What did you spend your first paycheck on?
For me, that was many decades ago and I can’t recall exactly what I spent it on, except for two things: giving my parents their first allowance and reaching out to my insurance friend to buy a policy.
To me, that was a natural instinct. Beyond feeling excited about the newfound ability to earn a living, I was also cognisant of my unspoken responsibility to repay my parents, who had sacrificed their lifestyle for their children.
Nowadays, with growing affluence, school leavers or graduates might not feel the same way, especially if their parents are financially well-off, with no expectation of their children to provide beyond a token sum of gratitude. Technically, in such situations, as there are no dependents yet, hence there is no need for life insurance.
However, you may want to consider two reasons to still get life insurance while you are young.
2 Benefits to Purchase Life Insurance While You’re Young
Buying insurance when you are young has several advantages, below are the 2 key ones.
1. Lower Premiums
Life insurance premiums depend on age. You may not notice it, the younger the person, the lower the risk of death, and hence, the lower the premium.
One of the most cost-effective ways for protection is Term insurance. At Havend, we strongly advocate the use of Term insurance, which allows you to get as much coverage as you need but pay as little as you can.
Using Term insurance from one insurer to illustrate the rising premium with age.
Table 1: Annual Premium of a $1,000,000 Term Policy (Death Cover) That Covers a Period Until Age 65, Based on the Age of Purchase
The premium for younger ages is very affordable, even for a $1M Term policy. However, with every 5-year delay, the average premium increase can range from about 20% to close to 40% for each 5-year interval. Hence, it costs less to start early.
2. Easier Approval Due to Good Health
Good health is the most crucial determinant of getting life insurance. People with underlying medical conditions may not be able to get life insurance or may be offered additional terms and conditions, such as restricted coverage (exclusion clauses) and additional premiums, which can cost as much as 2x more!
Naturally, it is better to get insurance when one is healthy. The longer we put off, the higher the risk of ineligibility due to unexpected medical conditions that may develop over time.
When Do I Need Life Insurance?
Just because you are able to get insurance does not mean you should buy one. There must first be a need for insurance.
How to Ascertain If You Need Life Insurance?
Consider if one of these is important to you:
1. Providing for Dependents
Are there people you are supporting, like parents, children or a spouse? If so, having life insurance ensures financial security if you are no longer around, providing the much-needed money to meet their living expenses so that no one suffers unnecessary financial hardship.
2. Debts and Loans
Life insurance can prevent personal debts from becoming a burden to the family. Having a home loan fully paid off by insurance ensures housing security and peace of mind if the breadwinner is no longer around.
3. Tertiary Education for Children
One of the best gifts to children is the provision of tertiary education. Life insurance can help provide the resources even if the family provider is no longer around. Learn more about the best insurance policies you can buy for your children here.
4. Gifting
If you have a passion for supporting a cause, a charity, or gifting a significant sum to beneficiaries (legacy planning), life insurance is arguably the cheapest and fastest way to make it happen without compromising your retirement.
So far, we have only discussed life insurance, which essentially insures against the event of death.
Beyond life insurance, there are four other crucial areas of protection to be adequately covered, which, at Havend, we use as part of our insurance review for our clients.
Here are the five core areas of risk as the most important risks to transfer to an insurance company, which we have covered extensively in our InsureWell for Smart Accumulators insurance eBook:
1. Life Insurance: Having sufficient financial resources to support your loved ones in the event of death
2. Critical Illness: Having the option to stop work temporarily to focus on recuperation from a critical illness, like cancer, without sacrificing any loss of income
3. Income-Earning Ability: Protecting your most important asset, which is your ability to work. While this is the most important insurance for young working adults, it is often the most overlooked.
4. Hospitalisation: Adequately financing your healthcare needs and expectations, as an unexpected catastrophic medical event can wipe out years of savings.
5. Care-Giving: When we are no longer able to live independently and require the help of a caregiver in the event of a severe disability.
Closing Thoughts
True be told, I eventually terminated my first insurance policy, which was an investment-linked policy (ILP), many years later in favour of Term policies. I will probably save the reason for another article.
In conclusion, start early in your protection journey while you are still healthy and the cost is cheaper so that when life throws a curveball, you and our loved ones are well protected financially.
At Havend, we are passionate about helping our clients be adequately covered without the fear of being oversold, through our first-of-its-kind Money Back Guarantee. If you need any assistance with your insurance or would like to go through an insurance review, please contact us at for a review of your insurance needs with our complimentary InsureWell Assessment.
This is an original article written by Eddy Cheong, CEO of Havend.
At Havend, if we are found to have oversold you, we have put in place a Money Back Guarantee (MBG) scheme, so you can trust that we will always prioritise your interests first. Unprecedented in Singapore, learn more about our Money Back Guarantee scheme here.
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