1 00:00:00,000 --> 00:00:02,310 Speaker 1: This is a C. N. A. Podcast. 2 00:00:04,790 --> 00:00:08,050 Speaker 1: We'll go for some quick fire questions in a few words. 3 00:00:08,050 --> 00:00:11,149 Speaker 1: Can you give us your thoughts on the following when 4 00:00:11,150 --> 00:00:15,440 Speaker 1: to get life insurance. When you need it how much 5 00:00:15,440 --> 00:00:19,310 Speaker 1: to spend on this. It depends on your needs. Alright, 6 00:00:19,320 --> 00:00:22,650 Speaker 1: whole life or term term most of the time. Sometimes 7 00:00:22,650 --> 00:00:28,380 Speaker 1: whole life investment linked insurance definitely. No, no best rate 8 00:00:28,390 --> 00:00:30,950 Speaker 1: of an insurance agent. Honesty. 9 00:00:49,100 --> 00:00:52,540 Speaker 1: Life insurance is most often the first financial product we 10 00:00:52,540 --> 00:00:56,090 Speaker 1: buy sometimes that the advice of a well meaning friend 11 00:00:56,100 --> 00:00:59,330 Speaker 1: or insurance agent. It could feel like we can never 12 00:00:59,330 --> 00:01:03,570 Speaker 1: have enough of it while others caution against buying too much. 13 00:01:03,580 --> 00:01:07,179 Speaker 1: But what's the point of getting life insurance? How much 14 00:01:07,190 --> 00:01:10,410 Speaker 1: should be put into it after paying for years and 15 00:01:10,410 --> 00:01:13,459 Speaker 1: even decades? How much of a difference will it make 16 00:01:13,459 --> 00:01:14,720 Speaker 1: in our golden years 17 00:01:15,100 --> 00:01:18,589 Speaker 1: to discuss this? We're joined by wealth adviser Christopher ton. 18 00:01:18,600 --> 00:01:22,720 Speaker 1: He's the ceo of provident chris thanks so much for 19 00:01:22,720 --> 00:01:26,780 Speaker 1: joining us. Insurance is such a huge topic and we 20 00:01:26,780 --> 00:01:29,310 Speaker 1: won't be able to cover everything of course in one episode. 21 00:01:29,310 --> 00:01:32,080 Speaker 1: So today we'll focus on life insurance because there are 22 00:01:32,080 --> 00:01:34,990 Speaker 1: people who don't have enough insurance and I know you've 23 00:01:34,990 --> 00:01:38,970 Speaker 1: said elsewhere that it's possible for people to be over insured. 24 00:01:38,980 --> 00:01:42,020 Speaker 1: So can you break down the key points that we 25 00:01:42,020 --> 00:01:44,090 Speaker 1: should know about life insurance? 26 00:01:44,760 --> 00:01:47,020 Speaker 1: Yeah. I don't think just in Singapore by many parts 27 00:01:47,020 --> 00:01:49,870 Speaker 1: of the world. I think a lot of people buy 28 00:01:49,880 --> 00:01:53,460 Speaker 1: insurance without first understanding their needs. They buy the insurance 29 00:01:53,460 --> 00:01:56,550 Speaker 1: products and then they start to ask themselves whether they 30 00:01:56,560 --> 00:02:00,610 Speaker 1: really do need those products I've always believed before we 31 00:02:00,610 --> 00:02:04,450 Speaker 1: buy our insurance, we must first ask how long we 32 00:02:04,450 --> 00:02:05,840 Speaker 1: need the insurance 33 00:02:06,410 --> 00:02:09,740 Speaker 1: and then we ask how much we need before even 34 00:02:09,740 --> 00:02:12,230 Speaker 1: deciding what kind of insurance we should buy. 35 00:02:12,770 --> 00:02:16,460 Speaker 1: So that's the first step that we should really take. 36 00:02:16,470 --> 00:02:20,890 Speaker 1: And not everybody needs insurance really because at least for 37 00:02:20,889 --> 00:02:25,170 Speaker 1: insurance that replaces your income upon your demise or upon 38 00:02:25,169 --> 00:02:29,480 Speaker 1: disability or upon say a medical crisis. For example, if 39 00:02:29,480 --> 00:02:33,590 Speaker 1: you have no dependence, well you might not need an 40 00:02:33,600 --> 00:02:37,019 Speaker 1: insurance to replace your income laws in the event of 41 00:02:37,020 --> 00:02:39,260 Speaker 1: your demise because if you're gone, 42 00:02:39,580 --> 00:02:42,630 Speaker 1: there is really no one that depends on your income. 43 00:02:42,630 --> 00:02:46,450 Speaker 1: So you might not need death coverage. So these are 44 00:02:46,450 --> 00:02:49,630 Speaker 1: some of the considerations. Before one even decide to buy 45 00:02:49,639 --> 00:02:52,870 Speaker 1: the insurance out there. How do you determine what your 46 00:02:52,870 --> 00:02:56,590 Speaker 1: need is? Because you mentioned that first, you have to 47 00:02:56,590 --> 00:02:59,799 Speaker 1: understand your need when deciding what type of life insurance 48 00:02:59,800 --> 00:03:00,369 Speaker 1: to get. 49 00:03:00,760 --> 00:03:04,750 Speaker 1: So the first thing that a person must determine is, 50 00:03:04,760 --> 00:03:08,430 Speaker 1: how long do you need the insurance? That's the first time. Right? 51 00:03:08,440 --> 00:03:12,390 Speaker 1: So if you are buying insurance to replace your income loss, 52 00:03:12,400 --> 00:03:17,690 Speaker 1: whether upon your demise or upon a disability or medical condition. 53 00:03:17,700 --> 00:03:21,859 Speaker 1: You don't need your insurance forever. You only need it 54 00:03:21,860 --> 00:03:23,100 Speaker 1: for a period of time. 55 00:03:23,419 --> 00:03:27,060 Speaker 1: You only need this kind of insurance until your planned 56 00:03:27,060 --> 00:03:31,740 Speaker 1: retirement or when you have no more dependence, whichever is later. 57 00:03:31,750 --> 00:03:35,070 Speaker 1: So let me give an example. So let's say you 58 00:03:35,070 --> 00:03:37,630 Speaker 1: plan to retire at the age of 60 years old 59 00:03:38,160 --> 00:03:41,809 Speaker 1: And your Children will only be financially independent from you. 60 00:03:41,810 --> 00:03:46,440 Speaker 1: Say when you are 65, then you need insurance to 61 00:03:46,440 --> 00:03:52,370 Speaker 1: cover for income replacement until 65, whichever is later. Right? 