Importance of Insurance for Youngsters | Get Insurance Protection Singapore

by Priyadarshini 25 August 2023

Everyone has an opinion about insurance coverage in the world of personal finance, so it can be difficult to determine what is considered necessary (and what is merely desirable). Learn why adequate protection is important and why it is best to obtain it while you are young. In this blog, we tell you about the importance of insurance for youngsters

Importance of Insurance for Youngsters 

Healthcare Will Be Expensive

The main reason why health insurance should be your top priority is that once a diagnosis is made, getting coverage becomes more difficult or impossible due to a pre-existing condition.

As Singaporeans, we are fortunate to have access to a world-class universal healthcare system as well as the mandatory basic health insurance MediShield, which helps to offset some medical expenses. To ensure that the majority of the financial burden is not on you, you can supplement your coverage with an Integrated Shield Plan rider from a private insurer. Some insurers also recommend obtaining a disability income.

In 2020, the government introduced CareShield Life to replace ElderShield, with higher cash payouts starting at S$600 and increasing over time.

The Age of Critical Illness Is Growing

While this is not true for the entire list of 37 official critical illnesses, it is true for diseases such as stroke, which is caused in part by lifestyle factors such as smoking, excessive sodium consumption, and a sedentary lifestyle. According to the findings of a Life Insurance Association of Singapore study, the average Singaporean has a S$256,00 critical illness (CI) insurance gap.

This is based on the recommendation that the CI coverage amount is around 3.9x the insured person’s annual salary in order to cover the costs of treatment, unemployment, and family care. Unfortunately, contracting a critical illness may also result in its recurrence after recovery, so having a plan that provides payouts at various stages would be beneficial.

You have Dependents – Importance of Insurance for Youngsters 

If You Have Parents or Dependents Another important insurance you should obtain as soon as you begin working is life insurance. Why? For the simple reason that you will pay lower premiums if you start young. If you get a term life policy, the 15-25 year payment period means you won’t have to pay after you retire (unlike a whole life policy), and you can focus on other types of protection or just your life. For parents with young children, this is usually the point at which their children begin to earn their own money and no longer rely on you for financial support.

Choosing between term and whole life insurance depends on whether you want a product with cash value and your ability to pay the premiums, which are higher for whole-life plans. While the general recommendation is to set aside 10% of your salary for insurance premiums, consider your actual financial situation and needs.

Long-Term Financial Objectives

Do you intend to send your children to college? Or are you looking forward to retiring early to enjoy a slower pace of life? These are examples of large financial commitments that necessitate some forethought, such as putting together an investment portfolio that includes fixed income or endowments.

When it comes to getting an endowment plan, having a goal in mind before signing up will make you more likely to stick with it rather than thinking it’s a waste of money. There are plans with shorter durations of 2-3 years for short-term goals such as affording a wedding or housing. Before investing, make sure you can commit to the funds for the entire period in order to earn the highest interest.

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