Bridging the protection gap at different stages of life
Having sufficient insurance coverage will always be a fluid situation for people. As we enter different stages of our lives, insurance coverage that used to be sufficient in the past may no longer be adequate or even suitable.
One common problem is underestimating the risk of being under-insured when a person transits from one life stage to another. Often, people don’t even recognise that their protection needs have changed until a life crisis hits. By this time, it is often too late and individuals are left to bear the full consequence of being under-insured.
What can a person do to ensure that they are not at risk of being under-insured?
One simple trick is to re-look your existing coverage levels each time you enter new stages in life. Here are some common life stages that may impact your protection needs.
# 1 Joining the workforce
One of the first things one can do upon entering the workforce is to get themselves insured, if they haven’t already. The reason is simple – being young and with the potential of a long and bright career ahead, the risk you face is an unexpected accident or illness restricting your ability to earn a livelihood for yourself and/or your family.
It is important to openly discuss any existing insurance policies that you may already have. This could be policies that may be bought by your parents while you were a child or provided by your employers. It is equally crucial to discuss your financial commitments and requirements with your financial advisor. Only when your financial advisor is armed with this information, can they accurately help you identify possible protection gaps that you may have.
# 2 Starting a family
After working for a few years, many people settle down and start a family. This is where it’s timely to review your existing insurance coverage to identify new protection gaps that may have formed.
For a start, you may wish to ascertain if you, as well as your spouse and children, have the right health insurance policies to protect the entire family against hefty medical bills. Beyond just health plans, having sufficient life insurance coverage is crucial at this stage in your life. That’s because as a parent, you may want to ensure that your spouse and children are able to continue life at the existing standard of living they are used to if something were to happen to you.
You can work with a trusted advisor to calculate the amount of coverage that you need, and discuss the possible way(s) to reduce any existing shortfall.
# 3 Peak earning years
As you enter the decade between your mid-30s and mid-40s, you will likely be at your “peak earning”. At this stage of your life, retirement planning may become an important part of financial planning.
Even as you go about building investments and income streams for your retirement, you have to be vigilant to the risks you face. For example, you may have bought an investment property to provide rental income in your retirement years. In the long-term, this property could be a valuable one providing a recurring income stream. However, in the meantime, you may have had to take on a housing loan to fund the down payment.
This housing loan, while taken on as part of a savvy retirement plan, may create an insurance gap. That’s because in the event something happens to you or your spouse, the surviving parent may be burdened with a strenuous mortgage to upkeep, especially if they have to ride out a weak rental market.
Other risk areas associated with retirement planning include poor health or illness, which may force a person to take a break from working, at a time when their earnings, and financial commitments, are peaking. This could be detrimental towards an individual’s retirement planning goals and even have a more immediate impact of struggling to keep up with financial commitments.
Relook your protection gap during major transitions in your lifestyle and financial commitments
Entering new stages in life can be exciting and daunting. This also means making important decisions in both our career and personal life, while having new experiences to look forward to.
It is this period of time that is important for individuals not to neglect the protection gap a new phase in life creates. Whether it’s the birth of a new child, an additional loan to fund an investment or even switching to a career that is considered higher-risk, it’s always worth spending the time with your financial advisor to identify new risk areas and how you can bridge the protection gap for yourself and your family.
Speak to your Insurance Specialist or Relationship Manager to explore insurance options here.
Source: AIA Singapore Private Limited (Published on May 2018)
Disclaimer
Contents on this webpage are for general information only, and should not be relied upon as advice. The information provided does not have regard to any individual’s investment objectives, financial situation or particular needs. This webpage and its contents are not an offer nor solicitation to purchase, nor endorsement or recommendation of, any products or services by Citibank Singapore Limited, its related entities and their respective directors, agents and employees (together "Citigroup").
This webpage and its contents do not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution, offer or solicitation is not authorised or to any person to whom it is unlawful to distribute such information or make any offer or solicitation.
Contents on this webpage are prepared by AIA Singapore Private Limited. Citigroup has not independently verified such contents, and makes no representation or warranty as to the accuracy, truth, adequacy, completeness, fitness for purpose, non-infringement of third party rights or continued applicability of such contents.
Citigroup shall not be liable for any complaint, suit, action, claim, expense, loss or damages directly or indirectly arising out of or in connection with any person’s reliance on, or acting upon, or use of, any contents on this webpage.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
Having sufficient insurance coverage will always be a fluid situation for people. As we enter different stages of our lives, insurance coverage that used to be sufficient in the past may no longer be adequate or even suitable.