62 00:03:52,380 --> 00:03:55,610 Speaker 1: So let's say you plan to retire 60, but your 63 00:03:55,610 --> 00:03:59,960 Speaker 1: dependence will already be financially independent from you at your 64 00:03:59,970 --> 00:04:02,920 Speaker 1: age of 55 years old. You will need your insurance 65 00:04:02,920 --> 00:04:06,270 Speaker 1: until 60, whichever is later. Now, why do I say so? 66 00:04:06,740 --> 00:04:10,420 Speaker 1: So assuming today I'm not financially independent yet and I'm 67 00:04:10,430 --> 00:04:13,080 Speaker 1: 50 years old. Let's say, right, and I'm still working. 68 00:04:13,080 --> 00:04:15,300 Speaker 1: My kids, let's say they are still depending on me 69 00:04:15,300 --> 00:04:18,430 Speaker 1: for an income and if death occurs or if I'm 70 00:04:18,430 --> 00:04:21,839 Speaker 1: disabled and I can't work anymore or if I've got cancer, 71 00:04:21,850 --> 00:04:24,810 Speaker 1: I need to be in hospital. I can't work anymore. 72 00:04:24,820 --> 00:04:28,200 Speaker 1: So my family loses my income and my wife isn't working. 73 00:04:28,210 --> 00:04:31,159 Speaker 1: I need to make sure that I've got sufficient insurance 74 00:04:31,160 --> 00:04:34,570 Speaker 1: to replace the income loss until my Children, they are 75 00:04:34,570 --> 00:04:35,270 Speaker 1: on their own. 76 00:04:35,600 --> 00:04:41,210 Speaker 1: But let's just say that today I'm already 65, I'm retired. 77 00:04:41,220 --> 00:04:43,580 Speaker 1: I'm not working anymore. I don't have an income and 78 00:04:43,580 --> 00:04:46,650 Speaker 1: my Children, they are all working. And if death occurs 79 00:04:46,650 --> 00:04:49,530 Speaker 1: to me think about it, right, I'm not earning an 80 00:04:49,529 --> 00:04:52,890 Speaker 1: income in the first place, there is nothing to replace. 81 00:04:52,900 --> 00:04:56,290 Speaker 1: And because I'm retired, I've got a sum of money, 82 00:04:56,779 --> 00:04:59,270 Speaker 1: My wife doesn't need my income. In fact my wife 83 00:04:59,270 --> 00:05:02,830 Speaker 1: will be very happy that I'm gone because I don't 84 00:05:02,830 --> 00:05:06,550 Speaker 1: think I'm just joking. But you know what I mean? Right. 85 00:05:06,550 --> 00:05:08,310 Speaker 1: That sum of money that was meant for both of 86 00:05:08,310 --> 00:05:11,490 Speaker 1: our retirement. She can now have it all for herself 87 00:05:11,500 --> 00:05:14,550 Speaker 1: with sadness. Of course with tears in her eyes, she'll 88 00:05:14,550 --> 00:05:16,969 Speaker 1: take the money just for about a month and then 89 00:05:16,970 --> 00:05:19,780 Speaker 1: she'll be jumping for joy because she can have the 90 00:05:19,779 --> 00:05:20,740 Speaker 1: money for 91 00:05:20,755 --> 00:05:23,375 Speaker 1: the rest. I mean her standard of retirement lifestyle just 92 00:05:23,375 --> 00:05:27,155 Speaker 1: went up double. Yeah, but joke aside, I think we 93 00:05:27,154 --> 00:05:30,125 Speaker 1: first need to decide how long we need the insurance 94 00:05:30,125 --> 00:05:34,654 Speaker 1: coverage and not every situation you need insurance coverage for 95 00:05:34,654 --> 00:05:38,835 Speaker 1: your entire life. So basically it sounds like you need 96 00:05:38,845 --> 00:05:42,844 Speaker 1: life insurance. As long as your kids depend on you. 97 00:05:42,855 --> 00:05:44,725 Speaker 1: That's how it sounds to me. 98 00:05:45,050 --> 00:05:47,770 Speaker 1: Yeah. So I will not say just your kids but 99 00:05:47,779 --> 00:05:51,430 Speaker 1: anyone that depends on you because some people, they have parents. Yeah, 100 00:05:51,430 --> 00:05:54,440 Speaker 1: they may have relatives. So as long as you have 101 00:05:54,450 --> 00:05:57,940 Speaker 1: no more dependence and you are no longer an income, 102 00:05:57,950 --> 00:05:59,650 Speaker 1: if you think about it, there is really no need 103 00:05:59,650 --> 00:06:02,250 Speaker 1: to replace any income anymore. And so you don't need 104 00:06:02,260 --> 00:06:04,700 Speaker 1: insurance at a point in time. Right? So you also 105 00:06:04,700 --> 00:06:08,900 Speaker 1: have to take into consideration how old your dependence are 106 00:06:08,900 --> 00:06:11,510 Speaker 1: your kids, your parents and how long you want to 107 00:06:11,510 --> 00:06:11,980 Speaker 1: be 108 00:06:12,230 --> 00:06:15,010 Speaker 1: protected for in an event that something happens to you. 109 00:06:15,720 --> 00:06:17,920 Speaker 1: That's right. So if you have Children then we always 110 00:06:17,920 --> 00:06:23,330 Speaker 1: say it will be when your youngest dependent becomes independent, 111 00:06:23,370 --> 00:06:27,870 Speaker 1: feels like a long time for me. Right? You come 112 00:06:27,880 --> 00:06:31,410 Speaker 1: very soon. That's an interesting point in an interesting perspective 113 00:06:31,410 --> 00:06:35,349 Speaker 1: because a lot of times we buy life insurance and 114 00:06:35,350 --> 00:06:35,790 Speaker 1: we 115 00:06:35,960 --> 00:06:40,800 Speaker 1: pay these insurance policies for years and even decades and 116 00:06:40,800 --> 00:06:44,240 Speaker 1: we wonder what is it really for. So can you 117 00:06:44,240 --> 00:06:49,130 Speaker 1: think of an instance when insurance has helped someone greatly 118 00:06:49,130 --> 00:06:50,200 Speaker 1: at some point? 119 00:06:51,160 --> 00:06:54,990 Speaker 1: Yeah. So you see going back to first knowing how 120 00:06:54,990 --> 00:06:57,450 Speaker 1: long you need the insurance now, that's very important because 121 00:06:57,450 --> 00:07:00,820 Speaker 1: if you realize that in most situation we only need 122 00:07:00,830 --> 00:07:05,490 Speaker 1: insurance temporarily. We will buy insurance correctly. 