facebookHow much should insurance premium should I be paying yearly? For Term, WL and ILP respectively. 23F, fresh grad with salary ~3.5k. No family history of major illnesses or liabilities - Seedly

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Anonymous

30 Sep 2021

Insurance

How much should insurance premium should I be paying yearly? For Term, WL and ILP respectively. 23F, fresh grad with salary ~3.5k. No family history of major illnesses or liabilities

Have been quoted ~2.4K yearly premium for either of the three types of plans… I find it too high but I’m not sure what’s the “market rate”

The PA plan quoted is ~$20 per month, which I find kinda expensive too…

Discussion (3)

What are your thoughts?

Elijah Lee

Elijah Lee

05 Oct 2021

Level 18·Independent Financial Advisor at Phillip Securities (Jurong East)

Hi anon,

In total, you shouldn't be spending more than 10% of your income on your coverage. Most fresh grads are probably in the range of 6% to 8%.

Instead of asking how much you should be paying, look at what coverage you need first.

Term - This is best used to cover liabilities/dependents. (Think children, parents who need your support, mortgages, etc) Do you have these? If so, get a term plan, and one that lasts till you till these liabilities are no longer around (think children growing up, parents passing on, a house being paid up). This will probably be 1% - 1.5% of your income should you require it.

WL - Best combined with a multiplier and with CI coverage added. Even then, given the details you have provided, a good WL plan should be around 5-6% of your income (or about $200/mth) and will provide you with $200K CI coverage for the bulk of your career, leaving some CI cover for your retirement.

ILP - Why? Just...why?

PA - You should be able to get a no frills plan for <$200/yr

If you're healthy, the best thing you can do now is to lock your insurability in. Don't forget your hospitalization plan as well.

Do compare across multiple insurers for quotations; an independent financial advisor will be able to help with that. Find an advisor that you are comfortable working with, as he/she will be instrumental in getting your coverage done up right, now and years to come.

I'll refer to my annual income as AI

Death/TPD Term Plan by Prudential: Covers 500,000 up to age 65.

Multi-CI Term Plan by Aviva: Covers 2x AI for ECI and 5x AI for CI up to age 65

Hospitalisation Plan by AIA: A-ward and below with rider

PA Plan by Prudential: ~$22

My current plan only takes up ~5% of my take-home income. It's not the most optimised yet but I think it suffices for now.

Based on what you said, it seems like you don't have a CI plan or hospitalisation plan. Your Term and WL plans may also have some overlaps. Hence, while you may only be paying ~5% of your monthly salary, you may not be sufficiently covered.

As for the ILP plan, you'll probably be better off with a roboadvisor for the lower fees and the less rigid withdrawal structure. If you haven't, do consider going to MoneyOwl for their recommendations as well. They are less incentivised to sell you products since the agents are paid a salary.

https://www.moneyowl.com.sg/insurance/

Would b good if you could include what you'll b covered for the 2.4k you've been quoted. So others m...

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