9 reasons why you should get insurance once you start working
You are swiping through your graduation pictures as you sit at your desk on your first day at work. It’s a wonder how every step of your life has led up to this very day. As you prep yourself for work, you realise that it’s time to shift your financial gears into motion. There's no denying it, the real adulting has begun.
For some, they are lucky to have financially savvy parents/colleagues/friends to tell them that the first thing they should buy as an adult is a comprehensive insurance plan. Others put it off until they are in their 30s or 40s and some don't have insurance policies at all.
But take it from us. It's true. The first thing you should get as a working adult is insurance.
Here are 9 reasons why you need an insurance plan right now and not a year or two down the road:
1. The Premium Prices are Still Affordable
You do not have to worry about commitments, as there are no loans or card repayments tying you down. Coverage is not going to cost you much when you are in your 20s compared to a decade later. It's a fact that premiums for policies get more expensive as you age. So be quick about it. This is not something you want to procrastinate.
If it is something you are entirely unfamiliar with, you could either get the help of a financial planner or do some groundwork yourself with various online portals.
2. Medical Bills Aren’t Going to Get Cheaper
By purchasing health insurance and depending on the insurance plan, you are protecting yourself from increasing costs and hedging against inflation.
For example, Prudential’s PRUShield A Premier and PRUShield A plus has historically increased their policy’s annual limit to match rising health costs against the Singapore’s annual consumer price index. You won’t need to use up your own funds to offset the increase in medical expenses.
Aviva’s My Whole Life Plan on the other hand, allows you to increase your coverage without additional health underwriting when you get married or start a family. These features are key in helping you plan out your health coverage as life milestones get checked off your list.
3. You are at Your Prime
There are no health complications bogging you down right now that could potentially make insurance companies question your eligibility for the policy. At your age, everything is still functioning well and you know you will have access to the best rates on a solid life insurance policy.
Just be cautious on bundled products that can be added to your insurance plan – these are usually savings-based or riders. Take a second look at ones that fit you and your lifestyle and brush off those that are not necessary.
4. Life Insurance Tax Relief Eligibility
According to the Year of Assessment (YA) 2016, you would be able to claim for Life Insurance Relief if you have:
- paid less than S$5,000 for your total employee CPF contribution or Medisave/voluntary CPF as a self-employed person or both for the year 2015, and
- paid insurance premiums for your own life insurance policy or your wife’s (you have to be the policy holder here) in 2015, and
- the insurance company must have an office or branch set up in Singapore if your policies are after 10 August 1973.
Take full advantage of the relief while you can!
5. Do You Have Sufficient Insurance Coverage?
Sure, your parents bought you an insurance plan way back when you were born. But according to the Life Insurance Association Singapore, the sufficient coverage amount is eleven times your annual earnings! This is based on a study conducted in 2007 by the Nanyang Technological University of Singapore (NTU). The researchers found that the insurance needs of an average working adult who lived in an average household came up to a sum of S$490,000.
Time to sit back and work the numbers to see if you’ve got that half-a-million accounted for while you're still relatively young and adding on riders to your policy will not pose a challenge.
6. You Qualify for a Policy Now, but What About Later?
Sure, you are a new set of feet in the office right now. An insurance plan does not really seem necessary. But will you still qualify for an insurance plan once you have been hit with a medical condition? You won’t be able to cover yourself for the same range of illnesses anymore, nor at a good price. Better safe than sorry.
7. It Will Put Your Mind at Peace
With an insurance plan up and running, you don’t have to worry about what happens to you and your family if a tragedy strikes. Don't think about paying for the premiums every year as a burden, but instead, think of it as an investment to your peace of mind.
If you happen to lose your job (touch wood) when there is a market downturn and companies are retrenching, you don't have to worry as much when you have insurance to back you up – that's why it is called insurance!
8. What Happens to Your Premiums After an Accident?
As you age, your chances of getting an illness or an injury get higher. Imagine yourself in a position where you are suffering from back problems after an accident. Your premiums are going to cost you more if you get an insurance plan after an accident or illness. So best be safe rather than sorry and have a backup in case something happens. One insurnace plan is never enough!
9. Facing the Reality of Life
Being an adult means having to plan for what comes when you fall sick, age or stare down the face of your own mortality. And that's not easy. Here’s one point that should drive home the importance of insurance. It’s not just about you, rather, it’s about taking charge of your responsibilities and the people you love. Even after you’re gone.
It’s all about forward thinking and about being prepared. Two decades from now, you’ll look back and be so relieved that you thought about the future way back when.