123 00:07:06,220 --> 00:07:10,930 Speaker 1: Most people in Singapore, although I think it's improved now. 124 00:07:10,940 --> 00:07:12,900 Speaker 1: I think we go on and buy this thing called 125 00:07:12,900 --> 00:07:17,320 Speaker 1: a whole life insurance right now whole life insurance is 126 00:07:17,320 --> 00:07:20,640 Speaker 1: an insurance that covers you for your entire life. It's 127 00:07:20,640 --> 00:07:24,630 Speaker 1: very expensive but it may not cover you adequately because 128 00:07:24,640 --> 00:07:26,820 Speaker 1: the premiums are very high but the coverage may not 129 00:07:26,820 --> 00:07:27,970 Speaker 1: be very high. 130 00:07:28,510 --> 00:07:31,580 Speaker 1: Now if you buy that kind of insurance, you may 131 00:07:31,580 --> 00:07:34,580 Speaker 1: be paying a lot but you are not covered adequately. 132 00:07:34,590 --> 00:07:36,790 Speaker 1: And so when you need the insurance you may not 133 00:07:36,790 --> 00:07:39,560 Speaker 1: have enough. I know I'm answering your question a long 134 00:07:39,560 --> 00:07:41,790 Speaker 1: way because I need to set the background. But if 135 00:07:41,790 --> 00:07:44,810 Speaker 1: you realize that actually you don't need insurance for your 136 00:07:44,810 --> 00:07:47,820 Speaker 1: entire life. You will then choose this kind of insurance 137 00:07:47,820 --> 00:07:51,380 Speaker 1: called term insurance. Term insurance. It's up to you right? 138 00:07:51,380 --> 00:07:54,550 Speaker 1: You can cover up to 50 55 65 70 years old. 139 00:07:55,100 --> 00:07:58,830 Speaker 1: Now it is very affordable and it can cover you 140 00:07:58,830 --> 00:08:03,220 Speaker 1: a lot. And I have known of many instances whereby 141 00:08:03,230 --> 00:08:08,770 Speaker 1: because someone chooses to buy a term insurance when something happened, 142 00:08:08,780 --> 00:08:12,290 Speaker 1: the payout is actually sufficient for him to take care 143 00:08:12,290 --> 00:08:15,700 Speaker 1: of the family as opposed to someone buying a whole 144 00:08:15,700 --> 00:08:19,200 Speaker 1: life insurance. But because he can only afford that amount 145 00:08:19,200 --> 00:08:22,220 Speaker 1: of premium, maybe he has only a summer short of 100,000. 146 00:08:22,740 --> 00:08:24,950 Speaker 1: Right? So I'm just gonna give you a bit more 147 00:08:24,950 --> 00:08:27,730 Speaker 1: numbers just to make it clearer. So let's say you 148 00:08:27,730 --> 00:08:33,260 Speaker 1: can only afford $3,000 per year premium. And because you 149 00:08:33,260 --> 00:08:36,080 Speaker 1: want to buy a whole life insurance, well you can 150 00:08:36,080 --> 00:08:39,300 Speaker 1: really afford 100,000 cover some assured which is well that's 151 00:08:39,309 --> 00:08:43,150 Speaker 1: about how much it costs on average. But most of 152 00:08:43,150 --> 00:08:46,220 Speaker 1: us when we passed on our family definitely need more 153 00:08:46,220 --> 00:08:47,160 Speaker 1: than 100,000. 154 00:08:47,600 --> 00:08:50,250 Speaker 1: So you may not cover yourself enough. However, if you 155 00:08:50,250 --> 00:08:53,870 Speaker 1: have gone to use these $3,000 to buy a term insurance, 156 00:08:53,880 --> 00:08:57,180 Speaker 1: you would have been covered with say about two million 157 00:08:57,179 --> 00:08:58,120 Speaker 1: sum assured. 158 00:08:58,380 --> 00:09:01,350 Speaker 1: So it means you get two million in an event 159 00:09:01,350 --> 00:09:03,960 Speaker 1: that something happens to you. I mean your family gets 160 00:09:03,970 --> 00:09:08,150 Speaker 1: two million. So your family has at least enough insurance 161 00:09:08,160 --> 00:09:11,150 Speaker 1: to actually take care of themselves. Right? So that's the 162 00:09:11,150 --> 00:09:15,370 Speaker 1: importance of buying the correct insurance and how much should 163 00:09:15,370 --> 00:09:19,100 Speaker 1: we be insured for because you gave a difference between 164 00:09:19,110 --> 00:09:22,750 Speaker 1: someone who is insured for 100,000 versus two million. How 165 00:09:22,750 --> 00:09:23,820 Speaker 1: much should we go for? 166 00:09:24,140 --> 00:09:27,060 Speaker 1: All depends on your needs and all depends on how 167 00:09:27,059 --> 00:09:28,910 Speaker 1: much income you want to replace. So let me just 168 00:09:28,910 --> 00:09:32,120 Speaker 1: go through it systematically. So if you're buying insurance to 169 00:09:32,120 --> 00:09:36,300 Speaker 1: replace your income upon your unfortunate demise. So let's say 170 00:09:36,309 --> 00:09:40,300 Speaker 1: your family needs $3,000 per month of your income even 171 00:09:40,300 --> 00:09:43,309 Speaker 1: though your husband is working and he's contributing. But your 172 00:09:43,309 --> 00:09:46,090 Speaker 1: family still need that $3,000 of your income even if 173 00:09:46,090 --> 00:09:51,290 Speaker 1: you're gone. So let's take 3000 times 12:36,000 a year. 174 00:09:51,429 --> 00:09:54,680 Speaker 1: And let's say you need to replace this family income 175 00:09:54,679 --> 00:09:58,790 Speaker 1: for the next 20 years until your youngest dependent becomes independent. 176 00:09:58,800 --> 00:10:02,429 Speaker 1: So that would be 36,000 multiplied by 20. That makes 177 00:10:02,429 --> 00:10:04,030 Speaker 1: it about 720 k. 178 00:10:04,559 --> 00:10:07,790 Speaker 1: You need a capital of 720K. But you got the 179 00:10:07,790 --> 00:10:11,830 Speaker 1: minus of those things you already have right upon your demise. 