You put in long hours at work to make ends meet and build a nest egg for retirement, but are you doing all you can to safeguard the money that you’ve worked so hard for?
When you’re focused on providing for your family and saving for your golden years, it’s easy to overlook the need of protecting your financial security as well.
With the right insurance coverage in place for your family, you will be able to reap the benefits of your hard work for many years to come. Otherwise, all your family’s assets might be wiped away by a single accident or serious illness.
Insurance Safeguards Your Loved Ones Against The Unforeseeable
It’s hard to wrap one’s head around the idea that even young people who appear to be in good condition can be impacted by diseases and accidents that change their lives forever.
According to the Singapore Cancer Society, during the period from 2014 to 2018, an average of 41 people are diagnosed with cancer daily, with 15 people dying from it every day. Even if adopting a healthy lifestyle might help lower the likelihood of having such diseases, there is no way to ensure that nothing bad will happen to you.
The first step to guarantee your family’s financial security in the event of unexpected occurrences is to review your insurance coverage.
Examine Your Insurance Policy to Identify Any Gaps in Coverage
Many people believe that holding one or more insurance plans means that they are totally protected in the event of any unexpected events. Ask yourself whether you have enough insurance coverage in case of an accident or major health problem. Calculating your protection gap is one method to do so.
Figuring out your protection gap is easier than you think:
Step 1:Take your yearly salary and divide it by nine (in the event of your death) or by five (in the case of critical illness). In the case of your death or inability to work due to illness, this is the amount of money your family would require to continue to live comfortably without your income.
Step 2: Make a list of all of your assets, including cash and liquid assets, and any insurance coverage you currently have. This is the total amount of money which your family will have access to and will be left to survive.
Step 3: Determine how much money your family has to spare by subtracting what you’ll need from what you’ve already had.
You have a hole in your family’s safety if the final figure is negative. In the event of your death or critical sickness, they won’t have enough money to meet their expenses.
How Can Lack of Insurance Cost a Mistake? (Take a look at this example)
Evaluate Your Financial Flow
Insurance isn’t cheap, but you shouldn’t skimp on it because doing so might wind up costing you a lot more in the long run. In order to determine whether you have the resources to improve the security of your current policies, you need to look at your current cash flow.
All of your monthly bills (such as rent, utilities and insurance) should be deducted from your take-home pay to get at this figure. After all, if your cash flow isn’t sufficient, you’ll need to analyze your spending patterns and make required modifications, such as cutting back on dining out or slashing your daily Samgyup habit.
Defining Your Family's Insurance Needs
Most families require the following sorts of basic insurance to safeguard their finances in the event of an emergency.
Healthcare Insurance
In the case of an injury, sickness, or disability, health insurance will cover the expense of medical care (i.e., hospital costs). To keep the expense of big medical expenditures in public hospital B2 and C class wards in Singapore as low as possible, every citizen is given access to MediShield Life, a basic health insurance plan. It also has a $100,000 yearly claim cap.
While MediShield Life provides basic coverage, you may want to consider purchasing an Integrated Shield Plan (IP) like Great Supremehealth from a private insurer in order to get additional coverage. A class wards at public and private hospitals will be covered by this, as will pre- and post-hospitalization charges. Additionally, you’ll be able to file claims for up to $1.5 million every year.
Health insurance isn’t only for the family’s primary breadwinners; it’s essential for everyone living in the home, including children and grandparents, to have some kind of coverage in case of an emergency, which might put a burden on the family’s finances.
Life Insurance Policy
One of the basic goals of purchasing life insurance is to provide financial security for your loved ones in the case of your terminal illness, disability (which might prevent you from working), or demise.
Your children’s happiness and well-being are at stake if you don’t have life insurance. Life insurance payouts operate as a safety net for your children in the case of the death of one or both parents, helping to keep their lives as steady as possible during what would otherwise be a struggle period for them.
Without these payments, you may be forced to choose between essentials and ‘pleasant things,’ delaying some of the things that make your child happy. It all depends on how urgent the disease or situation is. It’s possible that these scenarios will continue for years to come, as the family’s finances improve or if long-term care is required.
When it comes to life insurance, there are two primary options to consider:
Term life insurance provides financial security for a set number of years or until you reach a specific age limit. Coverage ends after the policy term expires. A good example of this is Great Term, which includes coverage for early, intermediate, or even critical illness.
If you die or reach the age of 100, your insurance coverage will continue until you die or until you reach the age of 100. (depending on the plan). The surrender value of the insurance may be received if the policy is terminated before death.
Even if your family has two incomes, life insurance is still vital since the death of one of you will make it even more difficult for the other family members to handle the household bills and maintain the level of lifestyle for your family.
Parents who stay at home with their children or elderly grandparents may still want to think about having both parents covered because finding substitutes such as daycare or assistants can be expensive.
Critical Illness Insurance
Hospitalization, surgical operations, and outpatient therapies are all included in health insurance policies. However, the compensation only reimburses the costs of treatment. Because critical illness (CI) insurance provides a lump sum payment that’s not limited to treatment but also during diagnosis of a critical illness—making sure that the cash can be used to cover your daily living expenses as an income replacement during your recovery period—which is highly recommended for the family breadwinner(s).
You might also be interested in taking Great Life Eastern’s Living Care Rider. This plan can be added to several types of insurance, such as whole life and savings policies. During the period of the rider, you will be paid the rider’s sum promised in the event that you are diagnosed with a debilitating condition (save for angioplasty and other invasive treatment for coronary artery).
Having access to a health savings account is a major advantage, as health insurance alone will not cover your daily needs, forcing you to deplete your hard-earned money.
