Term Life Insurance
Asked on 12 Jun 2020
In order of importance, here is what you should be looking at:
Hospitalization plan. This covers any hospital bills and associated pre/post hospitalization costs. This would be from an integrated shield plan, with a rider to take care of the deductible/co-insurance. Depending on your budget, you can take a private hospital plan and downgrade later, or just go for Goverment A ward.
Critical Illness coverage. This provides a sum of money for you to cover your expenses and other out of pocket costs should you fall critically ill and are not able to work. Usually recommended to cover at least 5 years of expenses and an additional sum to cover out of pocket. This is usually via a limited payment life plan, or a term plan, depending on your budget/needs
Death coverage. This provides a lump sum of money should something happen to you. Not mandatory if you have no dependents or liabilities. Usually takes the form of a term plan. For the coverage amount, you could use a multiple such as 10 x of your current income, or calculate based on your current liabilities.
Personal Accident. For the minor stuff like TCM claims, etc.
Generally, you should not have to spend more than 10% of your income on coverage.
You can work with an independent financial advisor who can provide multiple options and explain in detail what you will need to know about the types of insurance as well as the options from various insurers before you come to a decision, especially with respect to cost effectiveness as well as the minor differences between the plans.
You will want to be comfortable to share your fiinancial details with your advisor as that will be important for the advisor to consider your current situation before suggesting suitable solutions.
You need to know the systems of the agent eg. how will he review your portfolio, how will he update you etc. Ask the technical questions, ask for a cross comparison and be real about it. The failure to discern a good agent normally lies in the failure to ask good questions on how the agent functions. This is especially important if you are getting an ILP. If the agent has a social media account, feel free to check on what is the sort of content they have, are they active, testimonials etc.
The comments below are helpful in letting you know what are the type of insurance to get.
Financial planning is an integral part of life. You can reach me here to find out more.
As a start, the first priority should always be healthcare. The reason is simple - medical inflation hits 10% in 2019. Consequently, a single medical treatment could potentially wipe out all your savings. Therefore, it is always good to know the healthcare insurance policies available in the market and to evaluate whether you should enhance your coverage.
After we have set up the basic foundation, the next step will be your life coverage. This is because you are the biggest asset that you own. Therefore, greater emphasis should be placed on protecting your wealth (before we grow it further).
Generally, most insurance policies in Singapore will cover for pre-mature Death, and Total & Permanent Disability. While optional, one of the crucial coverage to have will be (early) Critical Illness.
There are many options available in the market, thus take your time to learn more about it. Alternatively, speak with your insurance agent or choose an experienced consultant who is capable of guiding you through the process.
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
Critical Illness Coverage = 5 times your annual income
Having mentioned that, this is a general guideline that may or may not work for you. The best way is always to have an in-depth understanding on your cashflow, current situation and future goals. It is only when we know you well enough, then it is appropriate to give you the best advice or suggestion that fits into your needs.
Finally, work with an experienced consultant who you trust and is able to guide you through the financial planning process in a responsible manner.
I share quality content on estate planning and financial planning here.
You can calculate your base requirements here, along with a budget based off your income:
Use them as guidelines. As for choosing a rep, the difference in premiums across all insurers are marginal due to competition, especially so if you want customized structured insurance. Go with a person you are comfortable to work with in the long term. The key is to get covered within your budget and affordability.
Hi Anon, I would say try and work with someone you trust or are recommended to. But if you have no one in mind, there are plenty of advisors on the seedly platform that provide quality answers to questions like yours.
For fresh grads, all you need to consider is income protection in the event of Illness, death coverage should you have financial dependents or liabilities, and a hospitalization plan with rider.
As an Independent Financial Advisor Rep, I can help you compare across insurers but if you're working with a tied advisor (can only distribute one insurer), then you can go along with just one insurer's suite of products.
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