Asked on 07 Jul 2018
Hello! Thanks for asking this question :)
I think there is no one clear formula to decide this. But I will give it my best shot.
If you understand the concept of insurance, it is essentially to allow you to get insured a sum of $X for in the event you die (for life insurance) or when you fall sick and have to be hospitalised (for H&S health insurance)
Age group is almost irrelevant. Let me explain why...
A 35 year old Single man (called John) who sits at home and plays games all day has a very different liability profile compared to a 35 year old married man with a spouse and 2 kids (called Ken).
The first man - John
Has almost zero liabilities
Nobody will miss him financially if he dies
His parents are all in retirement mode surviving on the CPF LIFE scheme
Does not have a home and does not plan to get a house as well
Does not intend to get married
The second man - Ken
Has multiple liabilites (both financially current, and in the future)
Current liabilities include - car loan, home loan, current earning potential (eg $100k a year income)
Future liabilities include - students education, family expenses
As you can see, if Ken dies (touch wood) there will be many people who will miss him financially and it will be extremely painful
Ken easily needs protection for life insurance in the range of $1M or more, if you start to sum up all his liabilites up to age 65 and beyond
From the above examples, it is extremely evident that, insurance is really the combination of these 3 factors:
For the right reasons
At the lowest costs
You should figure out 1 and 2 first, before optimising around the lowest costs. Hope this helps you understand better!
If you have any questions, feel free to just leave your questions in the comment section below. Will try my best to help you as well! I have nothing to sell, only knowledge. So don't worry!
The amount of coverage depends on a lot of factors, whether you are single or married, whether it is for income replacement or leaving a legacy, whether you are buying a term or whole life policy or simply whether you could afford. How much one should spend on insurance really depends on what you need at certain stage of your life. There is no clear cut answers.
Usually 10% is consider a reasonable guide to Budget your insurance premium. Like what Kenneth say, it also depend on your liabilities, if you do have Lot of liabilities, you will need to increase the %, usually Insurance Agent will do cashflow exercise with you to find the affordable budget. And for single man(John), he must also get his minimum coverage such as h&s and also term plan. In the event, sickness happen to him, all the problem will not go to him, but to his parent who suppose to retire.