How many percent of your income should be allocated to insurance? Currently have around 15% per month to insurance with take home pay of $2800. Coverage : Term life, CI, hospital plan and accident.

15% of $2,800 is $420 per month.

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How much are you covered for each component? It seems quite excessive considering you're covering it with insurance policies without any cash/ investment value.

Hi anon,

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15% is high. I'd try to ensure it doesn't cross 10%. That's my guideline. Most people will acheive it with lesser than 10%.

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CI will probably the most expensive component of your coverage.

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Base your coverage requirements around your needs. You will need around $200K CI cover, and at least $500K Death/TPD cover. That shouldn't set you back by much.

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As you progress through life, keep in mind that your salary will increase, so that percentage will drop. Don't be too worried if it's closer to 10% at this point. You sound like you have just started working. Your salary increases over time. Premiums typically don't. (Except for hospitalization)

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But when you move into new life stages like getting married or starting a family, your needs will increase again. But if you are getting married or starting a family, you would probably have had an increased salary compared to your current position, so you would be able to afford to get more coverage anyway. The only worry, as I always say, is your health. You have to be healthy to buy insurance.

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