Insurance for HTA & Global Nomads

Should you be insured? How much should you be insured for? What insurance plans should you get? What's the differences amongst these plans?

In a nutshell, an insurance plan is a financial tool to help you transfer unwanted risks (specified in writing) to an insurer. You pay a premium which is in most cases predictable (of course, in some plans, where specified, the premium rate may be revised if the claims experience is very bad). For this the insurance agrees to compensate you if a risk event had occurred.

Whether you want to get an insurance depends on your preference. If you have millions of dollars and are not worried about risks like medical conditions that can lead to hundred of thousands of dollars for treatment, you may choose to self-insure. For most, buying an insurance with a relatively affordable amount that they can set aside every month is the preferred way. If they don't spend this amount on insurance, that amount may often go to things like entertainment and shopping which, once consumed, do not have any lasting benefit. Between these and insurance, the later is a more beneficial and prudent spending. You've got to talk to your financial planner to discuss these issues since every person's situation is different.

Typically, there are a few types of insurance that you should consider:
1) Life insurance (commonly includes Terminal Illness and/or Permanent and Total Disability):
If you have dependents who need you to provide for them, you need to set aside an estate (amount that is available to them when you die) while you are still alive so that, in the event you die unexpectedly these persons can live on without financial constraints. Things in your estate may include your house, your jewelery, deposits in the bank, stocks, etc. Of course, if these are still not enough for your dependents, then you buy life insurance to increase your estate's value. As to how much you need, it's really subjective. It depends on how much your dependents need and/or how much legacy you want to leave behind to a Charity or religious institution whom you want to donate to.

Many life insurance plans also include TI/PTD. Typically, if your doctor certifies that you are likely to die within 12 months (eg. you are suffering from some advanced stage cancer and your doctor has ruled out any chance of survival beyond 12 months), you may file a claim for TI. PTD typically refers to the permanent loss of ability to carry out ANY business or work for income (income making ability, in short). Additionally, the permanent and total loss of sight/ both eyes or any two limbs typically also are accepted as PTD. In the event of PTD or TI, those life insurance plans that include these covers typically 'accelerate' the benefits payment (pay out the death benefits even though the insureds have not died) and the life insurance typically terminates after all the death benefits have been paid out.

2) Hospital and Surgical Insurance (H&S):
Which reimburses your expenses from hospitalization and surgical operations. Sometimes, they also cover outpatient treatments for cancer and kidney dialysis. Some plans give you a fixed amount of cash regardless of how much these expenses are, based on the number of days you stay in a hospital or on the number and complexity of the operations you had undergone. This is considered an essential plan for most people. Even if they have no dependent (eg. both their parents had passed away, and they are single), they are likely to need medical treatments covered under such plans before they die. Unless, of course, if they die in an accident instantly! Both most people don't die like that.

3) Disability Income:
Gives you a fixed amount of monthly income until you reach a certain age if you can no longer work. You may be suffering from a disease or had become physically handicapped in an accident. But the important thing to note is that it typically covers you only if you are working. So, a full-time traveler who had retired may not be able to buy these plans. However, if you can prove that you are still working as, for example, a journalist or blogger (income-earning profession), it may be possible to be insured.

4) Long Term Care plans:
which covers you in the event that you cannot perform at least a number (eg. 3) of the "6 Activities of Daily Living" (eg. feeding or bathing yourself). If you can't perform 3 or more these ADLs you would need someone to take care of you and there comes a cost. You may be admitted into some hospital or nursing home. You may live at home but hire a nurse or maid to take care of you. Or your spouse may need to resign and stay home to take care of you. All these come at a cost. These plans would pay you a monthly benefit (usually stated in advance, say $2000/month) once a claim is approved, and as long as you are still considered unable to peform the same ADLs. Premium is usually not payable by you when you are receiving the benefits, and the benefits are usually payable up to for a number of years (eg. 5, 6 or 10) or for life, depending on the contractual terms.

5) Critical Illness aka Dread Disease plans
Which cover very specific types of disases like major cancers, heart attacks, strokes, etc, which are defined in the contracts. The definitions may differ (unless the insurers decide to standardise the definitions amongst themselves) from one insurer to another, so a person suffering from a cancer may be able to claim from one insurer but not another. Many critical illnesses may be so severe that they cause sufferers to spend hundreds of thousands of dollars for treatment and nursing care and even lose the ability to work for a few years or for life. So, by having a lump sum of money if one is down with one of such illnesses is helpful in many ways. First, the person can use the money to pay for treatments or home nursing. Second, he may resign and rest at home and use the benefits to pay for his monthly expenses. Many CI plans are packaged with life insurance, so once a person makes a claim for CI, the entire plan terminates. Otherwise, CI may be purchased separate from life insurance so that the life insurance protection remains even after a claim on CI had been made.

6) Travel insurance:
For full-time traveler, you should be very interested in travel plans. They cover many things that are of concern to you. A few things that are worth mentioning are:
a) Typically they offer International SOS assistance service which is very important especially when you travel to places with poorer access to medical services. The reason why this is so important is IS offers advice on which hospitals to choose. They put only those of a good-enough quality in their listing. Also depending on your policies' terms, IS may be able to arrange for cashless admission to hospitals (without you having to pay a deposit first). Typically, they also have a qualified doctor available to offer medical advice on the phone. If you are sick or injured overseas and you are located in some remote places, this service is of great value.

Also, more travel insurance companies also incorporate other forms of essential advisory over the phone (eg. hotels nearby, ATM machines' location, embassies' location, relaying of your urgent messages to your family, legal advice if you are arrested by the police, etc....... )

b) They typically offer public liability. If you accidentally kills or injures a person or burn a hotel, you may be sued and be ordered to compensate the affected person's family or businessowner.
c) They offer emergency evacuation.