Insuring Your Future

When asked, the youth of Singapore would easily agree that insurance is a necessity, but very few have a thorough understanding of insurance. Not surprising. The complexities of insurance intimidates people, while its technical jargon confuses most. How many among us understand terms such as “accelerated critical rider” and “dread disease coverage?”


When asked, the youth of Singapore would easily agree that insurance is a necessity, but very few have a thorough understanding of insurance. Not surprising. The complexities of insurance intimidates people, while its technical jargon confuses most. How many among us understand terms such as “accelerated critical rider” and “dread disease coverage?”

However, in our contemporary world, one cannot afford to be ignorant about insurance. Life is unpredictable and even the best plans go awry. Insurance serves a similar purpose to diversifying your investment portfolio: it manages risk and protects you. When an accident happens, the potential loss you suffer is transferred to the insurance company you have aligned with.

The aim of this article, the final article in our Financial Planning series, is not only to help you understand why insurance is important, but also to hopefully compel you to take steps in insuring yourself.

 

Different Insurance Coverage and How to Get Them

Insurance may be a complicated topic to dissect, but it is also familiar. Most of us have experienced the presence of insurance in our lives. As a child, you may remember watching your parents recover some of the losses when your baggage is lost after a flight. Or watching your parents claim some of the costs of an expensive medical procedure.

There are many types of insurance you can protect yourself with, but for the sake of brevity, we will only focus on the two forms most essential to everyone: life insurance and medical expense insurance. These two categories protect your current way of life. Chances are, if you are well-covered in these areas, your future is insured.

Life insurance generally covers you when a terrible accident happens, such as death, loss of limb (also known as total permanent disability or TPD), or critical illness (such as cancer). The purpose of life insurance is to protect those dependent on your income, whether it is your significant other or your children, so they can survive if something disastrous happens. It is never too early to get life insurance for yourself as premiums will increase as the years go by. Getting insured earlier means paying less in premiums in the long run.

Buy Term and Invest the Rest is a common practice amongst insurance-savvy Singaporeans. It simply means buying simple-term life policies that offer coverage on death, total permanent disability, as well as an add-on critical illness coverage. Then, spend the money left over on an Investment-Linked Policy.

Medical expense insurance pays for expenses incurred because of an accident or illness. Medical expenses can arise from any of the following medical treatments or procedures:


·         in-patient medical treatment or surgery

·         day surgery

·         consultations with specialists before, during, and after the hospital stay

·         X-rays and laboratory tests

 

Meanwhile, ‘major’ medical expense insurance will pay for heavier hospital expenses due to major illnesses like cancer or major surgeries such as heart bypass and organ transplants.

 

Recommended Coverage

How much should you be insured? Look at the amount you need in order to sustain your current expenditures. You should also project your future expenditures and consider the expenditures of those dependent on you. To calculate these figures, CPF and Citibank have good calculators that can offer you insights on how much you need to be insured.


Monitoring Your Insurance Policy

Now that you have purchased an insurance policy and are now well-covered, what’s next? You’ll want to make sure that your policies are always paid for, so you are always protected. You’ll also want to stay ahead of the game in insurance – meaning, you need to make sure your policies are not outdated. When you buy new policies or get new corporate policies, you want to make sure that you are paying as little overlaps as possible.

To help monitor and manage your insurance needs, we would like to introduce a noteworthy mobile app from PolicyPal, an up-and-coming startup in the Insurtech space. The PolicyPal app helps you track, manage, or buy policies by creating a digital insurance folder and getting rid of all the paperwork. That way you always have access to your insurance policies even if the unexpected occurs. They partner with independent financial advisors to provide a holistic review and let you know which area you are over or underinsured in, saving you up to 30%. PolicyPal ensures you and your family are well-protected.

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We introduced our Financial Planning series with “8 Steps to Creating a Smart Financial Plan.” Then, we broke down essential elements, such as “Budgeting: Balance Your Spending,” “Types of Investments Available,” and “Building a Portfolio for Retirement.” With “Insuring Your Future,” our series is put to a close.

Only a third of Singaporeans have a comprehensive financial plan despite its many benefits. A financial plan trains you to live more securely than even those making more income, manages the costs of unforeseen accidents, and acts as a progress report towards your future goals – which is why we at Funding Societies hope that this series has inspired you to craft your personal financial plan.

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*This article was contributed by our friends at PolicyPal.

 



November 02, 2016    Funding Gap: SMEs in Malaysia
July 01, 2016    Insuring Your Future




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