180 00:10:11,830 --> 00:10:15,500 Speaker 1: You leave behind your CPF balances, you leave behind your bank, 181 00:10:15,500 --> 00:10:18,150 Speaker 1: you might have bought some insurance in the past. So 182 00:10:18,150 --> 00:10:19,900 Speaker 1: you minus all these things that maybe you need a 183 00:10:19,900 --> 00:10:22,230 Speaker 1: say for example you need half a million more. So 184 00:10:22,230 --> 00:10:26,130 Speaker 1: that's the amount you should buy upon your demise now, 185 00:10:26,130 --> 00:10:28,410 Speaker 1: disability income, disability income. 186 00:10:28,710 --> 00:10:32,000 Speaker 1: Well in the market today in Singapore the most you 187 00:10:32,000 --> 00:10:36,579 Speaker 1: can cover yourself is up to 75% of your income. 188 00:10:36,590 --> 00:10:38,910 Speaker 1: So if you earn 10,000 a month the most you 189 00:10:38,910 --> 00:10:42,170 Speaker 1: can buy is 7005. And so if you are disabled, 190 00:10:42,179 --> 00:10:45,120 Speaker 1: the insurance company pays 7005 a month. 191 00:10:45,429 --> 00:10:48,950 Speaker 1: Now if you are buying insurance to replace your income 192 00:10:48,950 --> 00:10:53,390 Speaker 1: loss upon you being medically ill like cancer heart attack 193 00:10:53,400 --> 00:10:56,500 Speaker 1: usually we will suggest that the amount you should buy 194 00:10:56,510 --> 00:11:00,050 Speaker 1: is about 3 to 4 times of your annual income. 195 00:11:00,050 --> 00:11:03,010 Speaker 1: So if you earn $100,000 a year you should buy 196 00:11:03,010 --> 00:11:06,520 Speaker 1: about 300 to 4003 to four years because the number 197 00:11:06,520 --> 00:11:09,900 Speaker 1: one killer in Singapore is actually cancer. And in that 198 00:11:09,900 --> 00:11:12,340 Speaker 1: 3 to 4 years usually the patient will need to 199 00:11:12,340 --> 00:11:15,190 Speaker 1: go for chemo, radiotherapy can't work 200 00:11:15,490 --> 00:11:17,780 Speaker 1: So that 3-4 years. If you have got a lump 201 00:11:17,780 --> 00:11:20,679 Speaker 1: sum to give to your spouse, your spouse can still 202 00:11:20,679 --> 00:11:22,730 Speaker 1: cook with the family expenses, you can focus on your 203 00:11:22,730 --> 00:11:25,950 Speaker 1: recovery 3-4 years later you either survive or you don't 204 00:11:25,950 --> 00:11:28,450 Speaker 1: survive if you survive you can go back to work 205 00:11:28,460 --> 00:11:30,390 Speaker 1: if you don't, your death coverage will come in. So 206 00:11:30,390 --> 00:11:33,800 Speaker 1: at least about 3-4 years of income replacement in the 207 00:11:33,800 --> 00:11:38,060 Speaker 1: event of a medical condition. I see. So is that 208 00:11:38,070 --> 00:11:40,450 Speaker 1: different from the life insurance. 209 00:11:40,890 --> 00:11:44,420 Speaker 1: So all these things that I've mentioned is generally categorized 210 00:11:44,429 --> 00:11:49,370 Speaker 1: under life insurance. I see. Yeah. So life insurance will 211 00:11:49,380 --> 00:11:52,719 Speaker 1: include things like buying insurance to cover for death for 212 00:11:52,720 --> 00:11:56,599 Speaker 1: disability for critical units. They are all under the umbrella 213 00:11:56,610 --> 00:12:00,270 Speaker 1: of life insurance. And then of course we have another 214 00:12:00,270 --> 00:12:06,229 Speaker 1: category called hospitalization insurance which should be like our medical life, 215 00:12:06,240 --> 00:12:10,820 Speaker 1: our integrated shield plans. Yeah that's hospitalization insurance. Yeah. 216 00:12:15,210 --> 00:12:18,170 Speaker 2: Hi. I'm Stephen share and I host the new season 217 00:12:18,170 --> 00:12:21,270 Speaker 2: of our podcast Heart of the matter join me in 218 00:12:21,270 --> 00:12:23,620 Speaker 2: getting right to the heart of the headlines as we 219 00:12:23,620 --> 00:12:26,980 Speaker 2: speak with experts and newsmakers to delve deep into the 220 00:12:26,980 --> 00:12:30,810 Speaker 2: most talked about news developments look out for our episodes 221 00:12:30,820 --> 00:12:32,750 Speaker 2: wherever you get your podcasts. 222 00:12:37,510 --> 00:12:40,570 Speaker 1: So today we'll focus on life insurance. So you mentioned 223 00:12:40,570 --> 00:12:44,500 Speaker 1: we have to make sure that we have enough insurance 224 00:12:44,500 --> 00:12:45,849 Speaker 1: to cover us 225 00:12:46,000 --> 00:12:48,990 Speaker 1: In the event that we pass away while we still 226 00:12:48,990 --> 00:12:52,300 Speaker 1: have dependence. And on top of that we need to 227 00:12:52,300 --> 00:12:56,580 Speaker 1: prepare for a potential critical illness that would take us 228 00:12:56,580 --> 00:13:01,350 Speaker 1: out of the workforce for 3-4 years. Yeah. So if 229 00:13:01,350 --> 00:13:03,900 Speaker 1: we look at it, there are three things that will 230 00:13:03,900 --> 00:13:06,840 Speaker 1: cause us to lose our income either for a long 231 00:13:06,840 --> 00:13:09,550 Speaker 1: time or permanently death 232 00:13:10,320 --> 00:13:11,609 Speaker 1: a disability 233 00:13:12,450 --> 00:13:16,250 Speaker 1: or when we are critically ill. These three things, if 234 00:13:16,250 --> 00:13:19,150 Speaker 1: it happens, our income will be affected either for a 235 00:13:19,150 --> 00:13:23,310 Speaker 1: prolonged period of time or permanently. So this is why 236 00:13:23,309 --> 00:13:25,679 Speaker 1: I say that well we need to consider how long 237 00:13:25,679 --> 00:13:28,570 Speaker 1: we need this coverage if one of these three things happen. 238 00:13:28,580 --> 00:13:30,970 Speaker 1: And so you buy your insurance to make sure you 239 00:13:30,970 --> 00:13:34,230 Speaker 1: cover yourself to replace the income loss. Of course there 240 00:13:34,230 --> 00:13:36,449 Speaker 1: will be another type of insurance you need. You should 241 00:13:36,450 --> 00:13:38,500 Speaker 1: be paying for your medical bills which we can talk 242 00:13:38,500 --> 00:13:40,040 Speaker 1: about it in a separate podcast. 