Member Discussions

hi

i think that's a hefty amount to be putting aside for insurance and critical illness. 26% of your earnings could well be put into savings that grow over time and u could retire earlier?

Like yourself, i am female, 35 and w 2 kids so here is what i did when i woke up to the fact that i was paying a lot in insurance 3 years back.

1. What was my objective?

I had to be very clear what i needed the insurance money for - if i needed it in the first place.

If i died prematurely - the kids will be covered by proceeds of term insurance and savings i leave behind.  If i lived to a ripe old age, i certainly dont believe that life insurance is the right thing to leave behind to my children.  i really dont buy the "leaving a legacy" story that insurance agents tout.  if i want to leave my children something after i pass, i rather leave them other assets.

If i was critically ill - what would i need ?  Hospitalisation cost would be covered by the medishield or pte shield plans.  if i was so ill as to be unable to work for a period of time, then i would have to either live on my savings or if i think its not going to be sufficient - then i would need a critical illness cover to pay out a lump sum to tide me through this period of illness.  For me i understand that the purpose of critical illness payout is to replace loss of income.

Hence it is really hard to answer your question - you first need to be clear what your objective is?  on how much to insure, it depends on how much ur monthly expenses are and from there do an estimation to determine how much u need to be covered for and why.

On a related point, i do not think children need life insurance cover.  They have no dependants so why the life insurance ?  Kids should just get plain medishield type coverage to cover their hospitalisation cost in the even they are ill.  No point buying life insurance or term insurance for them - that was my conclusion. 

Happy to hear other points of view.

m

u are welcome.

regarding the 26% of earning on insurance, here is what i suggest you do;

1. Think about what exactly to need to cover - what sort of contingency?

a. to cover remaining dependants if you die prematurely? - then term insurance is the cheapest - if i recall correctly it was only like $300 plus per annum for about $150k (i think..)

b. to cover Critical illness - i.e. u are so ill that you are unable to continue your income stream - well if you need to cover loss of income then you need to either set aside enough savings for it. this would just be regular emergency savings funds anyway.

2. Think about your current insurance plans - options:

a. think whether your current insurance plans are meeting your objectives (i.e. point a)

b. if u think they are not suitable - then think if it is time to bite the bullet and cut your losses.  this was what i had to do.  I was paying into an endowment scheme for around 10  or 12 years and i figured that it would be an even bigger waste of money to me to commit to another 20 years worth of payment till i was 50 +.  It didnt feel so painful after i saw the savings accummulating in the bank.

hope that helps

regards, M