Which life insurance should I buy as a young working adult?

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?

Is Integrated Shield Plan necessary in Singapore?

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

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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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Hi Anon,

The first insurance to get would be health/ hospitalisation insurance, as healthcare in Singapore will only increase in the future. So getting this is definitely the right choice.

Next you should look at getting a personal accident insurance, as they are usually affordable and provides you coverages for anything related to accidents. Accident & Hospitalisation insurances are usually on a reimbursement basis, meaning you would need to pay first before the insurer pays you back. The only difference is that a personal accident insurance has death, total permanent disability and partial disability related to accidents.

Once you have those, then you should get a whole life policy for critical illness, which Hariz has also mentioned, as critical illness can occur within our life time, so being covered for critical illness for the whole of life makes sense. For term, it's most ideal to provide coverage for us during our working years, as term gives us the biggest coverage at the most affordable rate. Usually most people would have both kinds of policy to provide the most complete coverage.

The guideline on how much coverage is as follows;

10x of your annual income for Death & Total Permanent Disability

5 - 7x of your annual income for Critical Illness

2 - 3x of your annual income for Early Critical Illness

For your case as your are a student at your age, you could look into getting a short term term policy coverage of maybe 10 years first, then you can get a whole life policy once you have gotten a job.

If you have more questions, just reach out :)