We insure our cars, our houses, our jewellery and even our holidays. But most people overlook the most valuable thing they have – themselves. Or they just think “it won’t happen to me”. So let’s just take a few minutes to look at life insurance along with critical illness and disability cover. You can also link in to a free one-hour Webinar on this topic on 4 August!
Protection: Looking After You and Your Family
Life insurance, critical illness and disability cover are the foundation of good financial planning to protect yourself and your family financially.
There are two main types of life insurance: term and whole of life. The former is the lowest cost, most popular type of insurance as you only pay for it while you need it – usually until your children are grown up or when you reach your retirement age. Whole of life insurance is a combination of protection and investment which, although most people prefer to keep these elements separate, can still be appropriate in some cases.
Life insurance rates are based on age, sex, smoker status and health; therefore, cost increases with every year you age. However, once you’ve taken out a policy, most term insurances have fixed premiums for the duration of the policy based on your age when you take it out. So, the younger and healthier you are when you take out your policy, the lower your premiums.
Companies often provide a small level of life insurance to their employees. However, it’s important to check how much this is; also, make sure you’ve named your beneficiaries for any claims.
It’s always recommended to have a private life insurance policy on top of any company cover. This ensures that you and your family remain protected regardless of your job situation. A lot of people are caught out by unexpected redundancy, causing them to lose their company benefits, including life insurance.
Many people decide later in life to leave their jobs to start their own business. This includes them having to arrange their own life insurance. Being older will mean premiums are much more expensive; in many cases, people may develop medical conditions that can mean having additional premium loading. Or they may even be declined altogether.
Total and Permanent Disability (TPD)
This cover is usually added as an additional rider to life insurance; it’s usually a low-cost insurance that pays out in the event you become totally and permanently disabled. It’s important to ensure you have enough funds to cover the cost of long-term care and an income for your family. This is especially true if you’re the main breadwinner.
Critical Illness Protection
This is one of the most important types of insurance, as the chance of suffering a critical illness is uncomfortably high. For example, in Singapore, one in four people will be diagnosed with cancer at some point in their lives.*
The good news is that over a third of all cancers are cured, yet many people suffer financially as a result of being unable to work during their illness. This can force them to use their long-term savings to cover everyday costs and, in the worst cases, to sell their home, if they’re unable to keep up with mortgage repayments. By having critical illness cover in place, you can ensure that you’ll have financial peace of mind, allowing you to concentrate on getting better.
Income Protection Insurance
Finally, income protection insurance is designed to ensure you have a continued income in the event you can’t work long term, due to either illness or disability. It’s usually a monthly benefit based on your current salary level and can be paid until the age of 55, 60 or 65.
The amount of cover you need for each of these insurances will depend on your personal situation. Your wealth manager can help you determine how much you’ll need to ensure you and your family are adequately protected should anything happen to you.
None of us plan to become ill or die prematurely. However, it’s important that you ensure that if the worst happens, you and your loved ones are financially secure. If you require assistance, speak to a wealth manager at AAM Advisory. They can give personalised advice regarding all your financial planning needs.
This life insurance information was written in conjunction with AAM. To arrange a complimentary consultation with an AAM Advisory wealth manager, email firstname.lastname@example.org.
Also, remember to watch the Webinar on 4 August!
Read on for more articles about living in Singapore.
* Singapore Cancer Registry 50th Anniversary Monograph 1968-2017 (2013-2017 mortality data)
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