Asked by Anonymous

As a fresh grad, how much should I be paying for insurance? My FA from Great Eastern suggested 20 years life/critical illness policy costing $200 a month.

Just started my first job n get 3k after CPF, I have an existing hospitalisation plan for $200 per annum. Do you think that's a reasonable price to pay/mth? Coverage from now till 65 is 220k lump sum, after 65 years old is 55k + amount of money i put in till then. Are there other better plans? I have an autoimmune disease that affects my kidney as well.

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  • Loh Tat Tian
    Loh Tat Tian, Complex Manager at Ocean IFM Pte Ltd
    Level 6. Master
    Answered on 17 Sep 2018

    My advice is take your time to understand the different insurance and their functions.

    The two important insurance as a single are

    1) H&S: covers your hospitalisation.

    2) CI & TPD. Hence a protection plan of 5X your income ensures you meet your expenses, and also savings rate. Not too high (which makes you worth more dead than alive and also very high insurance cost), not too Low where the help could only tide you 2 years (CI recovery are typical 3-4, some even 5 years).

    TPD is tricky because the nursing charges are high especially at a young age, and slowly taper down as you age (assuming you,live till 85)

    3) Death cover is more for dependents

    4) PA is a cheaper alternative, but covers only accidents

    5) DI can be a substitute to CI, But is more worth it for high income professionals.

    when you say reasonable amount, that can only be answered by understanding what you require to protect with insurance.

    You can look at alternative type of BTIR. But do your due diligence to compare the following:

    Critical illness benefit to BTIR, understand pass 65, can your investment be more than or = CI payout benefit.

    your kidney condition could cause to have exclusion clause, and/or loading to the insurance. It may not be worth to even cover. But please do your due diligence.

    There are also some other factors, like your current pay and future pay, whether it's better to insure slightly higher (assuming salary will increase).

    This can only be answered by doing scenario planning. At 18, when getting married, how many kids, going to upgrade to condo? There are so many variables that is difficult to give a "best" solution.

    You can cover enough ground for most situation, but there is no best solution because best only apply to specific situations.

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  • Daniel Loke
    Daniel Loke
    Level 2. Rookie
    Answered on 17 Sep 2018

    There are certain rule of thumbs for the amount of coverage that you require. You may take your case on from there. But do note that these are general guidelines and not 100% applicable or apply to your case.

    Death coverage: 7-10 times your annual salary

    Critical illness coverage: 4- 5 times your annual salary.

    Hospital coverage: 100% coverage up till government hospital minimally.

    Look at what it cost to get the above and it should be roughly what u are looking to pay for your insurance.

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    • Daniel Loke
      Not sure which additional detail u were referring me to? There are some areas in the question that is pretty vague so I didn't want to assume things. For E.g 1, I can't tell for sure whether 200 /mth is a good price to pay since it really depends on what coverage he has. But my advice to that is for him to see if his hospitalisation plans matches what he need, which I have listed to be at least 100% of govt hospital charges. 2, if the coverage he later mentioned of 220k lump sum etc, I don't think that is hospitalisation plan at all, as hospitalisation plans aka shield plans, don't have savings element. I'm not sure what he meant by "after 65 years old, coverage is 55k + what he put in till then". Where did the putting in of money come from? Therefore with all this doubts, I preferred to give him the rule of thumb for him to calculate himself, rather than elongate the thread by asking further questions which might confuse him.
      17 Sep 2018
    • Leong Wen Fong
      ahh, I see! How about the autoimmune part! will that affect?
      17 Sep 2018
  • Colin Lim
    Colin Lim
    Level 3. Wonderkid
    Answered on 17 Sep 2018

    what is your occupation.. normally i see your occupation to see the prospect of higher incement in income. example, my client is a junior judge, future judge and thus i recomnend him a term as it covers much more as both of us understood that his income will jump exponentially. investment separately. for your case, GE agent propose a whole life.. maybe at that point of discussion with your agent, you prefer to see money when you buy coverage which i dunnoe. unless i know more details.. otherwise my solution is stated above.

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  • Gabriel Tham
    Gabriel Tham, Tag Team Member at Kenichi Tag Team
    Top Contributor

    Top Contributor (Apr)

    Level 8. Wizard
    Answered on 18 Sep 2018

    How much to pay is subjected to how much coverage you need and the type of insurance you want to have.

    As a rule of thumb, insurance should be affordable and you should never overpay insurance. It should not feel like you have to struggle to pay. Because if you lose your job and cannot pay then that will be a worse case.

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  • Yong Kah Hwee
    Yong Kah Hwee
    Level 6. Master
    Answered on 26 Sep 2018

    I don't think that there is an amount that you SHOULD be paying. Rather, you should ask what is the coverage you are comfortable with having :)

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  • Jin Shun Chia
    Jin Shun Chia, Senior Financial Consultant at Prudential
    Level 4. Prodigy
    Answered on 18 Sep 2018

    Hello, I would suggest taking a holistic approach to this. Here's a quick checklist to size up your needs:

    1) does your hospitalisation coverage covers everything? is it 100% coverage rider and does it cover hospitalisation condition due to your autoimmune disease?

