Question: I am an ex-Cuban citizen. I arrived here two months ago. Can you tell me about the different types of insurance that are necessary for me as a private citizen living in Jamaica? I would also like to know about the different kinds of taxes. Can you advise me about this too?
- pinedojose@hotmail.com
ANSWER: I am glad to learn that you have made Jamaica your home. That there are persons like you who continue to think that "nowhere no betta than yard." A few weeks ago, a reader of this column, apachejj@aol.com, sharply criticised me. He said that I was "preaching" too much doom and gloom. "We [in this country], 'ave nuff a gwaan fi wi." 'Apache' misunderstood what I wrote. Jamaica has many plus points. But, as you recognise, there are also minuses. A high rate of taxation is one. Individuals [and businesses] also face many dangers. I know how insurance can provide protection from some of these risks. I know nothing about taxation. Find an accountant to answer your question on this subject.
We need many types of insurance to protect ourselves and our families. In the past, the government acted as "insurer of last resort." This has become very rare nowadays. It does not have the funds to discharge this function. We have to rely on our own efforts. Since state handouts are uncertain, and come with strings, we have to put away funds with private insurers - weekly, monthly, quarterly or annually - for the "rainy day." These moneys [premiums] are spent on different types of insurance. Life, health, accident, house and motor car insurance are some of the main ones.
Let us take a look at the markets and products that are available to consumers and which ease some of the burdens consumers bear in their daily lives.
LIFE INSURANCE
The life insurance industry went through a very rough patch during most of the 1990s. As a result, the numbers of insurers have declined but those that remain are much stronger. They offer a variety of products, ranging from whole [or ordinary] life, universal life, term life, investment products with some life insurance to final [funeral] expenses. What type of coverage you buy and how much insurance you purchase will depend on many things. Bear in mind that your needs should be influenced by the financial requirements of your family following your death. Make sure that you get the best professional advice before making any decision on what or how much coverage to buy.
HEALTH INSURANCE
Medical care in Jamaica is not cheap. This applies to services available from the public and private sector. Consumers spend more than $10-15 billion each year in premiums for health insurance, part of the cost of services provided by public hospitals and as co-payments for prescription drugs and other kinds of services. These numbers exclude amounts for those who buy insurance overseas or who have the dollars to fly to the USA or other places for treatment. Expenses incurred for mental health problems are also excluded. Health insurance is necessary even though less than 20 per cent of the population have access to it.
Three insurers provide health insurance coverage. Most plans are targeted to employers or affinity groups as opposed to individuals or families. Products tend to be similar. Most persons expect their insurance to pay for everything, including dental and optical benefits. The feature that I value most is where there is a large major medical limit for life threatening illnesses. Access to overseas treatment without any hassle is also very important, if you want options other than local treatment.
HOUSE INSURANCE
Most persons in Jamaica do not insure their houses or contents. This is even though hardly a month goes by without one type of disaster or another. House [and contents] insurance provides protection against a wide range of perils. Fire, earthquake, hurricane, flood and burglary are some of the main ones. Thirteen companies provide this type of insurance.
MOTOR INSURANCE
Our laws, like those of most countries, require car owners to carry minimum amounts of motor insurance when their vehicles operate on public roads. This is what drives the demand for coverage. One can buy insurance to comply with the law, third party coverage, or upgrade it to include fire and theft damage to the vehicle. It is also possible to top up fire and theft to include collision damage and other types of losses. The latter is called comprehensive.
I hope that you now have an insight into how the different elements in our insurance market operate to provide protection to consumers like you against some of the perils of living here.
Cedric E. Stephens provides advice on risks and insurance. If you need free information or advice to solve a problem, write to The Financial Editor or contact Mr. Stephens directly at aegis@cwjamaica.com.
