What insurance should I own as a 24 yo male?

Hi there,

As a single male, your most important Insurance for now will be hospitalisation and Critical Illness (CI) coverage. Hospitalisation plans are the most fundamental insurance and they cover for hospital admission and surgical costs which are usually quite hefty. Your hospital plan is payable by Medisave while the rider (which pays for deductibles and co-insurance costs) is payable by cash.

If you are looking for CI insurance, you can either opt for a standalone multi-pay CI plan or a whole life plan. There are CI plans that cover for pre-early benefits and even comes with a rider that waives off your premiums in the event of a CI, regardless of stage eg. AIA Power Critical Cover.

For whole life plans, it offers a 3-in-1 solution to cover for death, TPD and CI. For whole life plans. there are a few variables you can tweak depending on your needs namely:

1) Multiplier

2) Premium payment term

You can choose the multiplier, which boosts your coverage during your essential working years. Eg. If your base coverage is 100k and multiplier is 5x, your boosted coverage is 500k. The difference in multiplier isn't just coverage. Your whole life plan comes with a cash value accumulation since your premiums are invested into the insurer Participating fund. If you opt for a lower multiplier, more premiums are invested hence your projected cash value will be higher. The converse is also true.

The premium payment term normally comes in different options eg. 10 years, 20 years or until a certain age (usually multiplier cut off age). The shorter the premium payment term, the pricier it is since payment is condensed. Of course effectively, you pay lesser but not everyone may have the Budget so it depends on how much cash outlay you are thinking.

Just as a rule of thumb, this is what you can aim for in terms of coverage:

1) Death: 10x annual income

2) CI: 5x annual income

The idea behind it is to cover for lost income in the event of CI and also leave behind something as a love gift/hedge against liabilities in the unfortunate event of death.

The discussion between term VS whole life plans largely depends on your preference. For some people, whole life plans might be pricier but they do offer limited premium payment terms so you aren't paying your whole life/term period. So if you have a large cash outlay and may not be looking at big ticketed items in the near future, whole life plans do work.

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Healthcare

As a start, the first priority should always be healthcare. The reason is simple - medical inflation hits 10% in 2019. Consequently, a single medical treatment could potentially wipe out all your savings. Therefore, it is always good to know the healthcare insurance policies available in the market and to evaluate whether you should enhance your coverage.

More Details:

Is MediShield Life enough in Singapore?

Integrated Shield Plan Singapore: A Starter's Guide

Life Insurance

After we have set up the basic foundation, the next step will be your life coverage. This is because you are the biggest asset that you own. Therefore, greater emphasis should be placed on protecting your wealth (before we grow it further).

Generally, most insurance policies in Singapore will cover for pre-mature Death, and Total & Permanent Disability. While optional, one of the crucial coverage to have will be (early) Critical Illness.

There are many options available in the market, thus take your time to learn more about it. Alternatively, speak with your insurance agent or choose an experienced consultant who is capable of guiding you through the process.

More Details:

What is a Term Insurance Policy?

What is a Participating Whole Life Insurance Policy?

Term vs Whole Life Insurance Singapore

How much insurance coverage should You have?

As a general rule,

10% to 20% of your annual income on healthcare insurance and life insurance

Basic Life Cover = 10 times your annual income

Critical Illness Coverage = 5 times your annual income

More Details:

Understanding Your Personal Cash Flow

Having mentioned that, this is a general guideline that may or may not work for you. The best way is always to have an in-depth understanding on your cashflow, current situation and future goals. It is only when we know you well enough, then it is appropriate to give you the best advice or suggestion that fits into your needs.

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