Let's put it clearly.
If you are an average Singaporean, you will need to have a protection coverage of $1 million dollars to ensure your family is not financially burdened if anything unfortunate happens to you. Most people tend to be covered for $100,000 or $200,000 sum assured as they are usually sold a whole life plan, and covering for a larger sum assured would usually be prohibitively expensive.
(See "You Might be in Massive Trouble, Without These 3 Insurance Policies")
Is $1 million really that necessary?
Here is breakdown of your expected liabilities and obligations down the road:
Expected Expenses or Liabilities |
|
HDB Loan for 4 or 5 room |
$360,000 |
Car Loan |
$72,000 |
Household Living Expenses for 10 years1 (Based on Singstat study) |
$4,000 x 12 months x 10 years = $480,000 |
Child's Future Education Needs2 (Based on approx. education cost inflation rate) |
$40,000 p.a. x 4 years = $160,000 After 21 years of inflation at 5% = Approx. $446,000 |
Total Protection Need |
$1,358,000 |
Should you have similar liabilities as shown above, then it is clear that $1 million alone is not sufficient to meet your financial obligations. It is not entirely necessary to cover your total protection need via insurance coverage, but the more coverage you have, the more assets your family will have to tie over the next few years. Some items can be covered through other means, such as the HDB loan which is usually covered through the Home Protection Scheme.
Your savings, investments and CPF funds also covers part of your financial and protection needs, encompassing what is termed as self-insurance. However, it is not a good idea to be over reliant on self-insurance (or basically your own savings) as it will drain your financial resources which would not be easily replaceable in the near future.
Having a $1 million dollar coverage can have a significant difference in how you loved ones can move on with life.
(See "4 Exciting Ways Insurance at FSMOne Makes Your Life Better")
So how can you cover for $1 million dollars?
Example of a Male, Non-smoker:
- Term policy coverage till 65 years old
- SGD $1 million Death and Total Permanent Disability (TPD) Coverage.
*#Monthly premiums in SGD $
From Age |
Premium Term |
Premiums Per Month |
30 |
35 Years |
$90 / month |
40 |
25 Years |
$169 / month |
50 |
15 Years |
$280 / month |
*Premiums reflected on the table are tabulated on 2 Feb 2017.
#This is a simple illustration that does not take into account client risk profiles, financial objectives and other types of commitment.
Available Products on FSMOne Insurance |
Term Life, Whole Life, Critical Illness, Annuity, Health, Endowment from Manulife, NTUC Income and Tokio Marine Life Insurance *Please check with our advisory team if the product you want is available on FSMOne Insurance |
Our team of friendly advisers are able to help you review your financial objectives, long term commitments, and customize investment and insurance advice specific to your needs. If you would like assistance in reviewing your financial and protection portfolio, or simply to get a quote for an insurance plan, you can contact our advisers at advisory@fundsupermart.com.
Interested to learn more? Check out these articles:
To Your Insurance Agent, You Are Just a $4,000 Cash Cow!
Worried About Critical Illness? Here's 3 Plans You Should Know
5 Awesome Facts You Didn't Know About Medisave & Shield Plans!
