Life is constantly changing, and so are our financial needs. A growing family, a new home, a new job - all mean a reassessment of your financial needs. This New Year's make a resolution to achieve good financial health.
Around this time every year, millions of people around the world make resolutions to lose weight, save money, take care of family members, eat healthily, and do other things that they hope will improve their lives.
While reviewing your insurance portfolio may not be the most exciting item on your to-do list, it’s important to ensure that your current plans are still relevant to your needs.
Inflation is an unfortunate certainty, hovering at 3.9 to 4.7% in Singapore over the past few years. Assuming a flat inflation rate of 3% per annum, $100,000 today will be worth only $55,000 in 20 years!
As the cost of living continues to rise, ask yourself whether what you have today, will be enough for you and your family in the future.
Here are some common factors that could trigger the need for an immediate review of your insurance portfolio:
You have a growing family
Getting married and having children means that more people are financially dependent on you, particularly when you are the sole breadwinner.
Consider who your dependants are – aged parents, spouse and children. Then consider their needs and expenses – mortgage, bills, education fees and their daily necessities. Your insurance coverage should be able to provide for all the above, should you no longer be around to provide for them.
When reviewing your portfolio, you should also consider different worst-case scenarios such as critical illness, hospitalisation or disability, and whether the types of coverage you have protects your family against all these.
When you are buying insurance for your family members, do look carefully as there may be economies of scale you can reap with certain types of plans. For example, with Aviva’s health insurance, MyShield, if both parents are covered under the two higher plan options, then their children are covered for free till they turn 20 years old1.
Your income has changed and so have your lifestyle preferences
Keep your coverage aligned to your income. A higher net worth and more expensive lifestyle means a greater sum assured may be necessary to cover all your expenses.
You can also consider an income protection plan. If you’re not able to work due to illness or disability, such a plan provides an income replacement, so you and your loved ones can continue paying the bills and daily expenses.
Click on the next page to find out how changing jobs, buying a home and getting older could mean that you need to revise and update your insurance portfolio.