Do I have sufficient insurance coverage? If not, what else should I get? I was thinking maybe multipayout CI plan under aviva as it is most cost effective. Any advice?

Hi there. In my opinion there is no right or wrong amount of insurance, but when you are younger, you should keep your premiums as lean as possible to allow more of your money to grow through investments and savings.

It does seem like your CI coverage is bundled with life insurance, which is not the most advisable as the comprehensiveness of coverage compared to a standalone CI plan will be poorer. Multipay is currently one of the best standalone CI plans in the market at the moment.

I do advise that you sit down with a trusted adviser to go through a review of your financial needs and planning. Only through that way can you know better what you need and what you don't need for now and in the near future.

If you want to know more, do feel free to have a chat with me here. I represent 9 companies including Aviva.

Hi anon,

The 10% number is a guideline, you may or may not exceed that depending on circumstances (e.g. if you are a sole breadwinner of a family, or are subject to loading, you might have to pay more).

You have gotten it right in that the key question is: Do you have sufficient coverage? I note that you are supporting 2 people, you will need death/TPD cover of at least 10x your annual income, and maybe more, since you still have so much earning potential ahead of you. For CI, at least enough to cover 5 years of expenses and out of pocket costs.

The real question is, based on your budget, what are the plans available to you? As an example, a whole life limited pay CI plan to give you a good baseline CI cover ($200K) for life would probably be $180/mth, and a good term plan to cover $1 million death/TPD would be maybe $44/mth. This does stretch you close to the 10% limit but there will be a higher death/TPD cover as well as lifetime of CI cover build into your coverage. The concern I have with a term plan for CI is that when the plan ends, what cover do you have in your old age? You will be forced to liquidate assets if something unforseen happens, which will greatly impact your retirement.

Multipay is probably most cost effective when you get it till age 65-75, as I find it tends to be prohibitively expensive if the duration is too long. I view multipay as an add on to your baseline CI cover, which most of the time, would come from a limited pay life plan if budget allows.

In summary, you'd probably want to see if you can up your death/TPD coverage, and after that work on getting whole of life CI cover. If budget still allows after that, a multipay would help, but is not mandatory. Remember, if you lock in your premiums now, they will be a smaller percent of your take home pay as your salary increases over the years, so don't feel too worried about the 10%. I was at 11%-12% of my take home pay for my insurance costs when I started work and over the years it has dropped drastically. Good luck!