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?”

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.

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.


*This
article was contributed by our friends at PolicyPal.