Why you should get insurance coverage as soon as you can

Good financial planning does not just refer to managing your monthly expenses well and growing your wealth. It should also encompass planning for the future and this means having the foresight to ensure that you have appropriate insurance coverage in place to fall back on in times when you need it most.

When you are younger and without dependents to look after yet, you may not see the full benefits of certain insurance policies. However, this does not mean that you should kick the can down the road when you actually have dependents to care for. You should aim to be sufficiently insured as soon as you can.

As an investor, you may wish to ensure that both these areas are adequately covered when you build your retirement portfolio. While you may want to grow your wealth over time, you may also need to effectively manage your investment risks to ensure that your portfolio returns do not get cancelled out by external factors such as ever-changing market conditions or unforeseen personal circumstances, such as accidents, illnesses or even a death in the family, which could affect your investment portfolio.

It provides you with coverage and protects your wealth

Getting insurance to protect your downside risk goes hand in hand with growing your wealth for a more comfortable lifestyle and retirement. As you put in the time and effort to earn money and grow your wealth, insurance acts as a safety net to protect this growing pot of money as well as your ability to continue working to grow your nest egg.

In unexpected times, for example, a trip to a hospital could possibly set you back a few months’ worth of savings, having a significant impact on the funds that you were trying so hard to grow.

Scope of Coverage

The younger you are, the more likely you are to have a clean bill of health, without any pre-existing medical conditions. This means any insurance policy you have will be more likely to provide you a comprehensive coverage.

Even if you live a healthy lifestyle, there is a higher chance you become ill, develop a chronic illness or get involved in an accident as you grow older. There are certain exclusions from coverage for such conditions or circumstances which are specified in your insurance policies at the point of purchase. These will usually exclude coverage on the medical conditions that you have already developed prior to purchasing the policy, among others.

You pay lower premiums when you are young and in good health

Premiums increase with age as many chronic illnesses tend to onset only at a later age and your risk of developing a medical condition increases with time. Hence, to enjoy paying lower premiums, you should get your insurance coverage when you are young and in good health.

It is also possible that you develop health conditions by the time you decide to purchase an insurance plan. Rather than have an exclusion inserted into your policy, you could be made to pay a higher premium to represent your greater risk of developing a recurring or new health condition.

Understanding the different types of insurance available

While there are many different types of insurance plans that provide you different types of coverage, here are three basic types of insurance to consider for young working adults.

Critical Illness Protection

Health insurance covers aspects of healthcare costs, such as hospitalisation bills, surgeries and medical treatments.

All Singaporeans are automatically covered under MediShield Life, a basic universal health insurance plan. However, MediShield Life only covers you for hospitalisation in B2/C-type wards at public hospitals. For those who plan to use an A/B1-type ward in a public hospital or go to a private hospital for future hospitalisations, you may consider a Medisave approved integrated shield medical reimbursement plan which combines a MediShield Life component with additional private insurance coverage.

Before purchasing your first policy, you should first understand what kind of health coverage you may already have.

Health Insurance

Critical illnesses include illness such as major cancers, heart attack, kidney failure and stroke. With critical illness protection, you could receive financial support so you can focus on recovery, without the added stress of having to find employment to pay for your and your family’s living expenses.

Disability Income Protection

Disabilities can have a great impact on your family’s financial security. Not only are you likely to be unable to continue working, you could also be put in a situation where you struggle to pay for ongoing bills, supporting your dependents and mortgage payments. This is where disability income protection comes into play.

Growing your long-term wealth

As you plug insurance protection gaps in your life, there are also plans available to help you achieve your long-term retirement goals. With this in mind, find out which insurance plan suits your current needs.

Speak to your Insurance Specialist or Relationship Manager to explore insurance options

Source: AIA Singapore Private Limited

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