What insurance do newly wedded couples need?

What do we need insurance for?

As a young newly wedded couple, buying insurance may be the last thing on your mind. However, this seemingly mundane task can actually help to protect you and your spouse against a financial disaster. Acting like a warranty, insurance can give you the assurance you need, knowing that you will be financially protected in the event of unforeseen circumstances.

As you embark on a new stage in life together, here are the 5 types of insurance that you should be looking at.

In this article, we focus on life insurance for the couple, and explain how to choose a life insurance that is suitable for couples at your life stage.

What kind of life insurance do we need?

Having just spent a sizeable sum on your wedding and with upcoming home renovations, and mortgage loans to finance, your finances may be tight. If you are looking for the best and most affordable option to get coverage, we have you covered.

If you are looking for an affordable option for life insurance, term plans are your solution. Competitively priced and easy to understand, term plans serves the intention of covering a temporary protection gap. In the table below, we show an example of how premiums may look like for a young couple.

Profile: Age 30, non-smoker for $500,000 coverage (fixed term until age 65).

_{^Premiums shown are calculated for $499,999 coverage.}

_{*Premiums shown are before discounts and are accurate as of 3 February 2022. Information may be subjected to changes at the insurer’s discretion.}

At this stage if you are only looking to protect a temporary protection gap, we recommend getting a term plan for life coverage. This is because term plans can help to safeguard the financial well-being of the one left behind. Additionally, as shown in the table above, term plans are affordably priced as premiums tend to be cheaper for those who fall into the young and healthy group.

How much coverage do we need?

To calculate how much coverage you will need, it is first important that you understand what a protection gap is. A protection gap refers to the difference in amount you need and the amount that you currently have.

To begin, first determine how much you need as a couple. This can be done by calculating how much shared debts you have as a couple. Some common debt examples include your mortgage, car loan, renovation loan, and credit card debts.

Next, estimate how much your future expenses may be. This should include any potential children’s expenses, living expenses and/or future plans to upgrade your house, car or purchase subsequent properties.

With these, your coverage amount can be calculated as:

Alternatively, you may also use our discovery tool to determine how much coverage you need.

If I am not working, do I still need coverage?

A common misconception that many may have is that only those who work and have an income will need coverage. However, this is not necessarily the case as spouses who do not earn an income will still need life coverage. This is because of the "unseen costs and household contributions" incurred behind a stay-home-parent’s role that would need to be replaced in the event of their passing.

For example, if something unfortunate happens to your spouse, the remaining parent may wish to take time off to care for their children. This time-off work may affect the parent's income especially if you are self-employed and do not have a fixed income to fall back on.

Additionally, the stay-home parent would no longer be able unable to handle their usual duties. You may then have to hire a helper to care for your child, elderly parent(s) or get domestic help to help with the household chores.

Can we use the MINDEF Group Term insurance for life insurance coverage?

All male Singaporeans are eligible for the MINDEF group term insurance, underwritten by Singlife with Aviva, when they start serving their National Service. But did you know that spouses are also eligible for the MINDEF group term insurance plan? Priced at just $102.50 for $500,000 life coverage, MINDEF term insurance plan offers affordable life coverage.

However, while we recommend getting the MINDEF term insurance plan for coverage, we feel that this should not be your only life insurance plan. Instead, use the MINDEF term insurance plan to complement your other life insurance coverage. This is because MINDEF coverage is offered on a group basis. This means that while you get affordable coverage, you are not the policy owner and have less control and flexibility for the policy.

To better understand MINDEF's insurance plans, you may read our article "Is Your MINDEF Group Insurance Really The Cheapest?".

Understanding your options and choosing your coverage

_{^Premiums shown are calculated for $499,999 coverage.}

_{*Profile: Age 30, non-smoker male for $500,000 fixed term coverage until age 65. Premiums shown are accurate as of 3 February 2022 and may be subjected to changes at the insurer’s discretion.}

As explained in our previous article "Best Term Insurance Singapore", the different term plans each has their own pros and cons to it. For example, while FWD Term Life Plus allows for affordable direct online purchase, this will not be the best term plan for smokers. Instead, Manulife’s ManuProtect Term II with its Quit Smoking Incentive may be the better option for smokers as this allows them to enjoy non-smoker premiums for the first 3 policy years. Non-smoker premiums will also be extended if they manage to quit smoking after the first 3 policy years.

If you are still unsure as to which term plan is right for you and would like to find out more, contact us here for a complimentary session.

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