2026 Insurance guide for beginners: How to buy life insurance, medical care, and out-of-pocket insurance? 6 major lightning protection traps

1. Why do you need insurance?

• transfer financial risk

  A major illness or accident may result in hundreds of thousands or even millions of expenses. Insurance can transfer these risks to the insurance company.

• Protect family finances

  If something happens to the breadwinner of the family, insurance can ensure that the family will not fall into financial difficulties.

• Supplement insufficient social security

  The social security systems of various countries have upper limits and restrictions, and commercial insurance can make up for the shortfall.

• Pursue life goals with peace of mind

  With basic protection, you can start a business, invest or pursue your dreams with greater confidence, without having to worry about losing everything in an accident.

2. Common types of insurance

3. The golden rules of insurance planning

• Double Ten Principle

  The annual premium payment shall not exceed 10% of the annual income, and the insured amount shall be at least 10 times of the annual income. This ratio ensures that premiums will not cause financial stress

• Keep the big first, then the small

  Prioritize risks that have "low probability of occurrence but huge impact" (such as major illness, death), and then deal with small risks

• Keep close first, then keep far

  Make sure your current medical and accident protection is adequate first, and then plan for long-term retirement protection

• Protect first, save later

  Do not purchase savings or investment policies before the basic protection is complete

• Check regularly

  Every 2-3 years or when there are major life changes (getting married, having children, buying a house), re-examine whether the insurance portfolio is still suitable

4. Insurance needs at different stages of life

5. Things to note before buying insurance

• Read policy terms

  Focus on the "exclusions" and "waiting period". The exclusions list the situations in which no compensation will be paid, and the waiting period is how long it will take after the insurance is purchased to take effect.

• Understand the claims conditions

  Claims definitions may differ between policies. For example, the definition of "critical illness" may differ among insurance companies.

• Confirm premium payment method

  Annual payments are usually cheaper than monthly payments. Make sure you can continue to pay premiums to avoid losing your paid premiums if your insurance is terminated midway.

• Compare multiple plans

  For the same coverage, the prices of different insurance companies may differ by 20-30%.

• Consider inflation factors

  The actual purchasing power of a policy with a fixed sum insured will drop significantly after 20 years. Choose a plan that can be increased or adjusted periodically

• Pay attention to the exemption period and deductible

  The shorter the exemption period (waiting period), the better. The lower the deductible, the higher the premium. You need to find a balance point.

6. Common insurance myths debunked

• "If you have social security, you don't need commercial insurance."

  Social security usually only covers basic medical care, and self-paid items, high-end treatments, and income loss compensation all need to be supplemented by commercial insurance.

• "The more expensive the insurance, the better"

  An expensive policy may not be the best for you. The key is whether the protection content meets the needs, not the premium level

• "Young people don't need insurance"

  Premiums are lowest when you're young, and accidents and illnesses don't wait until you're ready. Buy early and feel at ease early

• "Savings insurance can replace term life insurance"

  The death coverage of endowment insurance is usually much lower than that of term life insurance with the same premium. If the purpose is to protect your family, term life insurance is more cost-effective

• "Insurance is a waste of money"

  When there is no accident, it feels like the premiums have been paid in vain, but once an accident occurs, the amount of insurance compensation may be your income for decades.

7. Key points of actual payment reform in 2026: Duplicate claims become history

• What should I do if I already have a duplicate policy?

  The old policy will continue to be valid until the contract is terminated, so there is no need to rush to surrender the policy. Even if the new version is more expensive, it is recommended to retain the rights of the old copy

• Pay-as-you-go option for new purchases

  Look at the three key points: "Amount of miscellaneous expenses", "Whether self-paid medical supplies are covered", and "Extra daily benefit for hospitalization". Don't just look at the premium.

• Room fee vs miscellaneous fee

  Miscellaneous expenses (self-paid medicines, special medical materials) account for 70%+ of hospitalization expenses. It is recommended that the amount of miscellaneous expenses be purchased at more than 200,000.

• Paired with high deductible cancer insurance

  If your budget is limited, you can use the "high deductible cancer insurance" + "pay out of pocket" combination to save on premiums and not miss out on key protection points.

8. 6 major lightning protection traps: Don’t let your business convince you to buy indiscriminately

• Trap 1: Replace protection insurance with savings insurance

  Savings insurance has the highest commission and is the most recommended by businessmen. But at the age of 30, if you only have a death insurance coverage of NT$1 million but pay an annual payment of NT$50,000, it is simply savings, not insurance.

• Trap 2: Favor pressure to pay

  Relatives and friends are the hardest to refuse business from. Remember: Insurance is a 20-year commitment, so if it’s not suitable, just say no. You can buy small orders to support favors, and the main guarantee is to find another expert

• Trap 3: The myth of lifetime insurance

  "Whole life" sounds like a good deal, but with the same coverage amount, whole life insurance may be 5-10 times the premium of term insurance. The CP value of term insurance for young people is much higher

• Trap 4: Buying too many types of insurance if it’s not enough

  Buying 5 insurance policies but the life insurance is only 1 million is equivalent to no insurance. Concentrating the insured amount on the main insurance type is more effective than buying 5 kinds of riders separately

• Trap 5: Investment policies

  A policy that combines insurance + funds seems to be all-inclusive, but the expense ratio is extremely high in the first two years, and the performance is usually inferior to directly buying ETF + pure protection policies.

• Trap 6: Huge losses if you terminate the contract

  If you want to cancel the contract after paying for 3 years, you can only get 30% back. Before signing a contract, calculate "how much you will get back in the worst-case scenario" to avoid regrets.