New to insurance? Here’s how to get started.
The International Diabetes Federation estimates Singapore to have almost 800,000 diabetic patients aged 20 to 70 years old by 2030. According to the Singapore Cancer Society, 41 people are diagnosed with cancer every day. 15 people die of cancer every day, and 1 in 4 people may develop cancer in their lifetime. More recently, in June 2020 amidst COVID-19, Singapore saw a historical weekly high in the number of dengue cases since 2014, with 895 people infected in five and a half days.
These scary statistics are just one of the reasons why you should consider getting insurance to protect yourself and your loved ones.
The best way to start your insurance journey is to reach out to an advisor who can guide you through the process. However, it is always good to conduct your due diligence by doing research first. By reading this article, you have taken the first step to educating yourself on the topic of insurance as a way to protect your wealth.
Why should I get insurance?
Insurance may sound like a waste of money to some. Instead of pouring the money down the drain, why can’t I spend it on what I love, or invest the money somewhere else? To naysayers, insurance seems to be a nuisance.
The truth is, many people struggle to see the benefits of insurance until something actually happens.
By then, it is too late and no amount of regret can salvage the situation. Insurance protects your wealth and your loved ones, and is often an important part of financial planning.
No matter how much you diversify your portfolio, do dollar cost averaging, or invest to have an early retirement, without an insurance to protect yourself, all these investment returns may end up being pumped towards a heft medical bill or other emergency spend.
What do people usually start with?
Different individuals start with different insurance products based on their unique set of needs, life stage, goals, and more. Broadly speaking, most individuals start off with a combination of the following.
Personal accident insurance
How often have you met a rude rider who almost crashed into you? During the COVID-19 period, food deliveries on e-scooters and bicycles became rampant, and the popularity of cycling rose. Singapore roads experienced a spike in bicycle accidents since the cycling boom last year, with 572 traffic accidents involving bicycles in 2020, up about 25% from the previous year.
The recent reports on freak accidents further remind us that accidents DO happen. All you can do is to be careful and insure yourself.
Health insurance
With rising medical and hospitalisation costs, it is essential to get a good and wide coverage for medical expenses. You can customise your plans to complement the basic MediShield Life insurance, or select specific illnesses to cover such as critical illness or cancer, especially if you have a strong family history for hereditary diseases.
Insuring your health is crucial.
Whole Life insurance
While most people in their 20s don’t think about life insurance, it's often the best time to buy it. The cost of this type of insurance depends on many factors, but it is generally cheaper when you are young and healthy.
By insuring your entire life, you can also receive a cash value upon surrendering your policy. You may receive a payout if you are permanently disabled or critically ill, or you can ensure that your beneficiary receives sufficient money to tide over any difficulties in your absence after you are no longer around. This is especially important if you are the main breadwinner of the family.
Term insurance
This insurance covers similar aspects of the term insurance, but is without the residual cash value and for a shorter period of time (such as a decade or two). The premium is hence cheaper than a whole life insurance.
What if I want more than the basic coverage?
After reading about the four basic types of insurance above, you may feel that there are some gaps in protecting your wealth and your loved ones. For instance, the insurances above may not adequately address how you can retire with a peace of mind.
Protect your loved ones with insurance.
This is where endowment and retirement plans can step in.
Endowment plans
‘Endowment’ can sound like a confusing word. There are two key types of endowment plans.
(i) Regular endowment plan
Lasting for about a decade, this plan gives an annual cash benefit on top of a lump-sum amount when it matures. You are essentially saving for a large ticket item in the future, such as a mortgage down payment or a large-scale wedding which can easily go up to 5 figures. This plan typically provides some insurance coverage against total and permanent disability as well as death.
(ii) Short-term endowment plan
If you have short-term goals like putting a car loan down payment, or would like to hedge your wealth against inflation, this plan will be useful to you. In fact, with the decrease in bank interest rates in recent years, some have turned to short-term endowment plans as a place to park their money. This plan provides a lump-sum payout, and usually comes with a one-time upfront payment.
Retirement plan
This allows you to get a monthly retirement income after you stop working, and can come with insurance coverage too.
What is the best insurance for me?
With so many insurances to choose from, how will you know which is the most suitable for you?
Unsure how to proceed?
At Life First Advisory, living your life to the fullest comes first. With a team of private financial planners, we are able to examine insurances across all companies and provide you with the best customised package possible.
Speak with us today to find out more.