243 00:13:40,260 --> 00:13:44,350 Speaker 1: It sounds like we're preparing to die. But that's kind 244 00:13:44,350 --> 00:13:47,199 Speaker 1: of not how I want to view my life or 245 00:13:47,200 --> 00:13:50,680 Speaker 1: sometimes I feel like I don't want to spend my 246 00:13:50,679 --> 00:13:55,470 Speaker 1: money preparing to pass away early when that's not what 247 00:13:55,470 --> 00:13:58,400 Speaker 1: I'm trying to do with my life. Yeah, you are 248 00:13:58,410 --> 00:14:01,969 Speaker 1: absolutely right Sarah and sometimes the way I see people 249 00:14:01,970 --> 00:14:05,390 Speaker 1: buying insurance is really like they are preparing to die 250 00:14:05,390 --> 00:14:07,380 Speaker 1: because they spend so much of their 251 00:14:07,580 --> 00:14:12,010 Speaker 1: income paying for insurance premiums right? So you're absolutely right 252 00:14:12,010 --> 00:14:15,229 Speaker 1: and that is really the wrong way to use insurance 253 00:14:15,900 --> 00:14:19,570 Speaker 1: insurance is a contingency plan. You don't want to use 254 00:14:19,570 --> 00:14:22,100 Speaker 1: it if you don't have to use it. Your main 255 00:14:22,110 --> 00:14:26,070 Speaker 1: financial plan is an accumulation plan. So as we turn 256 00:14:26,070 --> 00:14:29,080 Speaker 1: our income yes we enjoy our lifestyles but we always 257 00:14:29,090 --> 00:14:31,600 Speaker 1: know that we need to set aside some to accumulate 258 00:14:31,610 --> 00:14:34,150 Speaker 1: towards the day whereby we can no longer work like 259 00:14:34,160 --> 00:14:36,990 Speaker 1: retirement so we save and we save and we save, 260 00:14:36,990 --> 00:14:39,620 Speaker 1: we earn money we save but can cause this plan 261 00:14:39,620 --> 00:14:43,910 Speaker 1: to fail. Well the minute our income stop our plan 262 00:14:43,920 --> 00:14:44,690 Speaker 1: fail 263 00:14:44,980 --> 00:14:48,970 Speaker 1: and insurance when you buy them is for the purpose 264 00:14:48,980 --> 00:14:53,510 Speaker 1: of replacing the income so that your plan can still 265 00:14:53,510 --> 00:14:56,730 Speaker 1: succeed with or without you. That's the purpose of insurance, 266 00:14:56,740 --> 00:15:00,160 Speaker 1: it's a contingency plan and we should not spend too 267 00:15:00,160 --> 00:15:03,520 Speaker 1: much money on a contingency plan. The energy I use 268 00:15:03,530 --> 00:15:05,460 Speaker 1: is like fire extinguishers. 269 00:15:06,010 --> 00:15:08,560 Speaker 1: You don't buy a lot of fire extinguishers and you 270 00:15:08,560 --> 00:15:10,330 Speaker 1: put all around your house, right? So if you have 271 00:15:10,330 --> 00:15:13,830 Speaker 1: got 100,000 renovation budget, imagine someone comes to you and 272 00:15:13,830 --> 00:15:17,330 Speaker 1: say I'm going to spend $70,000 on fire extinguishers because 273 00:15:17,330 --> 00:15:19,230 Speaker 1: I'm so afraid. And then you'll be like listening to 274 00:15:19,230 --> 00:15:21,240 Speaker 1: this story and you're thinking, are you crazy? You spend 275 00:15:21,240 --> 00:15:24,840 Speaker 1: 70,000 and fire extinguishers. You should be spending very little, 276 00:15:24,850 --> 00:15:27,910 Speaker 1: but you buy enough fire extinguishers so that if something happened, 277 00:15:28,080 --> 00:15:30,860 Speaker 1: well, you can use a fire extinguisher. Insurance is like that. 278 00:15:30,870 --> 00:15:33,760 Speaker 1: You try to buy as much insurance as you can, 279 00:15:33,760 --> 00:15:36,420 Speaker 1: but spend as little as you need. So that's why 280 00:15:36,420 --> 00:15:38,920 Speaker 1: we talk a lot about term insurance because this is 281 00:15:38,920 --> 00:15:40,950 Speaker 1: the kind of insurance that you don't have to pay 282 00:15:40,950 --> 00:15:43,979 Speaker 1: huge premiums. But you will cover yourself sufficiently. 283 00:15:44,170 --> 00:15:48,370 Speaker 1: You make an interesting point. This is separate from us 284 00:15:48,370 --> 00:15:51,590 Speaker 1: trying to grow our money. So this is not a 285 00:15:51,590 --> 00:15:57,050 Speaker 1: retirement plan. We cannot expect this to fund our future 286 00:15:57,050 --> 00:16:00,510 Speaker 1: when we are older and we pay this just in 287 00:16:00,510 --> 00:16:01,140 Speaker 1: case 288 00:16:01,250 --> 00:16:04,310 Speaker 1: something happens. That's right. So the way we looked at 289 00:16:04,310 --> 00:16:07,290 Speaker 1: insurance is that it is not a saving instrument, it 290 00:16:07,290 --> 00:16:09,920 Speaker 1: is not to be used for investing because if you 291 00:16:09,920 --> 00:16:12,260 Speaker 1: really want to save and invest, there are many other 292 00:16:12,260 --> 00:16:16,340 Speaker 1: better instrument to use insurance is a very expensive way 293 00:16:16,350 --> 00:16:18,320 Speaker 1: to save and invest. 294 00:16:18,800 --> 00:16:22,660 Speaker 1: I remember when I got my first job I was told, 295 00:16:22,660 --> 00:16:24,780 Speaker 1: you know it's time for you to pay your bills 296 00:16:24,780 --> 00:16:28,190 Speaker 1: and it's time for you to buy life insurance. So 297 00:16:28,200 --> 00:16:31,800 Speaker 1: now looking back, I mean I didn't have dependence then 298 00:16:31,810 --> 00:16:34,480 Speaker 1: and now I wonder what was that life insurance for 299 00:16:34,490 --> 00:16:34,910 Speaker 1: or 300 00:16:34,920 --> 00:16:38,220 Speaker 1: what's that? I'm paying for? A lot of young people 301 00:16:38,220 --> 00:16:40,100 Speaker 1: when they graduate, they always told that you should buy 302 00:16:40,100 --> 00:16:44,890 Speaker 1: your first life insurance. Not necessarily. That's the correct advice. Right. 303 00:16:44,890 --> 00:16:47,800 Speaker 1: I think the first insurance, if your parents have not 304 00:16:47,810 --> 00:16:51,940 Speaker 1: already bought them for you is a hospitalization plan. Right? 