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insurance to get

Which insurance do you actually need to buy?

There are various types of insurance that one should purchase, especially for those who have just entered the workforce. With some earning power, you should be able to get a comprehensive coverage of insurance. Having a myriad of insurance policies, agents and companies out there, it could get pretty overwhelming as to what to buy and what coverage or benefits will we get.

In this article, we will give a short introduction to each of the various insurance policies available in the market and most importantly, what are the basic plans to get for a start.

Almost every insurance agent that you first meet in your life will tell you this.

This is the recommended order to which you should purchase your insurance policies.

* Hospitalization Plan
* Critical Illness
* Life or term plan
* Savings Plan
* Investment Plan
* Others (e.g. travel, loss of goods etc)


1) Hospitalization Plan
This is the MOST important plan of all the policies available out there. In Singapore, healthcare is not cheap at all. Medical expenses can come in the form of in-patient medical surgery or treatment, consultation with doctors or specialists, a day surgery, laboratory tests etc.

An athletic Singaporean friend of mine hurt his knee and needed a knee replacement surgery. His bill came up to a total of $25000 for a stay and surgery at a public hospital. Being only a student, he was fortunate that his parents had him covered under a hospitalisation plan so the cost was still bearable.

Although policies get your medical expenses covered, you do have to take note that it might not cover the entire bill or there might be certain exclusions for individuals. Furthermore, you have to ensure that the waiting period has passed to be able to make any claims. The list of things to take note of goes on so do read the terms and conditions carefully.

2) Critical Illness Policies
This type of policies usually has the purpose of income replacement. Often called a “dread disease policy”, it is an insurance product that makes a lump sum cash payment to the insurer. Think of it as having an illness so critical that cause you to be unable to work for a period of time hence the sum paid out from this policy is to provide you with the income you need. Most of the insurance companies cover 30 critical illnesses in various stages that translate to different payouts (some examples are heart attach, stroke, cancers, kidney failure etc)

3) Whole Life or Term Life Plan
Both whole life and term life plans both cover 3 main things – death, terminal illness and total permanent disability. The differences between life and term are:
A) Coverage period – For life, you could purchase a 25 years policy to provide coverage till the age of 70. Whereas for term, you would have to pay constantly to get the coverage as the moment you stop paying the premium will be the stop of your coverage.

B) Get money back – many of the life plans are marketed as retirement planning plans whereby some give out a lump sum payment at a certain age or simply provide


4) Investment Plan
This is the category of policy which earns insurance agents one of the highest amount of commissions. Agents might usually push these products to you and promote it as an excellent investment tool, with a high guaranteed percentage of returns. This category of insurance should be carefully scrutinized as it might lock your money away and “distract” you from purchasing the more basic insurance that you really need.


5) Other Kinds if Policies

There are many other miscellaneous policies like travel insurance, motor insurance and insurance to protect the loss of goods etc. These are the insurance that you should consider after you have covered yourself with the healthcare plans. However, one exception is the motor insurance as all cars are required to be covered by one in order to drive on the road.


FP • December 3, 2017

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