Single income family with 2 kids. Is my insurance adequate?

I try not to overspend on insurance due to high family expenses. I base the sum assured on what expenses rather than annual income.

400k term life
150k CI
4500/month for DI
H&S for all members

I spend 5% of annual income on insurance for whole family.

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Pang Zhe Liang

29 Dec 2019

Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)

Firstly, ensure that your family is comprehensively insured for healthcare. In most cases, this includes a private integrated shield plan with rider. Hence, ensure that H&S is comprehensive in this area. Additionally, you may wish to evaluate whether to include coverage for private hospital: https://www.blog.pzl.sg/private-vs-public-healt...

Next, we will go back to the basics by having a complete understanding on our cashflow. Through this process, we will understand our earning ability and spending habit. Here is a guide to help you: https://www.blog.pzl.sg/understanding-your-pers...

Once this is completed, calculate the following:

2 Kids' expenses from now till they complete tertiary education
2 Kids' education fund
Household expenses from now till end of life (Singapore's life expectancy is around 86.1)
Other expenses, e.g. vacations, entertainment
Liabilities, e.g. loans, mortgage

Thereafter, multiply by a comfortable delta to create a sensible buffer. This will form your basic life cover.

For critical illness, you may wish to consider coverage for early stage conditions. Additionally, the key question will be: how long can you last with $150k? This money will be used for all the expenses in the household, including alternative treatment which may not be covered by your healthcare insurance.

On the whole, you may wish to conduct a comprehensive analysis on your portfolio. Accordingly, the best way to do this is via a comprehensive insurance portfolio summary. Through this process, it allows us to understand the coverage that we have, any financial gap, as well as to find out whether we are overpaying for our insurance policies. I have highlighted the rest of the reasons here: https://www.blog.pzl.sg/why-every-client-needs-...

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Tan Li Xing

28 Dec 2019

Financial Consultant at Prudential Assurance Company (Singapore)

Hi Anon,

Just out of curiousity, how long is your term life? As based on you coming from a single income family, am just concerned if it covers till retirement?

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