SG Budget Babe
Asked on 02 Dec 2019
Assuming my parents didn't buy any insurance, what's the first type of insurance I should be getting after landing my first job
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.
Work with an independent financial advisor who can provide multiple options and explain in detail what you will need to know before coming to a decision, especially with respect to cost effectiveness as well as the minor differences between the plans.
First priority is always healthcare. The reason is simple - medical inflation hits 10% in 2019. Accordingly, a single medical treatment could potentially wipe out all your savings. To do this, it is always valued to have your own private integrated shield plan. Here is why: https://www.blog.pzl.sg/is-integrated-shield-plan-necessary-in-singapore/
After you have the basic foundation set up, you may consider a basic life insurance plan that covers for death, total & permanent disability, and most importantly for critical illness.
There are many options available in the market, therefore, take your time to understand which suits your needs. Here is a general comparison between a term and whole life insurance to help you with some basic understanding: https://www.blog.pzl.sg/term-vs-whole-life-insurance-singapore
Once you have a stable income, here is the 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.
Here is everything about me and what I do best.
Shield PLANS (payable via CPF medisave)
this shld be the first plan to grab, as they cover your hospital coverage if you are required to be hospitalised due to illness or accident.
Buy the shield plan that covers your private hospital needs if you can afford it, and the riders if you can afford additional cash.
The 2nd plan I will buy is critical illness plan. to die is to cheaply settle it, but to be sick.. critically is an expensive way to "settle it".
3rd plan would be personal accident.
If you are a guy, do google for MINDEF-AVIVA group insurance, its the cheapest group insurance you can get for critical illness and personal accident (and term plan for death if you need to prepare your coverage for your parents)
Hospitalization plan hands down!! And max it out. In the case of a sudden emergency/surgery, you are covered by it. You'll never when this kind of thing will strike.
In order as priority below -
Hospitalization & Surgical Cover numero uno. In Singapore this would be the Integrated Shield Plan and riders.
Next would be protecting my income in the event of Illness and Disability.
If i have dependents or plan to in the future, I'll buy coverage in the event of premature death as well or soon after.
Medical hospital insurance.
because hospital bills can ruin you if you are really unlucky to get an expensive illness or accident.
Grab that hospital coverage!
Most important and a must to have is hospitalization plan. Then the next one would be term plan. Why term plan and not whole life plan?
Term plan is cheaper and the coverage is much much higher.
Though whole life plan usually pay for 20 years. But in order to have the coverage as high as term plan, it will be very costly.
05 Dec 2019
Many different opinions and sentiments here; but I think as a guideline, the most foundational insurance you can get is;
These 2 are fundamental, because in the event any unforeseen happens, you have yourself covered, and these 2 usually are more affordable with high coverage. *clause is that any claims related to medical, they are on a reimbursement basis.
Once you have those 2, then you can start looking into a whole life or Term policy, which will cover the other aspects of life, Death, Total Perm. Disability, CI.
After that some might start looking into their retirement planning and look into getting wealth accumulation policies or other ways to get your money to work for you through investments
Definitely the hospitalisation plan. Some parents may be pangtang about getting insurance because they feel it's like saying that they might fall ill, so approach this topic with your parents carefully and frame your arguements well if they need convincing to get insurance!
https://blog.seedly.sg/working-adults-key-insurance-policies-singapore Seedly covered it but,
Depending on your budget,
(1) Hospitaliazation - To cover the hospital bills that matters. Wouldnt want a bill shock of 5 digits or even 6 digits.
(2) Critical Illness - Mindef Aviva Living Care, cheapest if you are below 30, and anything above 30 and require top up, do buy private in this case (due to escalating premium from Living Care) and premiums are not guaranteed.
(3) A small WL for CI base coverage (do you really need CI insurance at age 65 and above? you will need to decide for yourself) because premiums are cheap and you are offered OPAI (option to purchase additional insurance) without medical underwriting. Perfect for Case (2) should you require top up.
(4) A big term for TPD ($1 million is good) till age 65 (not to be confused with term till 99). or... Disability income (current pay) , cheap and if you really felt that you do not need it, can reduce it after 5 years. A lot of people do not overpay for insurance, but the locked-in premiums savings can be good. Of course, if you are the mathematical model kind, you can do a Dy/Dx curve to find the most efficient one. You can top up more later through Mindef Aviva
(5) Accident - depending on your job nature, it can be very important or totally not worth in risk management aspects.
(1) and (2) is definitely important, the rest are dependent.
i think the first four is similar to what the others are saying. For me saving plan is important because I don't have the tedency to save myself and I need someone or someplace that I can save the money at. So I rather have a portion maybe 5% of it somewhere else.
In your 1st - 2nd year of working, I would say getting these 2 plans would be quite good:
Hospitalisation - lots of reasons covered above, which i shall not mention again.
Personal Accident - I found this useful as I couldn't guarantee that I will not get into an accident overseas or in Singapore. And in the event that I don't have to be hospitalised, I can still get my medical bills claimed from this aspect. :)
After 3rd year of working, you can consider the rest:
Term/Whole Life - I went for Whole Life (because the retirement age is increasing and term has a age cap) and am considering topping up term soon.
Critical Ilness (+ Early Stage CI if you can afford it) - Being a healthcare worker, I think it's vital to have early stage CI cause a lot of diseases can be preventative once found out early, and it's good to have that extra cash to tide you along the way.
Income Protection Insurance - Works in the event where you can't work due to a illness and you still get 50-75% of your last paid job.
I believe the order ought to be:
Hospitalisation - because I definitely can't afford to pay a huge hospital bill
Term - because it is affordable and leaves my parents with a sum in case I'm gone.
Critical illness - only after I start earning more money. otherwise the premiums are too much for me to have paid when I was a first-jobber earning a $2,500 income
You probably want to consider personal accident coverage as well if you're physically active or keep travelling around for work. It is cheap and the likelihood of claiming from it could be pretty high in those cases.
Definitely hospitalization first, then critical illness, then life, then accident.
I wrote an article about it before. You can check it out below
I write cool stuff about personal finance and money-saving hacks here.
Medical Insurance to cover for any ig ticket hospitilisation incidents. Definite most.
It is one of the lowest cost but covers for the unfortunate large medical bills
Definitely hospitalisation, critical illness and death