facebookHi, could you give me feedback and criticism on my current insurance plans. Am I spending too much or too little on these plans? Are my plans too expensive? - Seedly

Anonymous

05 May 2020

Insurance

Hi, could you give me feedback and criticism on my current insurance plans. Am I spending too much or too little on these plans? Are my plans too expensive?

23/M/non-smoker/fresh grad with annual income 42k after CPF

1) Life insurance + CI rider: Manulife LifeReady Plus 25
Premium: 1.73k/year for 25 years.
Coverage 300k life & 150k early CI up till 70year then 60k life, 30k CI up till 100.
2) Early CI: AIA Power Critical
Premium: 1.63k/year until I'm 75
100k CI coverage with up to 5 claims +/- up till 75.
3) Hospitalization: AIA HealthShield Gold Max Ar
$400/year

Total: 3760/year ~ 9% of annual income.
Will get accident later on when income rise

Discussion (1)

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Pang Zhe Liang

05 May 2020

Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)

Insuance Portfolio Summary

Firstly, one of the most important things to do is to have a complete understanding of your existing insurance portfolio. Through this process, it allows us to understand the coverage that we have, any financial gap, as well as to find out whether we are overpaying for our insurance policies.

Key Reasons Why:

Why Every Client needs an Insurance Policy Summary

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 = $420k

Critical Illness Coverage = 5 times your annual income = $210k

Possible things to look into

Firstly, I noticed that the majority of your critical illness coverage drops after age 70. In fact, you will only be left with $30k coverage. In effect, this may be a point that you wish to look into. While getting yourself properly insured is important during your income working years, don't forget about it when you are likely to need it the most.

Secondly, for life insurance coverage, we will need to know more about your background in order to plan and determine how much coverage you will need.

More Details:

5 Reasons why You need Life Insurance

By planning early, we avoid paying a higher premium in the future. However, we also need to take into account opportunity cost. Hence, we need to conduct comprehensive financial planning in order to make the optimal adjustment.

Thirdly, for your integrated shield plan, may I check and confirm whether you have the rider? This is important to cover the cost of deductible and co-insurance.

As for personal accident, I believe you do not need to wait for income to rise. Instead, it is more about understanding the need for it, or whether it is unnecessary.

Overall, your situation looks fine on the surface. In order to give you specific advice, we will need to understand you. Thereafter, we can brainstorm together on how to plan for your future such that you will become confident about it in the long-term.

I share quality content on estate planning and financial planning here.

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