Let’s face it – all of us dread cold calls from insurance agents and companies. You’re young, rockin’ your career and taking over the world. Why would you want to readily fork over your hard-earned dough to some company for the rest of your life for circumstances that’s never going to happen to you anyway?

Delicate Balancing Act

Whether or not you have had it figured out, you have to realise that insurance is an essential item. Even though we don’t want unfortunate accidents to happen to us, it’s better to be prepared, than to tear your pretty hair out if you’re faced with financial strain that may come with an accident.

Of course, you’re not alone when you sulk at the idea of talking about insurance because whenever you have spoken to someone in the past, the insurance industry and agents have thrown too many different industry jargons that has made you feel, well, stupid.

With insurance, you yourself need to determine the kind of insurance you need and the amount of cover – too little and the policy will fail to insulate you from the financial emergency; too much and you stretch your wallet to the breaking point. We help you break down what you need to know about insurance.

What & How Much?

We don’t need to tell you that every person is different; your perception about a threat is different from your BFF’s. Insurance requirements change from person to person and make choosing the correct insurance policy a highly personalised task.

Based on your lifestyle and your estimation of certain threats, you can start by making a list of events that are likely to occur. Granted you can’t foresee the future, but just make sure that you’re not too scared or unreasonably ‘this won’t happen to me’ brave. Stick to the golden, middle path.

Next, prepare a rough estimate of how much these events are likely to affect you financially. Comparing this figure with your income will get you near the amount of insurance cover you need to purchase.

As a general rule, you will need:

  • Life Insurance if you are the main breadwinner of the family and want to safeguard your dependents in case of your unexpected death or disability

Life Insurance must be your number one insurance priority if you have young children and other dependents and you are still repaying mortgages or student loans

Term Life Insurance is inexpensive but provides compensation only if you die within the policy duration. It is a good choice if you want cover only for a short duration – say five years after which your children will be financially independent

Whole Life Insurance covers you your entire life and you can withdraw the entire cash value of the policy or borrow from it

  • Health Insurance is something almost everyone needs as the cost of healthcare gets higher and higher

While you cannot predict a major illness or accident with absolute certainty, you can check your family history for hereditary disorders and estimate the age when these conditions develop. Get health insurance at an early age before disorders creep in and multiply the cost of health cover

You are more likely to be involved in an accident if you travel lot. If so, Medishield Integrated Shield Plan and other hospital plans are useful

Long Term Disability Insurance covers the income you lose when you are unable to work due to a disability. Choose one that covers 60-80% of your income

Long Term Care Insurance is very expensive. If you are aged 70-75plus and have to employ nursing care for your daily living activities, this cover does help you maintain your financial independence without burdening your family. If you can afford it, purchase it

  • Home Insurance is necessary if you live in a region prone to natural disasters. Choose a policy that covers replacement of the structure and the belongings in the house on top of the expenses of living at a temporary residence until your home is safe to live in again.
  • Car Insurance or at least the liability insurance part of it, is required by law. These days, people are increasingly interested in filing lawsuits. If you are involved in an accident, you might end up paying for more than the repairs of your car

Purchasing car and other insurance from the same company does usually save money. Don’t forget to shop around though. Consider your income, net worth, driving habits, the amount of your health coverage, and whether you are leasing or financing your vehicle before getting car insurance

  • Business Insurance can make the difference between a successful enterprise and a bankrupt one. If you are an entrepreneur, it literally pays to have business insurance to guard against legal liability, property damage, and employee related risks

Good To Have Insurance. . .

While focusing on what you need, do not forget what you do not need. Here is what you don’t usually need:

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C.E.O @ The New Savvy
Anna Haotanto is passionate about finance, education, women empowerment and children’s issues. Anna has been featured in CNBC, Forbes, The Straits Times, Business Insider, INC and The Peak Singapore. She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).