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Anonymous

28 May 2020

∙

How much of critical illness coverage to have? Should the 5x of annual income be based on current income or projected future income?

I’m doing a review of my current plans and thinking if I should upsize my coverage. I’m a 33 year old female with two children (2 and 0). Hesitating to increase my ci coverage because it will cost a lot now. I had a 10-year term (with ci) previously which will end next year hence I’m considering whether to remove the ci portion and just get the death/tpd coverage or include the ci portion again until age 65. Any comments please? Thanks!

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Hariz Arthur Maloy

28 May 2020

Independent Financial Advisor at Promiseland Independent

Hi Anon, as with all personal insurance related recommendations, it's always best to speak to an advisor you trust that hopefully has worked with you before as you currently have some insurance coverage.

The 5 X Annual Income rule of thumb is based on today's annual income. You can decide to pre-pone getting a higher coverage in anticipation of future income but you'll be paying for more as well before you can afford it.

This is why reviewing yearly or every few years at least is important. Only when you actually make more in the future, should you decide to increase your coverage.

Also on your note that increasing CI coverage is more costly now, well to be honest its the cheapest it'll be because it can only get more expensive as you age.

So make sure you get the right size and compare across options.

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