305 00:16:51,950 --> 00:16:54,730 Speaker 1: As a responsible working adult. If you fall sick, you 306 00:16:54,730 --> 00:16:57,460 Speaker 1: want to be able to pay for the bills yourself. 307 00:16:57,470 --> 00:16:59,310 Speaker 1: But other than that, if you think about it, if 308 00:16:59,310 --> 00:17:01,760 Speaker 1: you're fresh graduate, if you passed on, 309 00:17:02,100 --> 00:17:05,950 Speaker 1: your parents may miss you emotionally, but they are not 310 00:17:05,950 --> 00:17:08,020 Speaker 1: going to miss your income, you have no dependence. Right? 311 00:17:08,020 --> 00:17:10,860 Speaker 1: So actually you don't need all those life insurance that 312 00:17:10,859 --> 00:17:14,199 Speaker 1: replace your income. So it shouldn't be the first thing 313 00:17:14,200 --> 00:17:18,460 Speaker 1: that we by then. Absolutely, yeah, the income replacement should 314 00:17:18,460 --> 00:17:21,629 Speaker 1: not be the first thing that a young people need 315 00:17:21,630 --> 00:17:24,440 Speaker 1: to think about. It's more the medical that they first 316 00:17:24,440 --> 00:17:25,380 Speaker 1: need to think about. 317 00:17:25,830 --> 00:17:30,530 Speaker 1: So what about those who have dependence, whether they're kids 318 00:17:30,540 --> 00:17:33,970 Speaker 1: or elderly parents? How should they start then? I mean 319 00:17:33,970 --> 00:17:37,290 Speaker 1: you mentioned how much we should look into, how much 320 00:17:37,290 --> 00:17:41,750 Speaker 1: coverage we need, where should they go and how should 321 00:17:41,750 --> 00:17:44,990 Speaker 1: they go about this? Yeah. So it's the same thinking process. 322 00:17:45,000 --> 00:17:47,619 Speaker 1: So if I have got a set of parents I 323 00:17:47,619 --> 00:17:50,450 Speaker 1: need to take care of and I've got young Children, 324 00:17:50,580 --> 00:17:53,350 Speaker 1: the first thing I need to ask myself is when 325 00:17:53,350 --> 00:17:55,470 Speaker 1: I'm gone, how much income do I still want to 326 00:17:55,470 --> 00:17:58,920 Speaker 1: give to them? And then I calculate the capital amount 327 00:17:58,920 --> 00:18:02,490 Speaker 1: that I need minus whatever I already have. The gap 328 00:18:02,500 --> 00:18:05,140 Speaker 1: is really the amount that I need to buy. And 329 00:18:05,140 --> 00:18:07,990 Speaker 1: if I'm buying it temporarily, then I just go out 330 00:18:07,990 --> 00:18:09,689 Speaker 1: there in search of a term plan and speak to 331 00:18:09,690 --> 00:18:13,170 Speaker 1: your financial advisor, speak to your insurance agent insist that 332 00:18:13,170 --> 00:18:17,600 Speaker 1: you want a term plan honestly speaking whole life plan 333 00:18:17,609 --> 00:18:19,910 Speaker 1: because the premium is so high 334 00:18:20,109 --> 00:18:24,399 Speaker 1: the commissions are higher. So sales people might be motivated 335 00:18:24,410 --> 00:18:28,690 Speaker 1: to actually push whole life plan. Now I'm very careful 336 00:18:28,690 --> 00:18:31,620 Speaker 1: here because I don't mean all sales people, but there 337 00:18:31,619 --> 00:18:33,770 Speaker 1: could be people who are conflicted and they may want 338 00:18:33,770 --> 00:18:37,649 Speaker 1: to push you higher commission plan for themselves term plans 339 00:18:37,650 --> 00:18:40,810 Speaker 1: because the premiums are much lower. The commission is lower. 340 00:18:41,010 --> 00:18:45,220 Speaker 1: So as consumers, we need to understand what is actually necessary. 341 00:18:45,220 --> 00:18:47,139 Speaker 1: And when you speak to your financial advisors or you 342 00:18:47,140 --> 00:18:49,940 Speaker 1: speak to your insurance agent, you can at least tell 343 00:18:49,940 --> 00:18:51,590 Speaker 1: them no, this is what I want, I just need 344 00:18:51,590 --> 00:18:55,040 Speaker 1: a term plan because I'm just protecting my income temporarily. 345 00:18:55,050 --> 00:18:58,770 Speaker 1: I want to touch on that point about financial advisors 346 00:18:58,770 --> 00:18:59,480 Speaker 1: and insurance 347 00:18:59,490 --> 00:19:02,660 Speaker 1: agents. I'm sure we've all been approached by at least 348 00:19:02,670 --> 00:19:07,270 Speaker 1: one insurance agent and you've pointed out that commissions play 349 00:19:07,270 --> 00:19:09,750 Speaker 1: a part as well. And many of us listen to 350 00:19:09,750 --> 00:19:14,030 Speaker 1: the advice that we get from financial advisors. How then 351 00:19:14,030 --> 00:19:18,620 Speaker 1: should we approach insurance agents in light of what you mentioned? Yeah. 352 00:19:18,630 --> 00:19:21,350 Speaker 1: So firstly, we all have to understand that as long 353 00:19:21,350 --> 00:19:24,380 Speaker 1: as your advisers takes a commission, there is always the 354 00:19:24,380 --> 00:19:25,980 Speaker 1: inherent conflict of interest. 355 00:19:26,200 --> 00:19:29,330 Speaker 1: We're not saying they are dishonest. You're not saying that 356 00:19:29,330 --> 00:19:32,230 Speaker 1: they are unethical. It's just that there is a present 357 00:19:32,230 --> 00:19:33,550 Speaker 1: of that conflict of interest. 358 00:19:33,900 --> 00:19:37,190 Speaker 1: And the only way for us to mitigate that as 359 00:19:37,190 --> 00:19:40,890 Speaker 1: a consumer is to do a lot of financial education ourselves. 360 00:19:40,890 --> 00:19:43,060 Speaker 1: Like listening to this podcast is an example, right? If 361 00:19:43,060 --> 00:19:45,210 Speaker 1: they learn, they're going to speak to the advisor and 362 00:19:45,210 --> 00:19:47,050 Speaker 1: tell them no, I've heard that it's better for me 363 00:19:47,050 --> 00:19:48,910 Speaker 1: to buy term. And if your advisor tell you know, 364 00:19:48,910 --> 00:19:51,000 Speaker 1: I think it's better to buy whole life. Ask why? 365 00:19:51,010 --> 00:19:54,010 Speaker 1: Ask him, why do I need insurance after I'm no 366 00:19:54,010 --> 00:19:56,250 Speaker 1: longer working. There's no income to replace. 