I feel a large sense of injustice when I hear my peers paying large sums of money for their insurance plans and yet, they do not have the essential insurance coverage they need. It could be disastrous for them if they meet a crisis.
Have you been introduced to insurance by a family member, a friend or a stranger on the streets? While we faintly know that having insurance is essential, it is difficult to fully understand and get an independent opinion on insurance.
I want to help as many Singaporeans as possible plan for their insurance needs the right way and hope that this article will point you in the right direction by providing easy-to-understand answers on some of the questions which you may have about insurance.
This could also act as a good guide for you to go about planning for your own insurance needs.
1. Why do I need insurance?
The primary purpose of insurance is to protect ourselves from financial risk. If an unexpected event happens, insurance helps us to reduce the financial impact of an unexpected event on our loved ones and ourselves.
2. Who should I seek insurance advice from?
Do you know that 41% of Singaporeans have not managed to start saving for retirement in a survey conducted in 2013? For every dollar more we spend on insurance, it makes our retirement much more difficult. You should preferably seek advice from an advisor whose livelihood does not depend on the commissions he earns from you. A true independent advisor will be able to compare products across insurance companies and advise you according to your needs. Do note that there is no insurance company which has the best plans for all the types of insurance products you need.
3. Which type of insurance do I need? And how much should I spend on insurance?
As little as possible for what is necessary to protect yourself and your loved ones from financial risk. Channel every other dollar to your savings and long-term investments to plan for your retirement.
Should I get a Term Life Insurance or a Whole Life Plan?
There is no need for a Whole Life Insurance Plan. If you get a Whole Life Insurance Plan, it is very difficult to fulfil both of your insurance needs and retirement needs. Find out more about The Case for Term Insurance.
So, what is the first step I should take to plan for my insurance needs?
Select the right financial advisor. If you engage an independent advisor who is not remunerated based on commissions, you can be assured that any advice delivered from your advisor is made in your interest rather than in his interest. A good advisor will make recommendations based on your unique insurance requirements.
Share the Knowledge
I hope that this series of quick-fire answers to the most frequently asked questions about insurance by Singapore will help you plan for your insurance and finances better.
If you have found this guide useful, please share this article with your loved ones and friends so that it can benefit more of us.
You are advised to speak to a financial advisor to advise you on your unique insurance needs before purchasing a product