Insurance Coverage in Case of Personal Accident
Insurance policies like Income’s Personal Accident Assurance are designed to give a lump sum payment in the event that you suffer a major injury, disability or death as a consequence of an accident, which can assist alleviate some of the financial burden caused by the loss of income. Additionally, this policy covers medical expenditures.
Children and the elderly are particularly at risk of falling, making PA plans an excellent choice for them.
How Much Would I Pay for a Basic Family Plan?
Your career, obligations, lifestyle, and the number of dependents you have all play a role in determining how much insurance you need for your family. It is advised that you spend no more than 10% of your monthly income for insurance while making your insurance policy selections.
For James and his family, we’ll take a look at the most basic insurance coverage he’ll need and how much they’ll cost.
Healthcare Insurance
For James, his wife, and his two children, health insurance is a must. Everyone’s health was covered by Great SupremeHealth Basic Policies. James’ family’s health insurance premiums this year will cost him approximately $3,056 in cash, assuming all of James’ family members are Singaporean citizens or permanent residents and he has sufficient funds in his Medisave account.
2 children- $175(multiplied by 2)– $350
James- $443
Wife- $443
James’ mom-$800
James’ dad- $1020
Total: $3,056
Life Insurance
Due to the fact that the family relies on their monthly income from James and his wife, James acquired the $300,000 amount guaranteed and coverage up to the age of 100 with Great Term. There is a price to pay:
- James, aged 32, non-smoker – $139.35/month
- Wife, aged 34, non-smoker – $139.35/month
TOTAL: $3,344/year
Insurance Coverage in Case of Personal Accident
James has an Essential Protector (Personal Accident Insurance Plan) with free coverage for his children because he plays football on the weekends and wants to keep his children safe from accidents that can happen from school. James will have to pay $315.79 annually, and each of his children will be covered for free.
James also has PA Supreme Insurance coverage for both of his aging parents since he is aware that they are more likely to fall and require greater care as they become older. He pays $158.36 per parent each year for the Basic Plan since he had them covered when they were both 60 years old.
The annual cost he pays is $632.51.
Additional Insurance Considerations for Your Family
In addition to the “basics,” your family may have other requirements that you must consider. For example, newlyweds may want to look into house and maternity insurance. Car insurance and domestic helper insurance are options for individuals with larger homes. Families that often travel will, of course, require travel insurance. Let’s take a short look at this:
Home Insurance
Your home is probably your most significant possession, therefore it’s important to insure it.
Your house’s contents (furniture, television, etc.) are covered by home insurance in the event that they are destroyed by events such as water damage, fire damage, theft, vandalism, or other causes mentioned in your policy.
Great Life Eastern’s HomeGR8 Essential Plan coverage would cost $58.86 per year and provide you the following benefits:
- Up to $175,000 for renovation coverage
- Up to $35,000 for the contents of your home
- Up to $500,000 for personal liabilities
Car Insurance
Car insurance is required in Singapore and provides coverage for a variety of perils, including theft, collision, vandalism, and other natural disasters. In the case of an accident that results in unintentional injury, death, or property damage, the policy offers liability protection from legal claims.
Car insurance premiums are highly variable and rely on a number of factors, including your personal driving habits and the vehicle you drive. Let’s use the Income’s Drivo Car Insurance as an example. A 30-year-old male driver using a 2020 Honda Civic will most likely pay $1444.06/year for comprehensive coverage(The Income, 2020).
Maid Insurance
In Singapore, domestic assistant insurance is required, much like auto insurance, and it protects both of you and your helper in the event of an accident or damage to someone else’s property.
Both the scope of coverage and the cost of a policy might differ. It costs $143.38 a year for 14 months of coverage if you’re covered by Great Eastern Life’s MaidGR8 insurance plan. As a result of this strategy,
Coverage of $15,000 for medical and surgical expenses (required by law)
A $60,000 accidental death or permanent disability benefit (required by law)
Building a Family on Your Own
If you’re trying to start a family on your own, you’ll need Maternity Care.
Maternity insurance is meant to cover a variety of obstetrical conditions, including abruptio placentae, ectopic pregnancy, and stillbirth. Down’s syndrome and other congenital disorders like severe jaundice are also covered by this insurance.
Great Eastern Life’s Maternity Care costs $398 for a 30-year-old expecting mother and provides a three-year benefit of $5,000.
Travel Insurance
Whether you’re on the road for business or vacation, you’ll need travel insurance.
Because of delays, trip cancellations, and missed connections, it is essential to have a travel insurance policy in place. In the event of an accident that results in damage, disability, or death, travel insurance will pay for your medical bills and other personal expenses.
Travel insurance policies aren’t only for individuals; there are also plans that may protect families as well. Couples with children can benefit from family plans, which cover children up to the age of 21.
The cost of Income’s Travel Insurance for a two-week vacation to Australia is $285 for a single-trip, Preferred plan with family coverage (before any discounts)(The Income, 2020).
Travel insurance policies can be purchased annually if you travel frequently. Travelers over the age of 65 may want to consider options that cover pre-existing conditions while they are away from home.
Weighing the Risks and Benefits of Protecting Your Family
When it comes to protecting your hard-earned cash and lifestyle, having the right family insurance policies is essential.
It is important to keep in mind that the premiums described here are only approximations, and that actual costs may differ. You can seek the advice of a financial advisor or look for prices on a variety of forms of insurance through several insurance company providers like Great Eastern Life, NTUC Income, AVIVA, AIA, and etc.
Otherwise, it only takes one unforeseen sickness or accident to put your family in financial jeopardy.