367 00:19:56,480 --> 00:19:59,649 Speaker 1: Ask this person, why do I need life insurance when 368 00:19:59,650 --> 00:20:03,340 Speaker 1: my dependence are already independent. You don't need financial knowledge 369 00:20:03,340 --> 00:20:05,710 Speaker 1: for that. It's just logic, right? If there's no need, 370 00:20:05,710 --> 00:20:09,070 Speaker 1: there is no need for any coverage. But then some 371 00:20:09,080 --> 00:20:12,429 Speaker 1: would say that a term insurance at the end of 372 00:20:12,430 --> 00:20:15,800 Speaker 1: your coverage, you don't get a lump sum. 373 00:20:16,010 --> 00:20:19,150 Speaker 1: But if you buy a whole life insurance at the 374 00:20:19,160 --> 00:20:22,300 Speaker 1: end of your coverage, you still get this X amount 375 00:20:22,300 --> 00:20:26,000 Speaker 1: of dollars. So at least you don't feel like all 376 00:20:26,000 --> 00:20:28,280 Speaker 1: the money that you put in for all those years 377 00:20:28,290 --> 00:20:32,820 Speaker 1: was not used. Yeah, so that is true and that 378 00:20:32,820 --> 00:20:36,929 Speaker 1: is not true. So I know I'm like contradicting myself. 379 00:20:36,940 --> 00:20:39,810 Speaker 1: The reason why when you pay for a whole life 380 00:20:39,810 --> 00:20:42,609 Speaker 1: or any of those insurance plans that come with cash 381 00:20:42,609 --> 00:20:43,189 Speaker 1: value 382 00:20:43,380 --> 00:20:46,840 Speaker 1: is because you give the insurance companies extra money to 383 00:20:46,840 --> 00:20:51,119 Speaker 1: save for you. So let's say you are buying 100,000 384 00:20:51,119 --> 00:20:55,690 Speaker 1: term and 100,000 whole life just as an illustration, right? 385 00:20:55,700 --> 00:21:00,040 Speaker 1: So if you pay for $100,000 sum assured whole life, 386 00:21:00,050 --> 00:21:04,860 Speaker 1: let's just say that the premium is $1. Now, if 387 00:21:04,859 --> 00:21:08,580 Speaker 1: you buy a term plan, the premium might be 10 cents. 388 00:21:09,520 --> 00:21:12,370 Speaker 1: The coverage is the same. But you have given the 389 00:21:12,369 --> 00:21:15,700 Speaker 1: insurance company 90 cents more for the whole life plan 390 00:21:15,700 --> 00:21:18,770 Speaker 1: so that they can save for you. Now, the 10 391 00:21:18,770 --> 00:21:21,500 Speaker 1: cents that you pay for the coverage whether for the 392 00:21:21,500 --> 00:21:24,600 Speaker 1: term or for the whole life is never returned to you. 393 00:21:24,609 --> 00:21:26,610 Speaker 1: There must be a cost in ensuring you. And the 394 00:21:26,609 --> 00:21:29,710 Speaker 1: insurance company is not a charitable organization. They will take 395 00:21:29,710 --> 00:21:31,030 Speaker 1: away that 10 cents, Right? 396 00:21:31,240 --> 00:21:33,730 Speaker 1: So the only reason why you're getting some money back 397 00:21:33,730 --> 00:21:36,070 Speaker 1: from whole life is because you pay the insurance company 398 00:21:36,070 --> 00:21:37,910 Speaker 1: the extra 90 cents and you can do the same 399 00:21:37,910 --> 00:21:40,300 Speaker 1: with your term plan. You pay 10 cents for the 400 00:21:40,300 --> 00:21:43,430 Speaker 1: term plan. And with the 90 cents that you avoid paying, 401 00:21:43,440 --> 00:21:46,040 Speaker 1: you can actually go and save it yourself or you 402 00:21:46,040 --> 00:21:49,660 Speaker 1: go and invest it. Now, I've heard some people say that, Yeah, 403 00:21:49,660 --> 00:21:51,850 Speaker 1: but I do not know how to invest. I do 404 00:21:51,850 --> 00:21:54,480 Speaker 1: not know how to save or advisors will tell me, yeah, 405 00:21:54,480 --> 00:21:56,310 Speaker 1: but not every client like that. They don't know how 406 00:21:56,310 --> 00:21:57,900 Speaker 1: to say. They don't know how to invest, 407 00:21:58,070 --> 00:22:00,119 Speaker 1: but that's the job of the advisor, right? The same 408 00:22:00,119 --> 00:22:04,240 Speaker 1: advisor that advises you on insurance, surely it's also his 409 00:22:04,240 --> 00:22:07,720 Speaker 1: job to teach you how to save and invest. And 410 00:22:07,730 --> 00:22:09,980 Speaker 1: even if you are not a risk taker, there are 411 00:22:09,980 --> 00:22:14,100 Speaker 1: many safe instruments out there. Bond funds for example. And 412 00:22:14,100 --> 00:22:17,980 Speaker 1: in this period where inflation is high. Singapore savings bond 413 00:22:17,980 --> 00:22:21,960 Speaker 1: for example. Singapore Government securities for example, there are plenty 414 00:22:21,960 --> 00:22:22,699 Speaker 1: of options 415 00:22:22,950 --> 00:22:25,310 Speaker 1: and it's great because when you buy a whole life 416 00:22:25,320 --> 00:22:28,480 Speaker 1: and you don't like how the insurance company is performing 417 00:22:28,480 --> 00:22:32,750 Speaker 1: for you. The bonus is that they declares lo the promise, 418 00:22:32,750 --> 00:22:35,220 Speaker 1: you cannot terminate it because you terminated you lose money. 