How Young Working Adults In Singapore Can Enjoy Adequate Insurance Protection For Less Than $150 Per Month
This article was written in collaboration with MoneyOwl. All views expressed are the independent opinion of DollarsAndSense.sg
As young working adults in Singapore, our biggest financial advantage is that we have many years ahead to earn a living and to accumulate wealth for ourselves and our families.
As young working adults, we may have different aspirations that we are building towards in the first few years of our careers. Some of us might prefer to enjoy singlehood or married life (without kids) in our younger days, while others might take joy in raising a family or to support our elderly parents.
The more investment savvy folks among us will also want to start investing early, knowing that investing from a young age will give us the best chance to achieve our investment goals and to enjoy financial independence.
One common advice typically given to working adults is to have at least six to nine months of their average monthly expenses in emergency savings. This protects us from unexpected circumstances in life, such as a retrenchment, providing us with the funds to continue living our lives normally even as we spend time searching for a new job.
While our emergency savings can mitigate the risk that we face from an unexpected retrenchment, it doesn’t protect us from other curveballs that life may throw at us – such as a critical illness or an accident.
Buying Health Insurance Protection Is Critical For Young Working Adults
Unexpected health problems can rob anyone, even the healthiest and fittest among us, of the ability to work at any point in time. This is the biggest financial risk that young working adults are exposed to. If we have a critical illness or an accident, it is a possibility that we may no longer be able to work, either temporarily or permanently, and to earn an income for ourselves and our families.
The easiest way to mitigate this risk is to buy the right insurance policies. However, buying the right insurance policies isn’t just about spending as much as we possibly can on insurance. We also need to ensure that the insurance policies that we buy are going to be the right insurance policies that we need, and that we can afford over the long-term.
Ensuring Adequate Insurance Policies Isn’t Just About Spending A Lot Of Money On Insurance
Insurance is, at the end of the day, meant primarily for our protection. It does not make financial sense to spend a large chunk of our salary each month to pay for our insurance premiums, while having little funds left for other important aspects of our lives, such as investing for our retirement or providing for our parents and children.
Another thing to note is that even if we were to recognise the importance of insurance, we must also remember that there are many different insurance policies available, each of which would protect us against specific areas of risk. For example, a private integrated shield plan helps cover the cost of any hospitalization bill that we may incur while a term life insurance provides us and our families with a lump-sum payout if an insured event (e.g. death) were to occur.
Ironically, paying a lot for insurance may not necessarily mean you are well protected. For example, many people may pay a much higher premium for their whole life insurance coverage plan and yet still receive lower coverage as compared to what they would have received if they bought a term life coverage instead.
It’s also possible for someone to pay a high premium for his term life insurance plan, but to also neglect other types of insurance policies such as a critical illness plan or a disability income insurance plan.
What this means is that despite paying a high premium for his (one) insurance policy, the individual is still poorly covered because he is only protecting himself against one specific type of risk, while still leaving himself unprotected to other risk areas that can happen. For example, a person may be disabled and unable to find employment, but he/she will still not receive his term life insurance payout.
In general, we want to protect ourselves against two main types of risks – 1) health risk and 2) life risk.
Health risk is the possibility that we may get an illness or an accident that would make it hard for us to continue working, be it temporarily or indefinitely. When this happens, not only are we not able to earn an income for ourselves, but we will also incur healthcare expenses.
We need to get the right insurance policies to protect ourselves against these risks.
A private integrated shield plan helps us to cover the cost of any bills that we may incur at the hospital.
A critical illness plan provides us with a lump-sum payout if we are diagnosed with a critical illness, giving us the financial support we need to cover the cost of treatment, medication and additional help needed at home.
A disability income insurance provides us with a monthly payout in the event that we suffer a disability which would make it difficult for us to continue working in the role that we were working in previously.
Life risk is the possibility that we will no longer be able to provide for our dependents because we are no longer around. These could include our children, elderly parents and our non-working spouse.
The harsh truth is that death to a sole breadwinner is sometimes all it takes for an entire family to go from living comfortably to financial hardship. This is a very real risk that all of us working adults need to guard our family against.
The easiest way to guard against this risk is to buy a term life insurance plan. A term life plan provides your family with a lump sum cash payout in the event of death or total permanent disability. While this payout is not going to be sufficient in replacing a loved one, it helps the surviving family members to continue living their lives without having to worry about money.
Young Working Adult Protection Bundle By MoneyOwl
To help young working adults on their insurance protection journey, Moneyowl, a social enterprise and joint venture between NTUC Enterprise and Providend, has launched a Protection Plan which is designed specifically for young working adults.
There are two packages that you can choose from. The Basic Package and the Deluxe Package.
Basic Package: From as little as $112 (male) and $140 (female) per month, Singaporeans can enjoy extensive protection coverage which includes
- Term life insurance plan that covers for $500,000
- Early-stage critical illness protection for $50,000 per claim (with up to another ECI claim of $50,000 each)
- Critical illness protection for 36 critical illness such as major cancers, heart attack and stroke for $150,000, less claims made on early CI, if any (and up to 2 recurring claims of $75,000 each)
- Occupational disability of $3,000 pay-out during disability with 3% yearly increase in pay-out
- Private integrated shield plan up to Class A ward in public hospital (10% co-payment)
Deluxe Package: If you want a higher level of protection, you can also opt for the Deluxe Package. It’s more expensive ($195 per month for male and $225 per month for female) but also gives you a higher level of protection across most categories.
- Term life insurance plan that covers for $1,000,000
- Early-stage critical illness protection for $100,000 per claim (with up to another ECI claim of $100,000 each)
- Critical illness protection for 36 critical illness such as major cancers, heart attack and stroke for $300,000, less claims made on early CI, if any (and up to 2 recurring claims of $150,000 each)
- Occupational disability of $3,000 pay-out during disability with 3% yearly increase in pay-out
- Private integrated shield plan up to Class A ward in private hospital (5% co-payment)
Editor’s Note: The monthly premium stated above does not include the amount that can be funded by CPF for the hospitalisation benefit. The premiums are also based on the assumption of a 25-year old individual, non-smoker. Monthly premiums will change depending on age, gender and whether the individual is a smoker or non-smoker.
MoneyOwl – Taking A Customised Approach Towards Insurance Planning
When it comes to insurance planning, what works well for one person based on his needs and budget might not necessarily be the best plans for another.
So while the abovementioned plans (particularly the basic plan) may seem suitable for a fresh graduate who isn’t married and has no dependents, these plans might not suit someone that is a father-of-two, who is the sole breadwinner in his family as he may find the coverage insufficient for his requirements. He could prefer a higher term life insurance coverage and a higher critical illness coverage.
If you feel that the protection bundles described above are not exactly what you are looking for, or you have other specific risk areas that you need to address, you can always share your requirements with the financial advisers from MoneyOwl and allow them to recommend what’s suitable for you. MoneyOwl’s advisers are salary-based employees and do not receive any additional commission for the sales that they generate.
Getting the right insurance policies doesn’t need to be expensive, as long as you are paying for what you actually need.
Find out more about the Young Working Adult Protection Bundle here on the MoneyOwl website.
Disclaimer: Please note that insurance policies T&Cs applies. Packages may not take into account your personal financial situation and particular needs. Speak to MoneyOwl’s client advisers if you require specific financial advice.