As you embark on your professional journey as a young working adult, it is important to consider various aspects of ‘adulting’. One crucial aspect of this protection is insurance.
While insurance may not be the most exciting topic, it plays a vital role in providing a peace of mind and safeguarding your financial well-being for both the present, and your future.
If you are in a position whereby you have a limited budget to begin with, it's understandable that you may be looking for affordable options to protect your current and future assets.
In this article, we will guide you through into the types of insurance coverage you should consider as a young working adult that can provide essential coverage without breaking the bank.
Health insurance is the first and most important form of insurance and should set the foundation of your insurance needs. As medical cost in Singapore can be costly, having health insurance in place ensures that you can receive the necessary medical treatment without worrying about the cost.
In fact, it is recommended to have the health insurance settled as soon as you were born.
Having personal accident insurance is essential to complete your medical insurance as it covers certain aspects of medical cost (that are not covered with health insurance), particularly if you lead an active lifestyle that may increase the likelihood of accidents.
Personal Accident insurance will provide coverage for outpatient medical expenses due to accident such as A&E visits, Treatment by TCM, and mobility aids etc.
Even if you are confident in your own abilities, having your personal accident in place can be invaluable in scenarios that are not within your control such as sports injury, or being accidentally hit by another cyclist or motorist.
Critical illness insurance will provide you a lump sum payout in the event you suffer from critical illness such as Stroke, Cancer, Heart Attack etc. While health insurance is there to pay the hospital for the treatment cost, the payout from your critical illness insurance can be used on your own discretion such as living expense, home alterations, alternative treatment cost etc.
Premiums for critical illness insurance are more affordable when it is purchase at a younger age.
Life insurance pays a lump sum payout in the event of Death, Terminal illness and Total and Permanent Disability (TPD). For the death benefit, the lump sum goes to your loved ones if you pass on. It is important to have your life insurance if you have young children, parents who are dependent on you for the living expenses or if you have any large liability such as mortgage loan.
It is also important to set aside a portion of your earnings to grow your wealth for future use such as renovation, housing, emergency purpose and retirement. While the previous insurances is to safeguard your finances in the event of tragic events, wealth accumulation plans are there to safeguard you against longevity, and ensure that you do not outlive you savings in the future.
When it comes to medium to long term wealth accumulation needs, you can consider between endowment plans, or investment such as Fundsmith Equity Fund to earn higher than bank interest yield. This is to ensure your savings spending power are not eroded due to inflation.
1. Health Insurance (HSBC Shield Plan B with Enhanced Care)
Coverage: Restructured hospital Class A ward and Below
Additional Medisave premium for integrated shield plan: $90.80/year
2. Personal Accident plan (assuming non-hazardous occupation) – QBE Prestige Plan A
Coverage: Accidental medical expenses of up to $3000
3. Singlife Elite Term with Multipay Critical illness Cover IV
Coverage term: 40 years
Death/TPD Sum assured: $500,000
Multipay Critical illness Cover IV: $100,000
Premium: $1086 - $1200/year (Varies between gender, and smoker status)
4. Wealth accumulation – Unit trust/ILP/Endowment
Savings amount: $2000/year
Total amount set aside for insurance needs: $3516.80/year
As each individual insurance needs are unique, to ensure you make the right choices, it is wise to seek guidance from a licensed financial advisor to recommend a suitable insurance portfolio for you.
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