Asked on 17 Sep 2018
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.
Loh Tat Tian, Complex Manager at Ocean Ifm Pte Ltd
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.
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.
1 more comments
17 Sep 2018
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.
what is your occupation.. normally i see your occupation to see the prospect of higher incement in i...
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