Personal Finance 101
Asked 6d ago
Congrats on graduating and stepping into the work force!
For a young graduate like youtself, 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 and limit your out of pocket expenses. 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 lump 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. Nowadays there are multi-pay plans as well, but take note that their total cost can be highif your coverage duration is very long
Death/TPD coverage. This provides a lump sum of money should something happen to you and you pass on or are permanently incapacitated and unable to work. Not mandatory if you have no dependents or liabilities, although one can argue that you may wish to protect future income via TPD. 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. This helps you to narrow down your options from the numerous products out there. Some types of coverage (e.g. death/TPD) are more straightforward than others (multipay CI plans can be very complex in nature) so you will want to know the final details before making a decision.
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.
As a fresh graduate, it is key to ensure that you set aside funds in saving accounts to cover short-term expenses (like student loans and regular expenses) as well as emergencies.
If you have excess cash left over, consider putting your money in a short term endowment plan (2-5 years) or an insurance savings plan while you understand more about the financial market. Look for products that provide you with the flexibility to withdraw, so you can stash your emergency funds there.
Next, it will be to ensure you are well insured should there be any cases of any mishaps. The bare minimum would be a hospitalisation insurance plan that would cover you from the hefty medical fees in the unfortunate event that you encounter a medical emergency. Some good health insurance plans you can consider are AXA Shield by AXA (only insurer with outpatient and PA benefits embedded into the cash rider) or the Great SupremeHealth by Great Eastern. You might also want to add on or purchasing a critical illness plan to ensure you are well covered.
Feel free to reach out to us if you are looking for personalised and unbiased advice.
There are 3 main things that one should find coverage in:
1) Death/Total Permanent Disability (TPD)
2) Critical Illness
3) Hospitalization Costs
Your first insurance should be hospitalisation plan. For hospitalization plan, they are pretty straight forward and standardized across the insurers. For you, you just have to decide whether you want your child to be covered for private hospital or restructured (public) hospitals. Of course, private hospital coverage is more expensive. But for hospitalization plan, do opt to add in a rider. The rider covers for deductibles cost (ward associated costs) and co-insurance (10% of total bill less deductibles).
You can decide whether to insure yourself against death/TPD and CI either with a whole life plan with a CI rider or get a term plan With a standalone CI plan. Whole life plans cover for whole life while having A cash value to it and is generally a 3-in-1 solution. If you want limited payment and a cash value to aid in your retirement, get whole life Plan. If your Budget is tight, you can aim for a term plan that covers death and TPD only. It's highly affordable. There are a variety of multiply CI plans available and they even come with riders that waives off your premiums upon diagnosis of CI eg. AIA Power Critical Cover.
based on priority and importance:
hospitalization - cheapest plan to get often the neglected one. Can cover your hefty bills should any Hospitalization to happen
Life, term plan with CI - to cushion your expenses if you are diagnosed with any long term illness, or to leave a legacy of anything bad were to happen.
Savings plan/investment - after you have settled the basic 2 points above, start to think of instruments to let your money work for you!
hope It helps!
Shield Plan - Should have gotten right when you were born, not when you have graduated. Be thankful if you haven't had any pre-existing condition(s).
Death coverage - Get it early to lock in the premiums at your current age, unless you got no dependants now and you're sure you won't have any in future.
CI/ECI/TPD/Disability coverage - Get it early to lock in the premiums at your current age, regardless whether or not you've got dependants.
Personal Accident plan - Get it only if your employee benefit (aka company insurance) is lousy. This plan is meant to cover loss of income in the event you got injured/ill due to an accident (incl. food poisoning/dengue fever/hfmd etc), and also to cover out-patient treatments that are not covered by a Shield plan.
Endowments/Annuity/ILPs - I really hate to classify them as insurance. I'll just leave it here.
As usual, dont skip your hospitalisation plans.
If you work in a high risk job, can consider PA plans.
If your parents depend on you, term plans + optional riders( eci/ci)
If you cant control your spendings, endowments (withdrawal/non-withdrawal) might work
Dont buy life till you have dependants or you are feeling rich.
No point buying retirement/annuity plans since most only pay you at 50 except a few.
Ilps if you are lazy to learn about investing and ofc the charges are damn high if you terminate early so dont yolo sign. Make sure its 100% investment with no coverage if not your returns will be reduced sigificantly.