Insurance aims to protect you, your family and your assets from unexpected circumstances. You never know, an accident or death of a loved one might suddenly change your life. In those moments, you would likely wish you’d prepared for the financial impact.
A study by the LIA found the average working adult in Singapore has a mortality protection gap of $169,673 and a Critical Illness protection gap of $256,826. A mortality protection gap signals the need for term or whole life insurance coverage, whereas a critical illness protection gap signals the need for critical illness insurance. By covering yourself with the policies mentioned above, you stand a much better chance of having a secure future.
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The definition of insurance coverage is the amount of money you or your dependents receive in the event that you pass away or meet the criteria for other insurance clauses.
There are four main types of insurance that we consider: life, health, critical illnesss and general.
Ultimately, there is no one-size-fits-all amount of coverage. It will vary massively from person to person, which is why it's so important to speak with a professional.
As a super rough guide, an independent 2018 Ernst & Young study estimated protection needs for an average Singaporean at around $740,000, with somewhere under $240,000 covered by various savings incl. CPF. This leaves about $500,000 worth of "mortality protection" needed from various forms of life insurance. Are you an average economically active Singaporean, with average income and average savings, with the average number of dependents... and are you the average age? Exactly... you do need to speak with a trusted professional!
Don’t skip on insurance. If you find yourself struggling to afford it, then it could well be budgeting issues you need to improve on.
Most agents are primarily paid on a commission basis with sales quotas to meet. Some agents may be tempted to push higher-commission products, whether suitable or not.
That said, there’s no doubt that a good agent will sell you the best policy for you, one that's affordable and gives you exactly the coverage you need, when you need it. A good agent will cut through the jargon, explain complex products and help you know exactly what it is you’re getting. Given the complexity of identifying and matching needs with the almost infinite range of options out there, this is certainly not an easy task.
That said, even if you're dealing with a really good insurance agent, you'll still need to equip yourself with some knowledge to make an informed decision. Doing this is particularly important when the sums are large and the timeframe is long.
With the right knowledge and a good agent who gives you solid advice, building a long-term relationship can certainly be a win-win for both. The agents will add real value to earn their commission.
In return, you’ll get the protection you need in the context of your overall financial needs, even as your lifestyle, needs, and priorities change over time. Arm yourself by reading up on the products being offered by the agent.
And get this — while an ideal scenario would be to build a great long-term relationship with an agent you just spent time and energy explaining your life to, it’s okay to walk away from an agent to go elsewhere. There’s no obligation and so nothing to fear when speaking to insurance agents and financial consultants.
Approach with an open mind, and ask as many questions as you need to feel 100% comfortable! If there's anything you don't understand, it's because the agent hasn't yet explained it clearly enough to you.
A good agent will be more than happy to answer all your queries. An agent earns their commission when they are fighting for you in the event that you or your loved ones actually have to make a claim!
HOW MUCH INSURANCE DO I NEED? COMPLETED. ✅
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