Taking the time to understand and build your insurance portfolio will help protect you and your loved ones’ future.
Insurance should form a key component of your long-term financial planning. It not only offers financial protection for your family in case of an accident, ill health or death, but acts as a safety net for your future needs as well.
When deciding on the type of insurance suitable for you, it’s important to identify your protection needs and long-term commitments. You can then map these requirements to the insurance policies that best address them. Once you have this in place, you and your family can be assured of a secure future.
If you are the main breadwinner in your family, you might want to consider life insurance. It serves as a form of financial security for you and your dependants should there be a loss of income in the event of your death.
Here are some major types of life insurance policies.
- Term Life: Offers pure insurance coverage at the lowest premium as it provides no cash value if you survive the term of the policy. This is a good option to consider if you are only looking at high coverage and using other investment tools for better returns. Keep in mind however, that a pure term life insurance offers coverage for a limited time frame (10, 20 or 30 years) or up to a particular age, and this may not meet your long-term needs.
- Whole Life: A good option if you want to be covered for life while reaping the benefits of building cash value. A whole life policy generally allows you to accumulate wealth over the long term while giving you the option to partially withdraw money in the form of annuity payments to meet your retirement needs.
- Endowment: Allows you to build cash value over a fixed period, with the aim of meeting a long-term goal, such as your children’s college education. With an endowment plan, you will generally pay premiums for the first few years as specified by the policy and receive a lump sum when the policy matures. In addition to being a savings vehicle, endowment policies also offer insurance protection for the length of the policy term.
Accidents, illness and disability can lead to a significant financial outlay for medical expenses and hospitalisation costs, as well as a loss of income. Group health insurance from your employer may not offer you sufficient coverage. Also, while Singapore citizens and permanent residents enjoy Medishield Life coverage, its benefits are based on the cost of staying in B2 or C class wards in public hospitals.
If you are considering additional coverage, here are a few options:
- Medical expense insurance: This provides wider coverage for your hospital and surgical expenses.
- Hospital cash insurance: Offers a fixed amount of cash when you are hospitalised, to be used as needed.
- Critical illness insurance: Pays out a lump sum for medical treatment and other expenses when you are diagnosed with a major illness like diabetes or cancer.
- Disability income insurance: Offers a monthly payout to replace your income when you are unable to work as a result of accident or illness.
- Long-term care insurance: Pays a monthly benefit towards expenses for long-term care if you are severely disabled or unable to take care of yourself.
- Personal accident insurance: Offers you and your family financial support in case of death or permanent disability from an accident.
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