Industry standard for insurance coverage is 10 times your income

[Perisher]

+1 for defending your incentive trips

best interests for agents, zero thoughts for consumers

Stop going to every thread to derail every discussion. Thank.

 

[ikilledbarbie]

..........................ok

Hahahaha i laughed a bit too

 

[fitlies]

I am for the thought of using expenses as a benchmark as opposed to income. Because if anything happens to me, it's the expenses that needs to be taken care of immediately at least till things go back to normalcy again.

If my expenses increase as I age, then yes, I should increase my coverage. But if my income increases, why would I be looking to increase my coverage then?

So to TS question, yes, I'm on par with the "industry standards".

Saw a note on mortgage insurance being part of life insurance as well. My take is that there's already HPS to cover this expense, at least if we're talking about public housing. So I don't see why it should be lumped together with "basic life cover" here.

 

[w1rbelw1nd]

Makes me doubt the industry experts lol when they look at income. I have no dependents and thus have minimal tpd coverage. If they are going to fugging label me as "insufficiently covered" so be it then. Noobs....

 

[akwl88]

http://sgbudgetbabe.blogspot.sg/2016/08/prudential-says-majority-of.html

On the other hand, if you're more like Billy and you've continued to live frugally while putting your income increments into other investment vehicles such as bonds or stocks, then over time, your money is actually GENERATING more money for you. In such a case, there is hardly a need for you to chalk up greater emergency funds, much less increase your life insurance cover! (For reasons on what your emergency fund is for, click here.)

Prudential believes this "under-insured" situation can be attributed to a lack of awareness on the right level of financial protection needed during times of crisis. This could be true if one is to assume that spending increases exponentially in accordance to one's rise in wages, but remember that not everyone spends more just because they start to earn a little more.

Last but not least, remember that the poll merely surveyed 353 working adults - this is a small fraction of Singapore's numbers and are not definitely representative. As such, you probably shouldn't simply take the results at face value to extrapolate the findings to the rest of the Singapore population.

Remember that ultimately, you need to be able to discern your own financial needs and act accordingly. Don't always take what the insurers tell you at face value - look at the obvious conflict of interest here!

 

[chopra]

1million now is 500k in 24yrs.
Im not agent. Jus saying

 

[doody_]

Makes me doubt the industry experts lol when they look at income. I have no dependents and thus have minimal tpd coverage. If they are going to fugging label me as "insufficiently covered" so be it then. Noobs....

It depends on what you're trying to do. Some want to cover outstanding liabilities as well as loss of income. If you're earning 100k pa and you're suddenly gone, how about your dependents that depend on your income? This could be old parents, or spouse and kids.

Hence some people might think, ok, I want to also cover myself for 3 years of income aka 300k as well. That way, if I suddenly pass away, my share of the liabilities are covered, and my dependents have 3 years of income as buffer for them to adjust their lifestyle to reduce expenses if necessary.

 

[orange_sky]

It depends on what you're trying to do. Some want to cover outstanding liabilities as well as loss of income. If you're earning 100k pa and you're suddenly gone, how about your dependents that depend on your income? This could be old parents, or spouse and kids.

Hence some people might think, ok, I want to also cover myself for 3 years of income aka 300k as well. That way, if I suddenly pass away, my share of the liabilities are covered, and my dependents have 3 years of income as buffer for them to adjust their lifestyle to reduce expenses if necessary.

You made an important point

The 10x coverage doesn't consider whether one has liability or not. Consider A has 5x coverage of his income with no liabilities vs B with 10x coverage but 8x liability

Who's better covered?

Sent from lala using GAGT

 

[hwmook]

10x annual income coverage using term insurance is OK. I think it's excessive because you need to factor in the expenses as well. I think 15-20 year of expenses is more than enough for kids to grow up and make a living on their own.

 

[akwl88]

As we have painstakingly explained, for our higher level needs, our need for insurance is temporary. And for us to be fully covered, the premium for whole life plans are so expensive that most of us will not be able to afford it. Why then is it so that before 2005, there is a higher proportion of sales in whole life plans rather than term plans? And because a lot more people are sold whole life plans, many would have just bought what
they can afford in terms of premiums and as a result, they are not fully covered. Perhaps this explains why we are an underinsured nation.

