Insurance may not be at the top of your priority list at the moment. After all, you are most likely healthy, unmarried and do not have young dependents. Moreover, you have MediShield and MediSave from your CPF, and putting aside money to pay for additional insurance premiums with your entry-level salary may seem an unnecessary burden at this point of life – so maybe it’s alright to wait until you really need it?
Well, not exactly.
Investing in insurance from early on can actually be a savvy financial move to secure your financial future. Here are some reasons why you should consider getting yourself covered at a young age.
The Benefits of Insurance for Young Adults Like You
Getting yourself insured when you are in your early 20s is important for various reasons – also, time is on your side. Building financial security gets more challenging with age, even though one may have a higher earning power to cater to added responsibilities such as mortgage and family.
Insurance can help to cover costs typically borne at your stage in life, should an unfortunate event occur. These may include student loans, credit card debt, the financing of a new car, or a new mortgage. Some insurance can also provide practical protection that can help to cushion, or even substitute, a loss of income brought on by the unexpected.
Additionally, when insurance companies assess applicants, they look at risks. For example, health and life insurance premiums are typically lower when you are young and healthy. This is because the younger you are, the less likely you are to rack up high medical expenses due to illnesses – and you have a long life ahead of you.
Furthermore, the earlier you buy an insurance policy with cash value, the more time you have to let it grow. This gives you a larger lumpsum amount to take home when your policy has matured, as well as a safety net from financial burdens.
What Types of Insurance Are Out There?
There are many types of insurance for you to choose from – from a straightforward medical insurance, to specific ones like insurance which are only for ladies. A financial advisor will be able to advise on the best insurance to suit your needs. On that note, are you aware of the three main areas of coverage you can get insured for? Let’s dive into it.
This type of insurance covers your physical well-being. It includes health-related expenses such as hospital bills and medical treatments, and is typically grouped into the following categories:
- Medical & Health: Helps you pay for your medical expenses when you get ill, injured or disabled. This may include hospitalisation, critical illness, disability income, long-term care, and more.
- Personal Accident: Shields you from medical and out-of-pocket costs that you may incur after an accidental injury and this includes emergency treatment, hospital stays, medical examinations, as well as other related expenses, or a monetary supplement for loss of work due to an accident.
Lifestyle-type insurance protects your daily and lifestyle needs, and also assets and outstanding mortgage payments. These include:
- Travel: Helps to protect you from certain financial risks and losses that can occur while traveling. For example, most travel insurance plans cover medical emergencies, trip cancellation or delays, medical evacuation, and lost, damaged, or stolen luggage.
- Home: Aids in protecting your home and valuables against unwanted dangers such as fire, explosions and theft.
- Car: Covers your vehicle against loss or damage due to unforeseen circumstances such as floods, fire and theft – this can be very reassuring, especially for first-time car owners!
These types of insurance usually bear fruit years after you buy them; they are meant to provide you, as well as your future family, with financial security. They include:
- Life and Insurance Savings Plans: Grow your savings, so that you can have peace of mind knowing that you are financially secure.
- Retirement Plan: This simply means allocating savings for the stage in your life where you decide to take a permanent break from working life. Have you heard of FIRE e. Financial Independence, Retire Early? Well, with a good insurance plan for retirement in place, this may very well be in your grasp! However, some plans do come with a minimum maturity age, so do speak to your financial advisor about that.
3 Tips for Choosing The Right Policy in Singapore
Buying insurance is not exactly a one-size-fits-all option. With so many choices, you would need to pick the best policy for yourself by identifying your current and future needs, and factor in all your long-term commitments. Here are some things to ask yourself (or your financial advisor):
How much coverage do you need?
This includes the amount you would need, depending on the event you are being covered for. As an example, for a fracture or dislocation, the average hospital bill is about S$2,400, while the cost of cancer could go up to S$200,000 or more – Working backwards, how much medical insurance per year would you need to be covered for?
There are various insurance calculators that can come in handy – use them to assess your insurance needs and set financial goals.
What are some additional benefits you would like?
You can look at any additional perks that come with a particular coverage plan – these can range from significant features such as a savings plan to a yearly cash benefit which you can use to fuel your wanderlust – once borders are open, of course, or treat yourself to a quick shopping spree. Better yet, you can leave the money there to grow even further, to reach your financial goals faster.
There are so many choices available – which one is best for you?
Do a detailed comparison between all your options and choose what coverage suits you best. There are also multiple resources that can provide you with a bird’s eye view on the various insurance plans from different insurers in Singapore. Also, discuss with your financial advisor on what you need and your future plans, in order for them to tailor an individual plan for you.
So, do you still think you are too young to buy insurance?
Never! Remember, having a good insurance plan at a young age can help you immensely in meeting your lifestyle needs and prepare for any emergencies that may come your way. As owning an insurance plan is a long-term commitment, it is best to do your research and speak to a financial advisor to ensure you are making the right decisions to cater to your future needs.
This article has not been prepared for any particular person or class of persons and it has been prepared without regard to the specific investment objectives, financial situation or particular needs of any person, and does not constitute and should not be construed as investment advice nor an investment recommendation. You should seek advice from a licensed or an exempt financial adviser on the suitability of a product for you, taking into account these factors before making a commitment to purchase any product. In the event that you choose not to seek advice from a licensed or an exempt financial adviser, you should carefully consider whether the product is suitable for you. Standard Chartered Bank (Singapore) Limited (the “Bank”) will not accept any responsibility or liability of any kind, with respect to the accuracy or completeness of the information herein. The Bank makes no representation or warranty of any kind, express, implied or statutory regarding this article or any information contained or referred to in this article. This article is distributed on the express understanding that, whilst the information in it is believed to be reliable, it has not been independently verified by the Bank.
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