Insurance plays an important part in every stage of life, as it protects you and your family from life’s unexpected moments. While discussing death and critical illnesses can be considered a taboo, evading the topic will get you nowhere.
Don’t leave yourself vulnerable and be prepared in the event of death, terminal illness or total and permanent disability (TPD). Your life insurance can issue payouts to either your named beneficiaries or dependents to cushion your loved ones against major financial burden.
But there remain many commonly held misconceptions surrounding life insurance. Let’s debunk the most common five, so you can make a clearer, well-informed decision.
1. If you are young and healthy, you don’t need life insurance
Perhaps you’ve just entered the workforce and find it difficult to afford the money to purchase life insurance. Or maybe you’re healthy and feel that the money is better spent on investments.
Although you might be young and in the pink of health at the moment, there’s just no telling when something unpredictable may occur. If you wait until the diagnosis of a medical condition, you will likely have to deal with additional premiums, or not be able to purchase an insurance plan at all.
Safeguard your future as soon as you can, for insurance premiums are cheaper for both term and life insurance when you’re younger. Waiting it out means incurring additional costs, as most life insurance plans have different premium prices for the different age groups, with an upward trend. Find out when you actually need to buy insurance.
2. Life insurance is too expensive
Some people may have the misconception that life insurance is too expensive and may seem like an unnecessary expense.
However, before you dismiss life insurance policies as a high level of commitment, think about the value of being insured. Furthermore, life insurance might not be as pricey as you think. For starters, try allocating 10% of your monthly salary to life insurance.
On the other hand, whole life insurance comprises cash value and allows the insured to receive the available cash value in situations of an early surrender.
Enhance your financial security and take the first step to find out how much you need to get sufficient coverage. You could speak to your Financial Advisor, or even make use of online calculator tool to help you do your sums.
3. Life insurance is only necessary if you have dependents
Dependents refer to those who you are financially responsible for, and may include your children who are not financially independent or the elderly in your household.
This misconception has stemmed from the fact that your life insurance policy only leaves a legacy for your loved ones in the event that you are gone. Perhaps you may think that you do not have dependents who are reliant on your income, thus eliminating the need for life insurance.
However, you should also consider other financial implications that could affect your family in the event of your demise. For example, your grown-up children may still be staying with you and even if they are not sustained by your income, they might still be forced to move out to repay your housing loan.
Having life insurance means leaving a sufficient sum for your loved ones to cover your financial expenses or provide their daily living expenses to reduce their financial burden.
4. MediShield Life covers me for hospitalisation, so I don’t need life insurance
In Singapore, we’re lucky to have the government’s support in looking after our basic needs, with schemes including the MediShield Life and CPF Dependents’ Protection Scheme.
Although MediShield Life does provide basic coverage for your in-patient treatment, you would still be expected to pay for your hospital stay and the subsequent outpatient care, which could amount to a significant sum.
In the event of your total permanent disability or even death, your life insurance policy can provide your loved ones with a lump sum payout.
5. I already have life insurance that I purchased from years ago, so I’m good
If you are already insured, that’s great but it’s not the end point. If you’re guilty of not constantly reviewing your life policies, take this time to reassess your insurance coverage. As a guide, you should be doing this annually.
This is because your ideal life coverage amount is not a fixed one and tends to change as you transition into different phases of life. When you are single and have no commitments, you would probably require a lower amount of coverage. However, if you have just gotten married and are expecting a child, the amount of coverage from your previous policy might not suffice.
Additionally, the insurance market is always undergoing changes, with more innovative products being offered to consumers and some of them may even offer better value than your existing plans.
A frequent review of your policies will allow you to have a better understanding of how well your insurance plans are serving your lifestyle and needs, and whether you may require additional protection.
Stay insured for a better financial future
At the end of the day, it’s important to make sure that you are sufficiently covered because you will never know when life throws you a curveball. Stay insured to have peace of mind, knowing that you and your family are well protected.