Singaporeans are said to be kiasu (fearful of losing out) in almost everything. Looking around at the enrichment classes that a child attends these days for their development and other peripheral expenses that becomes priority makes one wonder if Singaporeans are also spending just as much on protection.
How much protection is enough?
Based on a gap study conducted by Tower Watson for LIA in 2012, a person should have an adequate insurance coverage of 10 times his or her annual income especially if one has dependants1. Alternatively, a working adult requires an average protection needs of $626,0001 ! This may just well be a guideline to the amount of insurance coverage required.
So what should I do?
Once you have a simple method to identify your insurance coverage, you may then start to work on your shortfall. With the shortfall, you may fill the gap by simply adding a term plan. Due to the fact that there is no cash value at the end of the coverage also explains why it is one of the cheapest life protection product out there.
Why do I need insurance?
Insurance is a very good tool for managing risks for you and your loved ones.
If you are earning $3,000 a month and need to cover yourself adequately for $500,000, based on a 20% savings each month, it will take you $500,000 / ($3,000*20%) = 833.33 months or 68.4 years just to accumulate that amount. This is where buying insurance to transfer the potential cost, in exchange for a fee known as the premium, for insurance company to take on the risk that you may face.
See full story at secure.fundsupermart.com