27 year old with a take home salary of 2100. Just completed my goal of having 9 months emergency fund. But I have no insurance plans. How much should I spend per month for it and what should i get?

Hi anon,

Congrats on reaching your saving milestone! You'll need to look at getting yourself covered now so that unexpected events do not erode your emergency funds that you worked so hard to save.

In order of importance, here is what you should be looking at:

1. Hospitalization plan. This covers any hospital bills and associated pre/post hospitalization costs. This would be from an integrated shield plan, with a rider to take care of the deductible/co-insurance. Depending on your budget, you can take a private hospital plan and downgrade later, or just go for Goverment A ward.

2. Critical Illness coverage. This provides a sum of money for you to cover your expenses and other out of pocket costs should you fall critically ill and are not able to work. Usually it's recommended to cover at least 5 years of expenses and an additional sum to cover out of pocket costs arising from such illnesses. This is usually via a limited payment life plan, or a term plan, depending on your budget/needs. You'll want to understand the various types of plans available before you decide what suits you.

3. Death coverage. This provides a lump sum of money should something happen to you. It's not strictly mandatory if you have no dependents or liabilities. Usually takes the form of a term plan. For the coverage amount, you could use a multiple such as 10 x of your current income, or calculate based on your current liabilities.

4. Personal Accident. For the minor stuff like TCM claims, etc.

Generally, you should not have to spend more than 10% of your income on coverage.

You can work with an independent financial advisor who can provide multiple options and explain in detail what you will need to know about the types of insurance as well as the options from various insurers before you come to a decision, especially with respect to cost effectiveness as well as the minor differences between the plans.

You will want to be comfortable to share your fiinancial details with your advisor as that will be important for the advisor to consider your current situation before suggesting suitable solutions.

At your age, you are relatively young and it's as good a time as any to get yourself covered. The biggest advantage you have is health (and to a certain extent, your youth), with good health, you can insure yourself, but if you are not healthy, no amount of money will get you the insurance you need as insurers may not want to take on the risk of covering you.

Hey there!

There are 3 main things that one should find coverage in:

1) Death/Total Permanent Disability (TPD)

2) Critical Illness

3) Hospitalization Costs

The amount of coverage you should be aiming for is this:

• For death coverage: 10x your annual income

• For CI coverage: 5x your annual income

The idea behind it is that insurance against CI replaces income lost in the event you're unable to work due to a CI while death/TPD coverage is really leaving behind a love gift for your loved ones in the unfortunate event of your passing.

Death and TPD coverage can be easily sorted out with a term plan: high coverage and highly affordable. They are plain vanilla products that offer coverage during a period of time (hence term), typically your essential working years. There are many options available. But the idea behind buying a term plan is that because it's highly affordable, you can allocate a sum of money apart from insurance to invest it.

For a CI plan, you can choose a multi-pay standalone CI plan since it offers multiple payouts to cover for relapses and different CI occurrences. Some plans even come with riders that waives off your premiums upon a CI diagnosis so you'll be covered even if you're unable to fund the plan eg. AIA Power Critical Cover. They are typically very comprehensive and covers a wide range of stages and CI conditions.

For hospitalization plan, they are pretty straight forward and standardized across the insurers. For you, you just have to decide whether you want to be covered for private hospital or restructured (public) hospitals. Of course, private hospital coverage is more expensive. But for hospitalization plan, do opt to add in a rider. The rider covers for deductibles cost (ward associated costs) and co-insurance (10% of total bill less deductibles). Hospitalization plan is the most fundamental insurance you can get so do prioritize it!

You shouldnt be spending more than 10% of your annual income on insurance. That being said, if the above coverage as mentioned is too much of a stretch for your budget, you can dial it down accordingly.

Do consult a licensed advisor to see what best meets your needs. You can reach me here to find out more.​​​