Is your family adequately protected?

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Everyone has their own understanding and views about insurance, but it’s good to get an expert’s perspective to see if you have thought through everything.

Have you ever wondered about how much insurance other families just like yours are purchasing? Or if the cover you have is enough to suit your needs.

To help guide you through your decision making, we met up with three different families, at different stages of life, and asked them about what choices they’ve made about insurance. In addition we asked a professional financial adviser to weigh in on their financial portfolio.

Our expert is Mr. Poh Choon Kia, CFP®, FChFP, AIFP (S’pore) is a Senior Financial Services Director at Professional Investment Advisory Services (PIAS), an independent financial advisory firm.

He is a successful veteran in the financial planning and wealth management industry with more than 14 years of experience. He has also been featured as an expert speaker on financial matters for TV programs such as “MoneyWeek” and “Frontline News”.

Family insurance

Young newly married couples can be more focussed on their current lifestyle. However, they should start preparing from now for their future kids.

The newlyweds

Public officers Nancy Goh*, aged 28 and John Ng*, aged 31 are newly married and will soon move into their new 4-room HDB flat in Sembawang.

Income, expenses and attitude to saving

Their monthly household income is $9,000.

John currently owns a hatchback compact car, but the couple plans to upgrade to a larger vehicle when they have children.

They have a joint bank account for shared household expenses such as groceries and daily necessities. This also acts as a combined pool for bigger ticket items such as renovation of their home, new furniture and appliances.

The couple has several large monthly recurring bills: Car season parking fees and road tax as well as personal care for Nancy – hair salon bills, manicures, facials and the like. John pays for his car’s road tax, loan installments, petrol and his personal items out of his own account.

Their approach to savings is quite relaxed. “Individually, we both spend wherever we need and occasionally splurge on good food or luxury items, but both of us will make it a point to save a portion of our salary for the future,” says Nancy, although she admits there is no fixed amount that they commit to saving each month.

The couple is now preoccupied with short-term savings for their upcoming wedding celebrations and home renovations.

Current insurance choices

Currently, John is covered by a term life insurance plan that he bought when he was in the army. Nancy owns a whole life insurance policy purchased when she graduated from University. Together, John and Nancy have an investment-linked plan as well. These plans will mature when the couple are in their 50s, and yield around $100,000.

The expert view

It would seem that the young couple has not reviewed their financial plan for a while, given that most of their plans were purchased when they were younger and had no dependents.

Now that they are married, considerations should be factored in for each other and also for future family planning.

First, I’d suggest they consider purchasing a Medisave-approved Integrated Shield Plan for hospitalisation and surgical needs. At their age, the premiums would be fully payable from Medisave, hence it would not disrupt their short-term wedding and home renovation goals.

Getting health insurance when young and healthy is important as it ensures that the medical plan doesn’t come with any exclusions.

The couple can consider getting an affordable rider to defray the cost of the deductible and co-insurance as well. In Nancy and John’s case, if they opt for Aviva’s MyShield Plan 1 or 2, they can benefit from the additional advantage of securing free coverage for their future children.

They should also consider a joint-life reducing term plan to cover the mortgage of their HDB flat. If either of them moves on prematurely, the coverage will ensure that the other person can still keep the flat.

I would advise the couple to review their financial plan once they have declared the liabilities from their wedding and home renovation.

What kind of insurance cover should you be looking for if you have kids? Click on the next page to find out.

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