Asked on 29 Oct 2020
You do have alot of things going on with regards to your own portfolio.
The general guidelines are,
30% Savings (Split into Liquidity, Long-Term and Investments)
These are just guidelines, 20% for insurance (protection policies), is usually avoidable through early insurance planning. The excess then overflows to the savings component.
You should categorise your portfolio into;
Protection Policies / Annual Income
Long Term Savings / Annual Income (Retirement and Endowment)
This way the percentages become more accurate for yourself.
If 25% of your income, is paid to insurance premiums which covers the difference aspects of your portfolio, based on the guidelines which i mentioned above, its actually within the healthy boundary.
Hope i was able to shed some insight!
Generally you shouldn't be spending >10% of salary to pay for insurance protection (shield, PA, Life CI, term death/TPD), unless you were faced with loading or bought the policies at a later age (like me haha).
I would park savings(endowment) as a separate component of my salary, together with my investments (after setting aside my emergency funds). This for me is already about 35% (10% + 25%) as I personally feel I start late and my husband to be keeps delaying his investments so I hope that these together will be able to support him a little bit should he one day run out of his savings later on in life.
Actually my endowment and investments are considered my retirement plans as my endowment lasts to till age 100, with option to put my future kid to get the payout upon maturity, assuming my investments can last me from retirement till death. If not I will happily withdraw from my endowment haha.
Actually I'm curious what your retirement planning is hmm.. If it's through ILP, better to reduce coverage to 0 and just pump all money to investments if you do not want to terminate due to loss incurred.
Anyway yup as you can see, mine is about 20~25% for my insurance protection + savings. It's a bit heavy but I don't want to say bye bye to my endowment =x Unless you have a breakdown of your policies, others may not be able to help you access if you have sufficient/overlapping coverage and if you're dedicating too much such that you end up investing less.
Rule of thumb from what I've seen :
10x Annual Income for death / TPD
5x Annual Income for CI with/without 2-3x Annual Income for ECI
Or, minimally $350k since LIA states ~$31x000 may be required for full treatment of CI
Or you could always try to reach out to any advisors on seedly to do a financial review. It sure will help you in your perspective taking to help you evaluate your plans better :)
Oh wow, 11 policies do sound like quite a bit. Given that you've included retirement planning and savings, I still hope you're doing a review to see whether you're overinsured!
I've heard that a general rule of thumb is to spend about 6-15% for insurance coverage.
I personally think 25% does seem like a stretch as we might also have to take into consideration situations where we might touch wood lose our jobs, etc. Please do check in with a trusted advisor to see whether this arrangement would be sustainable for you. :-)