Wednesday, October 27, 2010

What needs to be insured?

Know what needs to be insured and avoid paying premium for insurance that is not really needed or takes away too much of your money that should go into personal saving. Use this knowledge to test if your insurance agent is looking after your interest or his own commission.

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4 comments:

Unknown said...

Dear Mr. Tan,

You state:
The biggest risk for most people is loss of earnings caused by illness or unemployment. This risk is best managed by personal saving.

And also state: A good example of an event that needs to be insured is the chance of premature death of a young person. This is usually
caused by accident or may sometimes be caused by illness. The frequency is about 1 in 1,000. The severity is high, i.e. the loss
of earnings that are needed by the family.


But the risk of disability is higher than the risk of death. Isn't the severity similar though, the loss of earnings needed by a family?

How much personal savings do you recommend that a person save for the chance of loss of income? Would it be 6 months of income? Or 12 months? Or more or less?

October 27, 2010 1:18 PM
Spur said...

Depends whether temporary, semi-permanent or permanent disability.

Medishield or cheap private Shield is the fundamental foundation you need.

For temporary disability, best covered by your liquid emergency savings. Your emergency savings should be at least 6 months to 1 year worth of expenses. Temporary disability also usually won;t result in being sacked or let go by company. Usually companies have up to 60-days paid "hospitalisation" leave. Larger companies can also offer extension thru no-pay leave, flexible work arrangement etc.

Semi- and permanent disability best covered by PA policy which is freaking cheap. If you have dependents you can cover for 10X your annual salary.

Don't buy those disability-income policies, which is expensive in Singapore. And they also have strict terms & conditions. E.g. having to go for yearly medical checkup to confirm that you're still disabled and cannot perform certain jobs etc.

October 27, 2010 5:23 PM
Unknown said...

But isn't the risk of disability higher from sickness than accident? A PA plan won't cover illness disability (e.g. a stroke).

October 28, 2010 9:09 AM
Tan Kin Lian said...

Hi Jill
Send an email to me at kinlian@gmail.com I need your new contact.

I know that you are passionate about disability insurance. I like to know what is the cost of the insurance.

My approach is to encourage people to have adequate savings so that it can be used for unemployment, disability etc.

Disability is likely to occur at the older age. If the young person has adequate savings, it is better than insurnce. (But, if disability insurance is available at a fair price, I am happy to recommend it.

October 28, 2010 12:09 PM

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