This Is Why Life Insurance Planning Is Essential To Your Financial Security

Singaporeans are known to be kiasu and kiasi. If you’re not familiar with the terms, they mean “scared to lose” and “scared to die” in the Hokkien dialect. This mentality even extends to our government, who have come up with schemes such as the Central Provident Fund (CPF) and MediSave to ensure we are well taken care of in our golden years. While the government has provided some form of insurance for us, their coverage is extremely basic. Should anything major happen to you, those schemes will not be enough to act as a safety net for your financial portfolio – which might cause your loved ones to be saddled with bills. Here’s why life insurance planning is absolutely essential:

Understanding the concept of leverage

The dictionary defines “leverage” as the “use borrowed capital for (an investment), expecting the profits made to be greater than the interest payable.” This is what insurance essentially is. You pay premiums to the insurer such that in the case of an unfortunate event where your health is compromised, the insurer pays the sum assured – you are therefore investing in your future.

The importance of life insurance

Whole life insurance ensures you are protected in the event you become permanently disabled or pass on. Should death occur, your loved ones are usually guaranteed a payout that is equal to or more than the sum assured that you purchased your insurance policy. In the case of permanent disability, you will not be able to work which means a loss of income for you and your family. With whole life insurance, you are can rest assure that you will receive a steady stream of income from the policy, which will tide you and your loved ones through tough times. Of course, none of us want such misfortune to befall on anyone close to us. However, it’s always good to be prepared for the worst possible scenario – as they say, expect the worst, hope for the best.
While the average Singaporean enjoys a long life span of 84.8 years, there has been a rising number of unhealthy years people here live. The Burden of Disease in Singapore 1990-2017 report said: “The years that Singaporeans have gained are too often spent coping with age-related health problems.”

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To put all this into context, here are some statistics: According to a TODAYonline report, the National Cancer Centre saw a spike of 60% in the number of cancer patients under the age of 50. In addition, the Singapore Cancer Society reported that cancer is Singapore’s top killer, with 37 people being diagnosed with cancer every day, and 16 dying from it daily. Furthermore, if there’s anything we can take away from this whole Covid-19 situation, it’s that life truly is unpredictable, so it’s best to plan ahead. As a general rule of thumb, we would usually advise our clients to spend 10% of their income to ensure financial stability should anything unfortunate happen.

Be the last Sandwich Generation

The term Sandwich Generation refers to working adults who are financially responsible for their children, as well as their parents. This can be especially pressurising as they are their parents’ retirement plan, and their children’s future. As a result, it is easy for those who fall in the Sandwich Generation to neglect their own retirement planning. According to a Straits Times article, only one in five Singaporean youths believed their parents had enough for their own retirement, and a TODAYonline report found that 70% were sure they would need to downgrade their lifestyle in order to care for their parents and 47% were financially unprepared to provide for their parents in the event of unforeseen events.
If you fall into this category, there are things you can do to ease such pressures. Firstly, choose retirement products within your financial constraints to grow savings, such that you are able to support yourself in your golden years. This will end the cycle of the Sandwich Generation and relieve your children of the pressures you are currently facing. Secondly, ensuring you and your family are covered with insurance will protect you from sudden health-related costs.
If you haven’t got around to including life insurance in your financial planning, now’s the time to do it. This is to ensure that you are able to take care of yourself while supporting those that depend on you. The process of selecting the insurance plan that is best for you might be complex, but our preferred advisors are here to guide you through it. Simply leave your contact and we will get back to you shortly.

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