 

[icyboiz]

You made an important point

The 10x coverage doesn't consider whether one has liability or not. Consider A has 5x coverage of his income with no liabilities vs B with 10x coverage but 8x liability

Who's better covered?

Sent from lala using GAGT

precisely. alot of people think they brought 200k-300k then oh i have more than enough covered. how long can you last with that. personally i would probably finish that within 2-3 years with the increasing medical cost. could only probably raise my (1) kid from 0-4 years old with that amount. childcare itself one month already 1k+ 2 years about 24-30k+ already. baby powder one tin already 50-70+, sometimes cant even last for a week. pampers etc. bills (easily 200-400+ per month), hdb loan so forth and so on is another ongoing liabilities that will never stop.

 

[mummy1234]

10x annual income coverage using term insurance is OK. I think it's excessive because you need to factor in the expenses as well. I think 15-20 year of expenses is more than enough for kids to grow up and make a living on their own.

If based on 15-20 years of expenses. For me is S$4000x12x13 years (as youngest child is 7 years old now) which is about S$600k or my current coverage now which is 5 x my annual income. So it seems sufficient. And I still have my cash, CPF and equity in properties so I do not see why must have 10x annual income as coverage as a blanket rule.

 

[akwl88]

If one is gg to depend on insurance as the be all and end all to maintain your lifestyle/help your dependents etc, all the rest of the finanical products are useless?

Cash, bonds, equities, properties, cpf etc

We buy insurance in the hope that we never get to use them, not buy insurance to depend on insurance.

 

[icyboiz]

that's the problem being too close up, nobody says to DEPEND on insurance. it's call insurance for a reason. it helps to give assurance in the case of unforeseen or rather undesirable circumstances.

if something happens to you, no one will be able to handle your other financial products/investment for you either.

 

[akwl88]

http://dollarsandsense.sg/buying-the-right-insurance-policy-that-you-need-in-singapore/

Our needs and wants are limitless but our financial resources are not. It’s easy for a financial planner to say that saving, investing, insurance and retirement planning are all important, and share with us products that they think we should buy. Ideally, we would love to buy them as well. But all these things cost money that has to come from somewhere, and at the expense of something.

The other thing to remember is that not all our financial needs can be solved by buying an insurance product.

 

[Maeda_Toshiie]

that's the problem being too close up, nobody says to DEPEND on insurance. it's call insurance for a reason. it helps to give assurance in the case of unforeseen or rather undesirable circumstances.

if something happens to you, no one will be able to handle your other financial products/investment for you either.

By that logic, there should be no retail investors.

 

[Maeda_Toshiie]

precisely. alot of people think they brought 200k-300k then oh i have more than enough covered. how long can you last with that. personally i would probably finish that within 2-3 years with the increasing medical cost. could only probably raise my (1) kid from 0-4 years old with that amount. childcare itself one month already 1k+ 2 years about 24-30k+ already. baby powder one tin already 50-70+, sometimes cant even last for a week. pampers etc. bills (easily 200-400+ per month), hdb loan so forth and so on is another ongoing liabilities that will never stop.

Not everyone of us grew up drinking $50 powdered milk even as babies, let alone after the age of 6. Neither do we wear Pampers all our lives. Primary school does not cost >$1000.

Apparently the concept of "living within your means" is such a forgotten concept on this island that we need to spend all that we can and also ensure that we can keep spending like that for the rest of your lives.

----------------------------------------------------

http://www.wsj.com/articles/SB10001424052970203405504576599051448432720

It's the US, but the idea remains. I don't think the WSJ has an interest in selling insurance.

 

[Shion]

Should not tag income level to amount insured. More like should consider how much money can you afford to pay for the premiums

 

[akwl88]

Should not tag income level to amount insured. More like should consider how much money can you afford to pay for the premiums

Yup all those premiums have to come from your own pocket

Unless your agent willing to pay for you hehe

 

[Mecisteus]

Should not tag income level to amount insured. More like should consider how much money can you afford to pay for the premiums

If you are just starting to work or you fall under the low income group, affordability supersedes coverage.