Insurance is a way of protection yourself from financial loss.
The basic concept is that an Insurer will guarantee to cover your losses on uncertain future events, and in exchange, you pay a small monthly cost for that protection and the peace of mind that this gives you.
It’s common for people to insure things that are valuable to them, like their homes, cars, and jewelry, however more often than not, their most valuable asset – their ability to earn an income – is left uninsured. You can prevent financial loss from death with Life Insurance.
As a starting point, it’s recommended that you have 8 – 10 times your annual income in coverage, although your circumstances will dictate whether you need more or less than this. Any outstanding debts you have will affect the amount you need, as will the number of people dependent on your income.
I’m young, I don’t need Life Insurance:
If you think you might take out a mortgage, get married, or have children at some point in the future, then your need for Life Insurance is inevitable.
Life Insurance costs are linked to your age when you start a policy, so delaying your decision to insure yourself means it will only become more expensive.
Premiums are fixed, so if you start today at a lower cost, you will “lock in” this price for the duration of the policy.
Another consideration is your health. Should you develop an illness or medical condition before getting insured, you may find that an Insurer is no longer willing to offer you coverage.
I have Life Insurance through my employer:
Coverage through your employer is temporary, and when your employment ends so does your Life Insurance. If this happens 5 years from now, the cost of setting up a personal Life Insurance policy will be much more expensive.
Generally speaking, cover through an employer is 2 – 4 times annual income, which is insufficient and will leave most people underinsured.
It’s expensive:
Life Insurance is very affordable. A 35-year-old female, a non-smoker, can expect to pay less than SGD50 per month for SGD1,000,000 cover to age 60 – less than a few dollars a day!
For Employment/Dependent Pass holders, these premiums are tax deductible here in Singapore.
