Finally! After years of studying and burning the midnight oil to get over the finishing line, you have graduated and ready to step into the corporate world. But here's a fact adjusting to early wake-up calls to dress up professionally for work, meeting deadlines for projects and networking with fellow colleagues are not the only adventures you have to face. Financial planning starts now and you will not be surprised to hear from your friends about savings plans and insurance.
All of a sudden, you are receiving your paycheck every month and could afford that cup of Starbucks coffee that you have always been wanting to try out. Then before you know it, you do not have much savings left to build your retirement nest egg. You will start to wonder why we are talking about retirement when you have just started working. Time and inflation are your greatest enemies when it comes to retirement planning.
More importantly, before we could even talk about retirement, what if something unfortunate were to happen to us and we have to be warded for a couple of night stays at a local hospital? The bills could be substantial depending on the severity of the condition and although Medisave and Medishield could help to soften the impact, having a health insurance policy would have been a better option to offset the charges.
A health insurance policy is a product designed to cover your large hospitalisation bills and expensive outpatient treatments. You have already gone through a difficult period of staying in hospital or starting on long-term medication to get back to full health, so the last thing you need to be concerned with will be the charges and whether you can afford it.
As we start working, we are contributing to our CPF accounts and Medisave is one of them. We have covered in another article to explain what Medisave is all about and its role in our healthcare financing framework. You can make use of your Medisave account to pay for the premiums of these private integrated shield plans. These plans will cover your hospital bills and outpatient treatments and other specific treatments as listed in their product offering. If you choose to stay in a private ward to recuperate fully, you may want to consider riders to be included in your basic health insurance policies which will cover these charges.
Now that we have settled your health insurance coverage in the event of a hospitalisation stay or expensive outpatient treatment cost, it is time to look at protection. You are a working adult now so your parents are your dependents for now. They have worked hard to ensure that you have proper education and look forward to this day that you start working and be independent. Now that you have achieved that, it is our turn to care for our parents in their old age. Protection is to ensure that your parents are well taken care of if something unfortunate were to happen to you. Your parents may have retired and because you are no longer around to take care of them, leaving behind a sum of money is one way to show our filial piety and not to let them suffer due to a lack of finances.
They would probably have gone through a trying period to accept your loss and the last thing on their minds will be thinking about how they are going to cope financially after your passing. Hence, you should start to think about getting yourself covered so that both your parents and you will have peace of mind.
We have touched on term insurance on numerous occasions because it is affordable and provides reasonable coverage over a considerable long horizon. It is easy to understand, you pay a fixed amount over the entire coverage term and get yourself protected in the event that something unfortunate were to happen to you. At the end of the coverage term, you will lose the protection but along the way, you could have started on investments or getting life policies when you have higher disposable income so at this stage of your life, these are two key insurance products that you should be focusing on.
At Insurance@FSM, we have onboard a list of term and health insurance products available from the different insurers. Please feel free to look through the different product factsheets and if you have any questions, you can always approach our friendly team of Investment Advisers for a more detailed discussion subsequently.