revenue)

6. Health condition (different health conditions match different products)

7. Occupation (high-risk occupation or not)

8. Special preferences (big brands? Cost performance?)

In addition, we cannot allow the premium to become a heavy financial burden. Generally speaking, it is suitable if the premium accounts for about 5% - 15% of the annual household income. For ordinary working families, it is appropriate to control it within 10%.

04 Conclusion

To get proper insurance, we must first understand the rules.

Buy insurance within the framework of rules, and try to avoid stepping on the pit, so that the insurance you buy can really protect you for unexpected situations.

（Writer：Falady）