Assessing Your Needs and Current Financial Situation (Part 1)

Let’s be honest, no one enjoys buying insurance. But think about this question for a minute – what’s the most valuable possession that you can protect? If you’re thinking about your life and health, then you’ve just stated the two most important reasons for getting insurance in the first place!

However, many Singaporeans think that they have enough insurance protection just because they’re covered by MediShield Life or have employer-provided life/health insurance.

But while these policies might offer some protection against the unexpected – they may not be enough to provide you and your dependents with the financial security needed to deal with Singapore’s ever increasing cost of living.

After all, it only takes one major medical emergency to turn a good financial and retirement outlook into a situation where your hard-earned life savings gets wiped out by hospitalisation and treatment bills.


Why Do You Need Insurance?

Insurance provides the financial protection you and your dependents need to survive any number of unfortunate incidents that can occur during your lifetime. However, just buying the cheapest insurance policy is not enough – you need to make sure you have the right amount of coverage too!

For example:

If you’re a 25-year old who’s paying for $35 a month for the cheapest Personal Accident Insurance coverage available ($50,000) and you get involved in an accident that leaves you permanently disabled, you’re going to wish you had topped up an extra $100 per month for 4X the coverage ($200,000).

Think about it – $135 a month for insurance in this case can get you financial protection of more than 1,400%!

So unless you’re clairvoyant who can predict exactly when your house might catch fire, you’ll get hurt on the job or you’ll get into a car accident – you need insurance! Otherwise, you’re just playing a game of roulette with your life and possessions hoping that you’ll end up lucky every time.

There are many insurance products available that offer financial protection for the following:

  • Provide financial protection to your dependents in the event of your death
  • Provide financial protection to you in the event of permanent disability
  • Provide financial protection to you in the event of critical illness
  • Provide financial protection to you in the event of property damage
  • Provide financial protection to you in the event of vehicle damage
  • Provide financial protection to you in the event your personal possessions are damaged

One of the biggest problems many people have about insurance is that they think it’s a “waste” because they’re making monthly payments for something that they might never need to use.

But that’s exactly why it’s so important!

You’re paying a “small” monthly price for peace of mind that IF something unfortunate were to happen, your insurer, NOT you would cover the vast financial expense incurred by hospitalisation, medical treatment or damage to your property and possessions.


Assessing Your Current Risks

Singapore is famous for being one of the “safest” nations on earth. It’s so safe, you can walk practically anywhere in the country at 2 a.m. without fear of being the victim of a violent crime. But the sad truth no matter how safe Singapore may be – unexpected accidents and events can and will happen.

Here are some of the more costly incidents that ALL of us are at risk for:

  • Getting into a traffic accident
  • Discovering/Developing a major health problem
  • Being unable to work due to a temporary/permanent disability
  • Losing your personal effects (thievery, fire, etc.)
  • Losing your income due to retrenchment
  • Losing your home (due loan default caused by retrenchment/disability)
  • Suffering a personal injury at home or work
  • Being the victim of credit card or business fraud
  • And the list goes on!

Yes, even Singapore is full of everyday risks that can make insurance an absolute necessity. Don’t believe me? Just look at these surprising statistics from the Workplace Safety and Health Institute (WSHI) and the Land Transport Authority (LTA):

2011 2012 2013
Workplace Injuries 10,121 11,113 12,115
Fatal Injuries 61 56 59
Major Injuries 121 588 589
Minor Injuries 9,939 10,469 11,467
Work-related Fatal Traffic Injuries N/A 12 14
Traffic Fatalities 195 168 N/A
Traffic Injuries 9,760 9,106 N/A


The truth is that all of us deal with risks that make it necessary to purchase insurance. Of course, the more risky your job is – the more insurance you should be carrying (and higher premiums you’ll be paying too).

Insurers will factor your premiums and coverage depending on the type of job you have. These are the four classifications insurers use:

  • Class I: Jobs that involve daily work in an office environment.
  • Class II: Jobs that require work in a risky environment (ex. supervisor on a construction site).
  • Class III: Jobs that require light to medium levels of manual labour and/or operation of heavy machinery in a medium-risk environment (ex. air stewardess).
  • Class IV: Jobs that require heavy manual labour and/or operation of heavy machinery in high-risk environments (ex. oil rig worker on an offshore platform or construction worker).

The higher risk the profession, the more important it is for you to ensure that you and your family are protected with a sufficient amount of financial protection in the event you suffer an accident.

Otherwise, you might end up in a situation where medical expenses and your financial obligations end up being too much for you to handle financially – and that’s a mistake that can end up wiping out your life savings.