07 Sep 2019
I'm in my early 20s, currently looking to purchase CI coverage and I'm not sure if I should purchase early CI, given the high costs?
An agent gave me two options - whole life with early CI rider or early CI term with multiple payouts. However, both are still quite expensive. What's a normal rate for early CI and which would you get? Are there affordable early CI out there with single payout? Should I wait till I'm older to buy it? Is it worth getting early CI at all?
Thanks a lot!
The rule of thumb on how much CI coverage to get is 5 X your annual income.
Even if you get that covered for Whole Of Life, you should only be spending about 6-7.5% of your annual income because you're still so young.
Note that ECI has a max payout of 250k per claim, so I'll get the first 250k covered as ECI and if I'm getting more after that, I'll get regular CI cover.
So if I make 60k/yr for example. I'll get 250k ECI and 50k CI covered for the whole of life. The premium on the policy would only be about 4k/yr payable for 25 years giving me coverage for life.
ECI is becoming increasingly important because due to the advancement of medical technology, we're able to detect and ultimately treat illnesses earlier.
The worst thing would be to know you have a medical issue that insurance would cover but you can't get your payout yet because it's not at a severe enough stage.
Get ECI cover because medicine will just keep improving over the next few decades.
Probably the lowest cost way for you is through MINDEF group insurance underwritten by AVIVA. For 21-25-year-olds, get up to $350k of CI (Living Care) protection for $10 a month, and up to $300k of early CI (Living Care Plus) for $7 a month. But it's advisable to make sure your basic insurance needs have also been adequately covered without stressing your wallet. For example, you can get $1 million term life and personal accident coverage for only $312 a year (= $26 a month). Read more at https://thelobang.com/index.php/2019/08/27/insurance-basics/
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