How much should I spend on insurance? - Seedly


Asked by Anonymous

Asked on 29 Apr 2019

How much should I spend on insurance?

How much on average of annual income should be spent on insurance?


Answers (3)

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It's not about how much is your premium. Look at coverage instead.

The rule of thumb is:

10 X Annual Income as coverage in the event of Death

5X Annual Income as coverage in the event of Critical Illness.

Integrated Shield Plan with Rider

If you follow these, your premiums would be about 7-12% of your income.


Question Poster

29 Apr 2019

Hariz – Very good advice. Thanks mate!
Hariz Arthur Maloy
Hariz Arthur Maloy

29 Apr 2019

A pleasure. It's part of the job. :)
Eric Chia
Eric Chia, Senior Financial Consultant at Prudential
Level 6. Master
Answered on 13 Jun 2019

Hi Anon, agreed with Hariz on looking at the coverage you need instead of the premiums.

But be mindful rules of thumb are just rules of thumb! Apply the rules wisely!

Look into your current life situation, and what you can expect 10 to 20 years down the road. List down any certainties and uncertainties and think about what you like to have in your old age, or if you suddenly pass on.



It really depends on what kind of coverage you are looking at. Normally I would recommend 10-20 percent of your annual income for insurance protection plans. Anything more than 20 percent need to be considered very carefully. Either your policy is too expensive or you are getting something that you don't necessarily need.

There are also savings/investment plans. Though they are also provided by insurance companies, they are more for wealth accumulation than protection purpose, so I won't include them in the 10-20 percent limit. How much to put into these kinds of plans depends on how suitable these plans are for you and how liquid you want your asset to be.