Most people we talk to would agree that
insurance is an important part of financial planning. Growing up,
our parents may have bought insurance policies for us. We could
have seen people we know claiming on their policies due to
unexpected incidents that have occurred.
Even though we know insurance is important, many fresh
graduates in Singapore have very little understanding about the
types of insurances. They are not sure what’s out there, and what
they should be buying.
In this article, we hope to discuss the various types
of insurances that fresh graduates would need.
Insurance products may sometimes appear complex, but
this doesn’t always have to be the case.
Insurance policies usually become complex because when
investment benefits are added into the plan. If you take away the
investment component of insurance policies, most personal insurance
policies will fall under one of the following two
categories: Life
Insurance and Health
Insurance.
As young graduates who have just entered the workforce,
our ability to work is our biggest personal financial asset. Being
young and of good health, our entire career is ahead of us. We are
positive we can do well in the workplace and to earn a decent
living for our family and ourselves.
The harsh truth however is that unexpected health
matters can steal that ability from us in a heartbeat. If that
happens, a double whammy occurs. Not only would we be unable to
work and earn an income for a period of time while recovering, we
will also incur potentially hefty healthcare cost.
Health insurance helps us to mitigate this risk in
various ways. For example, a private integrated shield plan would
help us to reduce or completely cover the cost of hospitalisation
and inpatient treatment that we may need if we find ourselves
hospitalised.
A critical illness plan provides a different type of
support. When diagnosed with a critical illness condition, a cash
payout is automatically provided, even if hospitalisation is not
needed. This sum of money can be used to cover the cost of
outpatient treatment and living expenses during the recovery phase,
where policyholders may need to take a break from work.
Read Also: Is
An Early Stage Critical Illness Plan
Necessary?
There is also disability income insurance. This
provides payout in the event that policyholders suffer from a
disability that prevents them from being able to work. In such
circumstances, a stream of monthly payout will be given to
policyholders.
All of the above health insurance policies protect us
financially from unexpected issues that could take away our ability
to work, be it temporary or permanently.
You may have protected yourself financially against the
risk of health issues preventing you from working. You now have to
think about your family members who are reliant on you. These could
include your non-working spouse, your children and your elderly
parents.
A life insurance plan provides a cash payout to your
beneficiaries in the event that anything happens to you. While the
policy does not lessen the pain of losing a loved one, it would at
least ensure that financial hardship is not an additional area that
your dependents will have to be worried about.
As an individual, having sufficient life insurance is
important in giving you a peace of mind that your family members
will be taken care of financially if you are no longer around.
Read Also: Type
Of Child Insurance To Buy For Your Kids
There is currently no one-size-fit-all product in the
market. To enjoy the health and life insurance coverage describe
above, young adults need to buy a few different insurance
policies.
Do-it-your way
(DIYInsurance) is a comparison web portal developed by
Providend, a fee based financial advisory firm. The folks over at
DIYInsurance have designed a Young
Working Adult Package that provides coverage specifically
tailored towards what most young working adults would need.
Source: DIYInsurance
Based on the assumption of a 25-year old, non-smoker
who works at a desk-bound job, the above coverage will cost
policyholders about $170 a month. This is an estimate that may
change depending on factors such as your current age, lifestyle and
actual coverage you want.
As with most policies they sell, DIYInsurance will
provide a 50% commission rebate to their customers. This would be
about $850, or about 5 months worth of premiums.
DIYInsurance does
not have any special tie-ups with any insurance companies. The
products that you see listed above come from a variety of different
insurance companies. Their salary-based advisors curate and
recommend products to you based purely on your needs, and the value
you are getting.
If you have any further questions about
the Young
Working Adult Package that DIYInsurance
provides, or are wondering what other insurance policies you
may lack currently, feel free to have a live chat with the folks
from DIYInsurance on
their Facebook Page.
This article was written in collaboration
with DIYInsurance.
All opinions expressed in this article are the independent views
of DollarsAndSense.sg