Assessing Your Insurance Needs

Key Takeaways

Get term insurance if you only have life protection needs
There are different types of insurance for your various needs
Know what you can afford

What Are Your Insurance Needs?

Nowadays, it is possible to be insured against all sorts of risks. But it may not be necessary to cover yourself against all risks. Finding the right insurance product is about knowing what you want to protect and how much you will need to cover a financial loss if the event were to happen.

Here are the 3 main categories of insurance and how they can help you:

Life Insurance

If you're worried about...	consider
Death of a breadwinner	Life insurance provides some money for your family if you pass away
Total & permanent disability	Life insurance provides some money for you and your family if you suffer from a total and permanent disability
Death of mortgagor/main borrower of home loan	Mortage reducing term assurance (a type of life insurance) pays off the mortgage if the mortgagor passes away

Health Insurance

If you're worried about...	consider
Trauma or critical illness	Critical illness insurance pays a portion or lump sum on the first diagnosis of a serious illness
Medical bills for major illness or accident	Medical expense insurance, e.g., MediShield Life (compulsory for Singapore Citizens and PRs), Integrated Shield Plans, other hospital and medical plans and riders. The main medical expense insurance plans pay a portion of hospital and surgical costs if you're ill or suffering from injuries due to an accident. Complementary plans such as riders cover the co-payment portions (e.g., deductible and co-insurance) that are not covered under the main plans
Long-term care for disability	Long-term care plans, e.g. ElderShield, ElderShield supplements pay a fixed monthly amount for long-term treatment upon the insured’s inability to perform a number of “activities of daily living” such as bathing and dressing
Loss of income because of hospitalisation	Hospitalisation cash insurance provides income if you're hospitalised

General Insurance

If you're worried about...	consider
Loss of or damage to your belongings	Home contents insurance pays for repairs or replacement if you suffer loss or damage to your home or its contents. If you are renting your home, it’s your responsibility to cover the loss of or damage to the contents of your home
Damage to or theft of your car	Car insurance pays for repairs or replacement if your car is stolen or damaged
Damage to your home	Fire or home insurance pays for repairs or replacement if you suffer loss or damage to your home as a result of perils such as fire, flood, burglary
Loss of luggage, trip delays, cost of medical care while travelling	Travel insurance pays for repairs or replacement if you suffer loss or damage to your belongings. Also pays for financial loss if there are delays or cancellations. It also pays for costs related to a personal accident while overseas including medical and repatriation expenses
Protecting your pet	Pet insurance pays for vets' bills. Some will pay for you to advertise if your pet has been lost or even for kennel/cattery fees if the pet is suddenly admitted into a hospital

How Much Insurance Is Enough?

To help you decide what insurance you need, make a list of the risks or events that concern you. Assess the likelihood of the event happening and the financial loss you or your dependants may suffer if so.

Consider how you would cover the financial loss. Buying a watch to replace a lost one might be fairly easy, but large hospital bills could set back your retirement goals if you don't have savings or insurance to cover this. If you already have some insurance policies, check to see if these cover you for the risks you are concerned about.

Remember you do not need to have insurance for everything, just the things that could set back your financial situation or your financial goals.