There are many different types of insurance plans out there in the market (e.g. whole life, term, endowment, Investment-Linked (ILP), medical and personal accident) and… Read More »What Are The Types Of Insurance That Parents Should Buy For Children?
Yeah! It’s the time of the year where people have already planned (and went) their holidays, made out a long list of items to buy (to pamper themselves or just anybody in mind) and collecting their well deserved bonus!
And in the usual Financial Planning sense – if you are one of those who are fond of spending away your bonuses (without even thinking and planning), here are a few tips that you may wish to consider to do so first before happily spending (or wasting) it away…
Note: the tips here are meant for your own good and really to help you with your future. Tips mentioned here are not in order of priority as well.
Five Good Tips To Help You With Your Year-End Bonuses
#1 Think Of Your Previous Purchases (Pampering)
Throughout the year, there have been many various types of sales events and the ease of buying things online has even became easier. If you have made your purchases during those times – it’s time to hold your expenses and think twice before spending your bonuses away. You may wish to consider saving a major bulk of it. If you find it hard to do so, just tell yourself you may get to spend a bit more from this saved amount in next year’s sales events.
This is one common question that I have gotten from my clients and if you are one of them who have been asking around for an answer, the answer is a simple yes. But if you are referring to those health insurance, e.g. Shield Plans, you can only have one.
What You Need To Know About Owning Two Or More Same Policy Type
Basically you are not restricted to applying or owning two or more of the same policy type under one or two insurers. But for most insurers, you are only limited to the amount of coverage you are entitled to – and it can be based on your annual income (also quite subjective).
So how does it go? For example, some insurers may limit the amount of death coverage you may get under them up to a maximum limit of 10 – 20 times (or any multiples which you need to check out with your Financial Planner) of your annual income and also based on your current age group. For Total and Permanent Disability coverage, the common limit is around $1 million and likewise for critical illnesses coverage (recommended to verify as well).
That’s why you are not restricted to owning more of the same policy type but only limited to the amount of coverage you have with them. This is also one reason why in your insurance application form, it’s common to see a particular section that will ask you on the total number of insurance policies you have and the total amount of coverage. You may also be asked to provide a copy of your income tax as a proof to your current annual income status – the moment you apply for a certain amount of sum assured.
The Benefits Of Getting More Of The Same Policy Type Under One Or More Insurers
If your Financial Planner has done a financial planning review with you and recommended that you ought to get more insurance coverage but your rejection to him is that you are worried of the above – this particular section will share some light and maybe help to change your mind a little.
This is because there are certain benefits to getting more than one of the same policy type and even under more than one insurer. Benefits like:
1. You Get To Choose How You Want To Claim Or Surrender
There’s a recent news update that our Tertiary Education in Singapore is going to cost more. And the fee hike is applicable to this year’s cohort. Ouch!
So for those parents who are working hard to send their little ones in 10, 15 and 20 years time, what’s the financial impact should the fees of Tertiary Education to increase on an annual basis?
*For illustration purpose, I will be using the increment as 4% on the current annual fee of $7,170. Also assuming that the duration to get a degree is 3 years. Therefore, the total fee that we are looking at is $21,510. This amount is not inclusive of living expenses.
So, the new fee will be:
– $31,840 (an increment of $10,330 ) in 10 years time
– $38,738 (an increment of $17,228 ) in 15 years time
– $47,131 (an increment of $25,621 ) in 20 years time
And if you are concerned in planning for your little ones, here are a few common alternatives that you may consider in helping you to do so. There are also a few considerations that you may wish to take note.
1. Getting A Scholarship
This is true! There are people who simply just hate insurance (except for car insurance because this is made compulsory). And for these people, no matter how much you persuade, how many articles, how many real life incidents you can share to showcase the importance of getting insurance… they are just not interested!
I have personally came across some of them and through a few series of conversations, I have managed to compile a few suggestions on why they hate insurance… I will also be giving some of my opinions on how to resolve this hatred.
Reason #1: I Can’t Claim Anything From The Insurance Plans That I Have Bought
This is one top reason why people just hate insurance, they pay and pay for so many years of premium, and till one fine day that they can make a claim, it’s either that their claim is invalid or being rejected.
Reason #2: I Lost Money Because Of My Insurance Plans
This is very typical especially for Investment-Linked Plans and Term Insurance. This is also typical for any early withdrawal/surrender of insurance plans (e.g. whole life insurance, endowment plans).
Reason #3: I Buy So Much Insurance Plans Yet Nobody Is There To Take Care Of Them
Because of the high turnover rate in the insurance industry, the chances of people having their insurance plans become “orphaned” literally became higher as well.
That’s why when there’s some form of urgency, they can only depend on themselves and do not know what they can do next. And the two reasons above will apply as well.
*If you have other personal reasons for you to hate insurance, I hope you will share it with me with your comments below.
Personal Opinion To Reason #1