AMA Christopher Tan
Asked on 21 Jan 2019
Just graduated working in the engineering field in SG now, still paying down my University student CPF debt
Hi Anonymous, thanks for asking the question., And well done for paying down your student debt. I have high respect for people who pay for their own education fees.
With regard to your question, many of the participants here have jumped in to give you their answers. I will say that I generally agree with them. So just to summarize it for you and to share my thoughts on this:
The first policy you MUST buy is a hospitalization plan. All of us are current covered with MediShield Life. MediShield Life is meant for big bills incurred in public hospital’s B2/C ward. It has an annual claim limit of $100K and also not every expenses incurred is fully claimable. There is also no claim for pre and post hospitalization charges. You also cannot buy riders to lower the payable amount due to deductible and co-payments. In short, the claim amount is much lower than an IP plan. If you can accept that, there is no need to upgrade to an IP.
If you want to have the option to pay for alternative treatment in the event you suffer a dread dread disease that cannot be paid by hospitalization plans, consider buying a critical illness plan. A coverage of $50K-$100K should suffice.
If you have no dependents, the above should suffice. There is no need to really buy other insurance. However, if you have dependents that will suffer financially upon your unfortunate demise, you can consider buying the MHA/Mindef Group Term Plan. It is probably the cheapest insurance in Singapore.
The above 3 plans should suffice for now. Treat insurance as an expense. Buy as much as you need but pay as little as you can,.
As a fresh grad, focus on the most important insurance first
(1) Hospitalisation insurance. Its cheap, and most likely the possible wealth killer if you ever got into accident or fall very sick.
(2) A Whole Life insurance with Critical illness cover (Early CI) (please check the conditions covered). (its expensive so you may wish to skip this though its value for money).
(3) Term insurance for the rest for the coverage gap needed. You still have time to think through until you reach 30, but please do some scenario planning. (out of job, going to married, housing, baby?). these milestone will change the coverage you need. I opted for max coverage first. (Aviva Mindef Insurance and other Group insurance comes to mind to cover till 65) possible to afford as the max insurance cost is about 1k per annum
(4) Disability insurance. Something which is good to have imo unless you are earning at least $6,000.00 per month (which may make sense to insure since no job can pay you $6k easily, if you got involved in accident etc). But i personally think you cannot afford it based on your budget.
(5) Accident policy. Good to have to top it up in case your TPD is a result from the accident.
You need hospitalisation insurance the most. The rest needs further anaylsis before it is a want or a need.
While what plan is the most suitable for you would depend on a more specific profile and needs, i would say getting a saving plans first may be the first step to go! Assuming you are a local singaporean, you would already have medisave to help cover basic medical bills, and it would seem that paying off your debts fully is currently of a higher priority! FYI, savings plans from insurance companies usually provide a better savings returns in comparison to banks, so i would recommend comparing around with various companies before coming to a decision. Also, i've yet to hear of any company which would actually ask you to pay for advice on policies, so why not reach out to some agents? Of course, all this is based on the assumption that you are a local singaporean fresh grad where you are not the only source of income in your family. Like i said, depending on the specific situation, the advice would change.
Since you are still paying down debt, you should first and foremost get a hospitalisation plan. If you are concerned that your income might be affected due to disability, get a disability income insurance.
For term life, whole life, you can wait till you have paid off your debt unless you have dependents (your parents, wife or child) that are highly reliant on your income.
$1k is sufficient.
Hospitalisation insurance is a must. Most probably your parents could hv gotten for u already. Take over the ownership of the policy, it can be paid using your own medisave. You can decide to add a rider to it.
Next is get a term life with critical illness. Go for direct insurance:
For a 25yrs male, $400k term life with critical illness only cost about $650/yr, coverage till age65.
Only beyond that, u can consider other type of insurance: eg personal accident. Mindef group personal accident cost only $12/yr per $100k sum assured. This will cover for Death, TPD and Dismemberment due to accident.
Do add me on facebook if u wish to discuss further details with me.
Life insurance (if you have dependants like your parents)
Critical illness insurance/disability insurance
Endowment/ILP (not recommended because i think learn and invest yourself is much better than paying others to do it and still have to pay a hefty fees. )
As a fresh graduate, I would advise that you should go for protection first in the order of Health insurance, Critical Illness followed by Accident. Of course this depends on your needs and your profile as some graduates go for Investment Linked Products (ILP) which has a mixture of protection and investments at the same time. If you have any questions or would like to obtain more information, feel free to contact me at [email protected]