No matter how much you hate to deal with it, the only solution is to face it and get it done for one and forever. Buying an insurance under "certain" pressure can affect you to make a wrong dicision. And if you are not aware, this could be a life time wrong decision. As the saying goes : "Make it Right the First time", but is it possible that we always can make the right decision by our 1st attempt? I personally doubt so. Especially in buying big ticket items. Most people were "force" to make immediate decision by the agent, but please do not blame the agent solely as i always believe that " The money is in your pocket, if you are not willing to pay, no one can get your money from you." Based on the above philosophy whenever i am spending, i try not to make any On-the-Spot decision. Please note that, this does not include buying items which you have done market research for weeks/months. The idea behind it is to make sure that you understand what you are buying and you need the product / services that you are buying. Sometimes, you do make mistake even you are sure at the point of time of buying that you are buying the product that you need/ want. Please do not blame yourself as our needs change from time to time. That is why we should give ourselves some time to think, compare and consider if there is any other better options available.
Back to the insurance policy, since it is a long term commitment, it deserves some fair amount of time for us to think and consider throughly before proceed on to put our signature on it. How long is fair enough time? I do not know as it depends from person to person. Someone with a better understanding about what they really want will be able to make decision in a shorter time while those who do not have any idea about Insurance this article is meant for sharing with you.
To me, there are several things that we need to get ourselves covered:
1) Death & Terminal Illness
2) Critical Illness / Dread diseases
3) Total and Permanent Diability
4) Accident (death & others injuries)
5) Hospitalisation & Surgical
Others includes:
6) Wealth Accumulation
7) Disability Income
8) Accident Medical Reimbursement/ expenses
9) Hospitalisation Allowance (indemnity/benefits)
10) Others ( Emergency Evacuation, Partial disability, income shield etc..)
From 1-10, The first 5 items are the most important which i consider a need for everyone living in today's world. Considering the medical expenses and cost of living, all the 5 items can be a big burden to your family members. I always tell my friends, unless you want your hard earn money to be used for paying the big medical bills and feeding the doctors, you should get yourself covered for the first 5 items.
Dont worry as most of the time, the item 1 to 3 come in a package (life insurance plan), but do check to confirm the coverage. You have the resposibility to check for your insurance coverage writen on your insurance policy. But for those who are insurred with Whole life, ILP ( investment link product/policy) item 1 to 3 are usually pre-include in the package. So, what you need to do is to add on the riders ( this is just an additional protection policy attached together with your main policy). You can add those extra riders which suit you best.
** Bear in mind that rider comes in as additional cost and usually rider is quite expensive as compare to your main product cost.
For me, i split my coverage need into 2 parts.
A) Now-Age 55 ( where my kids can be independent on themselves)
B) After age 55 to my ideal age of Death (after 80)
Before we proceed on, here is my philosophy of buying insurance:
- Coverage / protect me from unexpected events and not a vehicle to make my dependent rich when i am not around (reasonable amount)
- Mainly protection for the high medical cost nowadays and in future
- Insurance is not my saving
- Insurance is not my investment vehicle ( i will look for other better (cost efficient) vehicle available in the market to achieve my investment purpose)
With the above philosophy made clear, we will further discuss about what you "think" you need if something did happen in future...
We start from protecting after age 55. Do not ask why, as you will know the reason of doing so later on.
To me, i feel/ think that i will only need SGD 100k coverage for ( Life, TPD and Critical illness). ( You will be covered when you take up loans from bank in future, so to me SGD100k is more than enough)
So, since it is cheaper to get coverage when you are young and healthy, it is wise to take up a WholeLife of SGD 100k to get yourself coverage after age 55.
Cost roughly around SGD140/mth -wholelife policy cost- SGD 100k sum assured (covered Death,TPD, Critical Illness), female age below 30, non smoker, pay until age 50 cover until agg 100. .
** The cost of premium is fixed for the entirely policy life unless changes announce by the insurance company
Now we will look at age from now- age 55. This is the period of time where you have increasing burden. From now until you kids are all grown up and can be independent, you will need to get urself covered for this particular term period. This is the time when i feel term policy is the best & relevant product and also cheapest available to get yourself this extra coverage. To me, term plan is good for topping up the existing wholelife plan based on our need from time to time. A SGD200k coverage is good enough for me. Buying a SGD200k term for a period of 10yrs cost you around SGD25/mth (covering Death, TPD, Critical Illness). You can buyupto 30-35yrs term plan if you like which i prefer to renew every 10 years upto age 55 and there after where i will only hold on to my wholelife policy.
From Now-age 55
Death ---SGD200k (term) + SGD100k (wholelife)
TPD-----SGD200k (term) + SGD100k (wholelife)( up to age 65)
Critical Illness--SGD200k (term) + SGD100k (wholelife)
Accident------SGD 100k
Hospitalisation & surgical--covered under enhance income shield (preffered plan)( up to age 65)
After age 55
Death ---SGD100k (wholelife)
TPD-----SGD200k (term) + SGD100k (wholelife)( up to age 65)
Critical Illness--SGD100k (wholelife)
Accident------SGD 100k
Hospitalisation & surgical--covered under enhance income shield (preffered plan) ( up to age 65)
With the above plan, you will still come across insurance when you are applying for loans like housing loan, car loan, renovation loan, your kid/s education loan etc etc....That's is why i believe that the above amount which i "think is enough" is sufficient.
If you have not get yourself covered, do it as fast as possible. It is not hard if you try to do it my way....Good luck and enjoy shopping for insurance products! Next topic i will share about why we should not buy ILP product.
