What consists of a good insurance portfolio?

Hi,

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There is no perfect insurance portfolio out there. There is only a suitable one. If you already have everything that you mentioned, then I would say you are well covered. Yes there can be stuff like early stage CI, multipay CI etc. However do note that the costs adds up. It is impossible to get coverage for everything.

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I would recommend that you set a budget (say 5-10% of salary) for insurance premiums. Then you work within your budget to come up with the most comprehensive insurance portfolio. If your budget constrains only allows for basic death, tpd and ci coverage, so be it. You can always increase coverage later on.

Hi Xin Ni,

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I'll try to answer this in general terms.

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You need to have the right coverage to address your risks, in the right amounts, for the right duration.

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So for most people that would mean CI and hospitalization at a minimum. People with dependents or liabilities would need Death/TPD coverage. You'll see 'rules of thumb' being discussed when it comes to the amount of coverage.

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For Death/TPD, you'll often hear 10 times annual income, or perhaps the amount of liabilities you have/the amount your dependents need. For CI, you might read about 5 times annual income. 10 times annual expenses, etc. These are just guidelines and to be honest, I don't think anyone will say that they bought too much insurance if a claim is paid out (just think for a moment, what it means to make a claim. Something's really gone wrong).

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What's more important is that the rationale of the amount of coverage must be justified. You may never be able to calculate down to the exact cent for the amount of CI coverage you need, but once you're close enough, it may be good enough. So if you figured you needed about, say $248K of CI cover, buying $250K isn't going to be overkill. Buying $500K might be. Make sure to run through the numbers for your own situation; the final result may not even be anywhere near the numbers that you would get from the 'rules of thumb'. Death/TPD cover is basically the same, but CI does throw up some interesting scenarios, since only late CI definitions are standardized, and early CI coverage differs tremendously from insurer to insurer. I haven't even started to talk about special condition coverage, or even multi pay plans. That's a whole topic on its own.

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For hospitalization, an integrated shield plan with a rider; the debate would be whether you want to have private hospital level of coverage, or are ok to stay with government level of coverage. Naturally pros and cons, with private generally having access to better and faster care, at the cost of paying higher premiums.

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Personal accident is important if you feel that you are at risk; some people might do more sports, or their work nature may mean they are prone to trips and falls. But some PA plans also cover infectious diseases; so they have certainly evolved with time. I do think that it is still something that I would tackle after sorting out D/TPD/CI and ISP.

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Lastly, Long Term Care remains very under mentioned, this is one of those things that most people can't really see happening to themselves. But if the government is making Careshield Life compulsory, then you can tell that they forsee a big risk in this area in future. I have an article on long term care here https://www.linkedin.com/pulse/what-you-need-know-new-careshield-life-elijah-lee/, although I don't know if you'll eligble for it at this point.

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You'll probably want to ensure that your coverage doesn't take up more than 10% of your salary. This is quite doable for most people unless they 1) started late 2) are smoking 3) have a pre-existing condition which increases their risk. Even then, people in all 3 categories mentioned above that I have worked with still acknowledge that this is something they will just have to bite the bullet and pay for even if the premiums are a bit higher. The alternative of living life on the edge without any insurance is not worth the risk to them and their families.