One common problem is underestimating the risk of being under-insured when a person transits from one life stage to another. Often, people don’t even recognise that their protection needs have changed until a life crisis hits. By this time, it is often too late and individuals are left to bear the full consequence of being under-insured.
What can a person do to ensure that they are not at risk of being under-insured?
One simple trick is to re-look your existing coverage levels each time you enter new stages in life. Here are some common life stages that may impact your protection needs.
# 1 Joining the workforce
One of the first things one can do upon entering the workforce is to get themselves insured, if they haven’t already. The reason is simple – being young and with the potential of a long and bright career ahead, the risk you face is an unexpected accident or illness restricting your ability to earn a livelihood for yourself and/or your family.
It is important to openly discuss any existing insurance policies that you may already have. This could be policies that may be bought by your parents while you were a child or provided by your employers. It is equally crucial to discuss your financial commitments and requirements with your financial advisor. Only when your financial advisor is armed with this information, can they accurately help you identify possible protection gaps that you may have.
# 2 Starting a family
After working for a few years, many people settle down and start a family. This is where it’s timely to review your existing insurance coverage to identify new protection gaps that may have formed.
For a start, you may wish to ascertain if you, as well as your spouse and children, have the right health insurance policies to protect the entire family against hefty medical bills. Beyond just health plans, having sufficient life insurance coverage is crucial at this stage in your life. That’s because as a parent, you may want to ensure that your spouse and children are able to continue life at the existing standard of living they are used to if something were to happen to you.
You can work with a trusted advisor to calculate the amount of coverage that you need, and discuss the possible way(s) to reduce any existing shortfall.
# 3 Peak earning years
As you enter the decade between your mid-30s and mid-40s, you will likely be at your “peak earning”. At this stage of your life, retirement planning may become an important part of financial planning.
Even as you go about building investments and income streams for your retirement, you have to be vigilant to the risks you face. For example, you may have bought an investment property to provide rental income in your retirement years. In the long-term, this property could be a valuable one providing a recurring income stream. However, in the meantime, you may have had to take on a housing loan to fund the down payment.
This housing loan, while taken on as part of a savvy retirement plan, may create an insurance gap. That’s because in the event something happens to you or your spouse, the surviving parent may be burdened with a strenuous mortgage to upkeep, especially if they have to ride out a weak rental market.
Other risk areas associated with retirement planning include poor health or illness, which may force a person to take a break from working, at a time when their earnings, and financial commitments, are peaking. This could be detrimental towards an individual’s retirement planning goals and even have a more immediate impact of struggling to keep up with financial commitments.
Relook your protection gap during major transitions in your lifestyle and financial commitments
Entering new stages in life can be exciting and daunting. This also means making important decisions in both our career and personal life, while having new experiences to look forward to.
It is this period of time that is important for individuals not to neglect the protection gap a new phase in life creates. Whether it’s the birth of a new child, an additional loan to fund an investment or even switching to a career that is considered higher-risk, it’s always worth spending the time with your financial advisor to identify new risk areas and how you can bridge the protection gap for yourself and your family.
Speak to your Insurance Specialist or Relationship Manager to explore insurance options here.
Source: AIA Singapore Private Limited (Published on May 2018)
Disclaimer
Contents on this webpage are for general information only, and should not be relied upon as advice. The information provided does not have regard to any individual’s investment objectives, financial situation or particular needs. This webpage and its contents are not an offer nor solicitation to purchase, nor endorsement or recommendation of, any products or services by Citibank Singapore Limited, its related entities and their respective directors, agents and employees (together "Citigroup").
This webpage and its contents do not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution, offer or solicitation is not authorised or to any person to whom it is unlawful to distribute such information or make any offer or solicitation.
Contents on this webpage are prepared by AIA Singapore Private Limited. Citigroup has not independently verified such contents, and makes no representation or warranty as to the accuracy, truth, adequacy, completeness, fitness for purpose, non-infringement of third party rights or continued applicability of such contents.
Citigroup shall not be liable for any complaint, suit, action, claim, expense, loss or damages directly or indirectly arising out of or in connection with any person’s reliance on, or acting upon, or use of, any contents on this webpage.
This advertisement has not been reviewed by the Monetary Authority of Singapore.