05 Aug 2020
Given that ones' earning capital will increase over the years, would it be better/cheaper to purchase a plan with higher coverage (e.g. up to 1m) now or purchase it when i'm promoted etc?
Strictly speaking, you would need death/TPD coverage if you have dependents or liability. If not, you would just need critical illness cover. However, you can plan in advance if you forsee that you would get married or buy a property within the next few years. In this case, yes, you can consider a term plan to cover death/TPD first. 10x of your annual income is a guideline, but you should also work out the numbers specific to your situation, which might turn out to be more than 10x, or less. It depends on your circumstances.
The more important thing is actually your insurability, regardless of whether you are getting death/TPD cover on a term plan, or a life plan with CI or early CI cover. If you are getting a plan now when you are healthy, not only is it generally cheaper, but you are also likely to be accepted as a standard case. Furthermore, your premiums would be locked in and stay that way. The biggest problem is down the road when you don't have insurability. At that point, getting a plan might be impossible, regardless of how much you are willing to pay. I have a client who was diagnosed with lupus at 18 and that's a death sentence for insurance coverage. She has to rely on a plan that her parents bought for her when she was young. So if you are going to need coverage, get it when you are still healthy.
You should be looking at a death coverage of 10x your annual income. Reason being usually, death benefits are used to leave behind something for your dependents eg. parents, future partner and to hedge against a liability so your future partner need not tank everything by him/herself.
The earlier you get it, the better. Term plans are typically affordable (you shouldnt be paying an arm and leg for it). Also, the earlier you get it, you need not run the risk of a pre-existing condition happen to you (yes, it happens and God forbid that happen to you).
Do consult a financial advisor to explore your options and reach out if in need.
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