    2) is the policy meant to cover critical illnesses (i.e. to help in your expenses during times of illnesses) or to leave money behind for your family in times of need? This would help you size up how much is enough.

    3) what's your current monthly income-expense pattern? $200/month is reasonable and for a payment only 20years you're covered for whole life, i.e. you don't need to worry about the premiums after your mid 40s. For some of my clients even when they take home more than $4k they also can't afford $200/month premiums (due to family commitment and bills); other clients can afford $300/month even though they earn less than $2.5k monthly - so know your budget and what you can afford

    Hope this helps!

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  • Tan Siak Lim
    Tan Siak Lim, CFP. Director, Financial Advisory Group at Financial Alliance
    Level 3. Wonderkid
    Answered on 18 Sep 2018

    $200/month is a reasonable budget for a person of your age. However, your GE FA agent only sells GE products. There are many other insurers that you should compare before you commit to lock up this large sum of money ($2001220=$48,000). Look for an Independent adviser and he/she will help you make the comparison. If you don't know where to find, go to the largest IFA in Singapore, Financial Alliance. www.fa.com.sg

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  • Nicholas Chan
    Nicholas Chan
    Level 5. Genius
    Answered on 18 Sep 2018

    If u don't have dependents, u don't need high coverage. Just need medical insurance & some disability insurance.

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  • Jonathan Chia Guangrong
    Jonathan Chia Guangrong, Fund Manager at JCG Fund
    Level 6. Master
    Answered on 18 Sep 2018

    The price you are paying sounds reasonable enough. Just to check, were the terms offered by GE substandard i.e with loading and/or exclusions? Autoimmune disease is something that insurers will take into consideration and may likely apply a loading factor. So if you were to obtain quotes from different insurers, it is likely that the same terms will be offered. Unless the insurer will waive for business consideration..

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  • Kenichi Xi
    Kenichi Xi, nᴉʍ oʇ dǝnᴉʇsǝd 不能说的秘密 at Tag Team with Gabriel Tham
    Level 6. Master
    Answered on 17 Sep 2018

    Due to your condition, there are really no str forward answer.

    There is a need to get under writer to assess your situation to get any protection if any which is quite unlikely for ur situation.

    Your premium will also be loaded due to the declared condition.

    The next best thing to do is to engage in a healthy lifestyle and get term protection for ur dependents.

    Hope this helps.

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  • Jason Sin
    Jason Sin
    Level 5. Genius
    Answered on 17 Sep 2018

    My humble opinion is you should have sufficient coverage for death, total permanent disability, critical illness (early, intermediate and late). You also need medical coverage such as integrated shield. How much coverage is dependent on how much you could afford.

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  • Alan Kor
    Alan Kor
    Level 4. Prodigy
    Answered on 17 Sep 2018

    1) existing hospitalisation plan for $200 per annum. Do you think that's a reasonable price to pay/mth?

    it depends on whether you are comfortable with pte or public hosp. there are also riders involved with isp. do read up and uds more:

    https://www.moh.gov.sg/medishield-life/about-integrated-shield-plans

    https://blog.seedly.sg/singaporean-integrated-shield-plan-comparison/

    2) My FA from Great Eastern suggested 20 years life/critical illness policy costing $200 a month. Coverage from now till 65 is 220k lump sum, after 65 years old is 55k + amount of money i put in till then. Are there other better plans? I have an autoimmune disease that affects my kidney as well.

    Uds what is the purpose of insurance.

    do you have any dependents?

    was this plan bought before your autoimmune disease?

    is the 220k coverage sufficient for ur dependents?

    do you want to mix insurance with investment?

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  • Luke Ho
    Luke Ho, Venture Capitalist at CFX
    Level 6. Master
    Answered on 17 Sep 2018

    Hi, it sounds like a whole life plan with a 4Xmultiplier. Its relatively cheap for the price of a whole life plan and within a rule of thumb budget, Im just not sure if its your best needs.

    Based on what youve said, what Id like to know is whether you declared about your kidney and whether Great Eastern cleared it or will clear it. I could very likely get you a more affordable or higher coverage for the same price as an FA with multiple selections to choose from (not to mention for specific need addressing. For example, why 220K? I suppose with inflation its okay, but...) but if GE has cleared you without loading, its typically better not to risk these things.

    If your hospital.plan at your age is only $200, you might not have the best hospitalization package as well. Do consider getting a second opinion if you dont think youre comfortable with the potential purchase.

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  • Brandan Chen
    Brandan Chen, Financial Planner at Manulife Singapore
    Level 5. Genius
    Answered on 26 Sep 2018

    There are definitely better plans out there, but the most important thing is the advice provided by your FA.

    $200 per month is deemed reasonable but I doubt that you had submitted your application yet. Given your condition, there is a chance that it may be excluded or loaded with extra premiums.

    As for your hospitalisation plan, it is likely that you are covered for Class A ward or below. You may want to considering upgrading it. Aviva is the only insurer offering moratorium underwriting but it also depends on the extent of your condition at the moment.

    Having said the above, no matter which insurer u decide to go with, do declare truthfully. And try to get your coverage soon.

    You may always drop me a PM at www.facebook.com/brandan.chen should u like to find out more

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