Do you need critical illness cover after retirement until death? I'm in my late 20s, F, no dependents & unsure if I want kids. Considering CI & ECI, what would be the pros and cons to my 2 options below? Are there any alternatives I should consider?

Hi anon,

After you retire, should CI strike, you will be faced with a number of costs that do not normally occur in daily life. For example, you might need to get mobility aids, hire a caregiver, etc, all of which might not be factored in on a day to day basis.

At this point in time, would you prefer to dig into your own resources, or have a pool of money to tap on? I would very much prefer the latter, rather than drawing down on my retirement fund.

Thus to me, a basic level of CI/ECI cover is important even in retirement. Therefore, one of the more cost effective methods of achieving it will be via a limited payment whole life plan, i.e. option 1. Multipay CI is a decent add on to a WL plan, but the WL plan is really your last line of defense as it will stay with you forever. Not that you can't get a Multipay plan till age 99, but at what cost, and what if you never make a claim on it? A multipay in my view helps to boost coverage during your working years, especially when one is young and healthy but with limited resources to fund the fight against CI.

For option 2, a term plan with a multipay rider is also another option to boost cover for CI/ECI, as long as you accept the fact that when the plan ends, coverage ends also. Thus my rationale for having a basic WL with CI or ECI as the last line of defense, and boosting your cover (should you need it) via a term, or a seperate multipay (after you have considered your budget and if you can afford it)

Lastly, it's great that you are doing ETFs on the side, but ETFs, being an investment are subject to market risk. Thus, if you consider Murphy's law, it is possible that in the midst of a market crash, your ETFs drop in value, and then it just happens to be also the time where a CI strikes. Will you want to sell your ETFs just to raise funds? Insurance as an asset class is a guarantee, so the payouts are independent of market conditions. This provides you a peace of mind. No ETF can guarantee you a payout of any form.

Hi there!

It is great that you are thinking about maximizing your dollar and doing careful planning with your budget.

The objective of CI and ECI after retirement is to ensure that you do not need to dip into your asset in the event that it occurs.

While your ETF strategy is fantastic, the return and volatility does not provide guaranteed capital flows. Which is why it is important to have CI and ECI policies in place as a safety net.

A few things which need to happen post retirement as a rule of thumb:

1. You should not be paying for premiums in CI/ECI. If possible, a limited payment term pre-retirement would be better to guarantee a cover without future premium committments during retirement.

2. You should still be covered for hospitalization insurance because this will defray a large portion of potential medical bills. This will be an ongoing expense, so I highly recommend thinking about a strategy for this, given the uncertainty we have today about rising premiums.

3. Lastly, I would not recommend that you put off your disability insurance. $100,000 is not enough for the average Singaporean. It is not a question about budget in most cases, but rather, whether clients can purchase insurance due to their health.

Disability insurance is cheaper when you're young, and very often, people overlook the importance of it.

As for budgeting, cap your insurance premiums for protection up to 5-10% of your income after CPF contribution.

Hope this helps!

Click here to find out more about me! ​​​