A recent study commissioned by the Life Insurance Association (LIA) has been completed with the conclusion that Singaporeans are grossly underinsured. While the methodology of such studies may stand up to scrutiny, I am always sceptical of studies that had been commissioned by the industry and subsequently arriving at findings that are in favour of the industry.
While the research found that the average Singapore adult may be underinsured by as much as $362,000 and LIA has stated that premiums of less than $4 a day to buy a term plan to cover this shortfall is possible, the reality of it is that at $4 a day for a 40-year male non-smoker, the premium of a 25-year term policy, the monthly premium is going to be around $120. An additional outlay of $120 per month is definitely something that will impact the budgeting of 40-year old male with financial commitments for the family.
If inflation, lifestyle changes and other variables are catered for, the proposed term policy coverage will be much much less in 26 year's time and additional policies will have to be purchased along the way to ensure the coverage keeps pace with inflation, lifestyle changes, etc. Insurance is a long term commitment, a long term financial planning and it is definitely necessary to keep in mind that life expectancy has been on the increase.
For the underinsured, it is perhaps more prudent to consider taking up term policies as an interim approach to address the gap in their coverage while taking the time to evaluate a proper whole life policy that holds some value that can be cashed out to fund retirement needs eventually.
Take time out to evaluate such long term commitments, trust no one but yourself to take care of your family and yourself. Question and make informed decisions.
While the research found that the average Singapore adult may be underinsured by as much as $362,000 and LIA has stated that premiums of less than $4 a day to buy a term plan to cover this shortfall is possible, the reality of it is that at $4 a day for a 40-year male non-smoker, the premium of a 25-year term policy, the monthly premium is going to be around $120. An additional outlay of $120 per month is definitely something that will impact the budgeting of 40-year old male with financial commitments for the family.
If inflation, lifestyle changes and other variables are catered for, the proposed term policy coverage will be much much less in 26 year's time and additional policies will have to be purchased along the way to ensure the coverage keeps pace with inflation, lifestyle changes, etc. Insurance is a long term commitment, a long term financial planning and it is definitely necessary to keep in mind that life expectancy has been on the increase.
For the underinsured, it is perhaps more prudent to consider taking up term policies as an interim approach to address the gap in their coverage while taking the time to evaluate a proper whole life policy that holds some value that can be cashed out to fund retirement needs eventually.
Take time out to evaluate such long term commitments, trust no one but yourself to take care of your family and yourself. Question and make informed decisions.
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