When you are young, you probably feel that your whole life is ahead of you, the world is full of possibilities, and nothing’s going to stop you now.
But is it true that you don’t need insurance, at all?
Of course, it’s easy to understand this sentiment. When you’ve just started earning an income, your immediate priorities may be making new friends, having fun and establishing a career.
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The common misconception is that if you’re twenty something, healthy and single, and have no dependents (assuming your parents and siblings are financially secure), you have zero need for insurance. In fact, some even call it an “unnecessary cost”.
However, there are reasons why you should consider speaking to a financial advisory professional to plan for certain scenarios:
1. You don’t want to leave your family in debt
Sure, you may be physically healthy, but are you financially healthy? If anything should happen to you, how would you feel knowing you may leave your parents and family a large debt? For instance, if you had taken out a significant car loan, and fall victim to a fatal car accident, your debt doesn’t just go away. Unless you have considerable assets to cover your liabilities, a Personal Accident plan, or a simple term insurance plan like the Dependants’ Protection Scheme, could help.
2. You don’t want to become a burden to your family
Generally speaking, it is relatively rare for a young person to experience a major health issue. But if something should happen to you – be it illness, accident, or violent crime – and you survive, MediShield can help pay your medical bills, unless your costs significantly exceed the Medisave withdrawal limits.
And if you need lengthy treatment or become unable to work (perhaps even permanently), you would have to depend on your family to help pay medical bills and your day-by-day living expenses. If you had purchased an Integrated Shield Plan (to cover hospitalisation and some treatments), as well as whole life insurance with disability and income replacement riders, you may be able to defray a large part of the costs.
3. You want to plan for the future
Assuming nothing untoward happens to you, why would you need insurance? Well, even if you don’t yet know what you want in your future – if you would like to get married and start a family, for example – you can still plan to give yourself options.
Taking out a limited-pay whole life plan early, so long as premiums don’t eat up an excessive amount of your take-home pay, could mean it becomes fully paid-up (with guaranteed cash value) by the time you’re ready to start a family.
Or an endowment plan, with lower sum assured, could help you save for your financial needs at that point in your life, say ten years down the road. Another possibility is an investment-linked plan, which offers you both protection and the flexibility to place your cash or CPF funds in the market (albeit with attendant risks).
Regardless of your situation, whether you’re in debt or have accumulated ample cash and assets, the aforementioned (and additional) insurance may be suitable for you. (Find out how Dr Wealth can help you gauge your needs and take an overview of your current policies.) Always seek the advice of a financial advisory professional, even if you’re single, have no dependents, and feel invincible.
About the Author
Yong Shu Chiang is a Contributing Editor for Doctor Wealth Pte Ltd (www.drwealth.com), which is an online financial planning platform. A journalist and editorial consultant with extensive experience in print, magazine and online media over 15 years, he is also an authorised financial advisory consultant for Life Insurance and General Insurance.
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