419 00:22:35,220 --> 00:22:37,740 Speaker 1: But with a term if the investment part is not 420 00:22:37,740 --> 00:22:39,689 Speaker 1: doing a good job for you, you can always change it. 421 00:22:39,690 --> 00:22:42,869 Speaker 1: You have full flexibility. Is this something that we have 422 00:22:42,869 --> 00:22:47,210 Speaker 1: to keep tweaking along the way? Should we keep reviewing 423 00:22:47,220 --> 00:22:48,179 Speaker 1: our in sh 424 00:22:48,200 --> 00:22:52,120 Speaker 1: insurance products to make sure that we have enough or 425 00:22:52,130 --> 00:22:55,240 Speaker 1: can we kind of do it one time to forget 426 00:22:55,240 --> 00:22:58,350 Speaker 1: about it. Yeah. So the product if you do it 427 00:22:58,350 --> 00:23:00,420 Speaker 1: one time you can forget about it. So you don't 428 00:23:00,420 --> 00:23:02,460 Speaker 1: need to buy a term and you keep tweaking the term. No, 429 00:23:02,460 --> 00:23:04,280 Speaker 1: there is no need. It's a very simple term. 430 00:23:04,790 --> 00:23:08,119 Speaker 1: But you know Sarah because our life changed, we are 431 00:23:08,130 --> 00:23:11,670 Speaker 1: at different life phases. Sometimes we may have the birth 432 00:23:11,670 --> 00:23:16,220 Speaker 1: of a new child. We may be earning more income 433 00:23:16,220 --> 00:23:19,940 Speaker 1: and there is a higher income to replace things like that. 434 00:23:19,950 --> 00:23:22,640 Speaker 1: Things change. And so because things change 435 00:23:22,800 --> 00:23:26,530 Speaker 1: our needs change, the amount of our coverage may change. 436 00:23:26,540 --> 00:23:29,440 Speaker 1: And that is when you need to review your coverage 437 00:23:29,440 --> 00:23:32,980 Speaker 1: to see whether firstly you have enough coverage and whether 438 00:23:32,980 --> 00:23:35,260 Speaker 1: you are covering for the things that you need to cover. 439 00:23:35,260 --> 00:23:38,379 Speaker 1: For example, when you first graduate as a student, you 440 00:23:38,380 --> 00:23:40,479 Speaker 1: may not need death coverage because if you die you 441 00:23:40,480 --> 00:23:41,600 Speaker 1: don't affect anyone. 442 00:23:41,900 --> 00:23:45,540 Speaker 1: But as you move into marriage life then you need 443 00:23:45,540 --> 00:23:47,720 Speaker 1: to review and realize that I need that coverage now 444 00:23:47,720 --> 00:23:51,470 Speaker 1: because I have dependence. Right? So you review regularly for 445 00:23:51,470 --> 00:23:54,530 Speaker 1: needs that may change. But once you buy a term 446 00:23:54,530 --> 00:23:56,530 Speaker 1: insurance to cover for them, you don't always have to 447 00:23:56,530 --> 00:23:58,580 Speaker 1: go and try to tweak the term and all that. 448 00:23:58,590 --> 00:23:59,780 Speaker 1: That's not necessary. 449 00:24:00,420 --> 00:24:04,350 Speaker 1: You know I've heard too that it's better to buy 450 00:24:04,359 --> 00:24:06,820 Speaker 1: insurance when you're younger. They say you're going to regret 451 00:24:06,830 --> 00:24:10,040 Speaker 1: this if you don't buy now and you end up 452 00:24:10,050 --> 00:24:14,109 Speaker 1: buying whatever is offered to you from what I'm hearing 453 00:24:14,109 --> 00:24:17,620 Speaker 1: from you, it sounds like we shouldn't buy life insurance 454 00:24:17,619 --> 00:24:20,010 Speaker 1: for our kids then because you mentioned some of us 455 00:24:20,010 --> 00:24:23,090 Speaker 1: may have gotten some kind of insurance product by our 456 00:24:23,090 --> 00:24:26,869 Speaker 1: parents and ask parents sometimes we think should I do 457 00:24:26,869 --> 00:24:30,080 Speaker 1: something like that for my child? What would you say? 458 00:24:30,240 --> 00:24:33,900 Speaker 1: I think in financial planning there is always a priority 459 00:24:33,900 --> 00:24:37,100 Speaker 1: of needs. Why is there a priority of needs? 460 00:24:37,830 --> 00:24:41,900 Speaker 1: Because we all learned that limited $1. So if I 461 00:24:41,910 --> 00:24:44,810 Speaker 1: earned that limited $1 a month and I spent all 462 00:24:44,810 --> 00:24:47,409 Speaker 1: my money buying things that I don't need, I end 463 00:24:47,410 --> 00:24:50,580 Speaker 1: up having very little to accumulate for the future and 464 00:24:50,580 --> 00:24:53,100 Speaker 1: live a life right now. So if you think about 465 00:24:53,109 --> 00:24:56,909 Speaker 1: young Children right? When a child is first born, it's 466 00:24:56,910 --> 00:24:59,770 Speaker 1: the first priority to buy a whole life cover for 467 00:24:59,770 --> 00:25:03,000 Speaker 1: the kid. No, because if the kid dies, he's not 468 00:25:03,000 --> 00:25:04,859 Speaker 1: going to affect me financially. Right? 469 00:25:05,080 --> 00:25:06,879 Speaker 1: So the first insurance, I need to buy for the 470 00:25:06,880 --> 00:25:10,040 Speaker 1: kid is medical, I need to buy hospitalization plan. I 471 00:25:10,040 --> 00:25:12,790 Speaker 1: may need to buy a critical illness plan. I surely 472 00:25:12,790 --> 00:25:15,320 Speaker 1: do not need to buy a plan to replace income 473 00:25:15,320 --> 00:25:18,179 Speaker 1: loss now I know parents because of the love for 474 00:25:18,180 --> 00:25:19,300 Speaker 1: the Children will say 475 00:25:19,690 --> 00:25:23,619 Speaker 1: Yeah I just want to start this person correctly and 476 00:25:23,619 --> 00:25:25,540 Speaker 1: then at 21 years old I will give the plan 477 00:25:25,540 --> 00:25:28,340 Speaker 1: to him you know and all that right? Not wrong. 478 00:25:28,350 --> 00:25:31,690 Speaker 1: But is this the priority right now? So you might 479 00:25:31,690 --> 00:25:33,960 Speaker 1: want to say let me buy those things are necessary 480 00:25:33,960 --> 00:25:38,119 Speaker 1: first after I buy all the necessary insurance. The next 481 00:25:38,119 --> 00:25:40,740 Speaker 1: thing is I should start saving for my children's education. 482 00:25:40,740 --> 00:25:43,770 Speaker 1: That's the next priority. And then after that whatever excess 483 00:25:43,770 --> 00:25:45,940 Speaker 1: money I have I should say for my own retirement 484 00:25:45,940 --> 00:25:46,510 Speaker 1: that's an impor. 485 00:25:46,530 --> 00:25:49,490 Speaker 1: priority. And then after that the next priority is I 486 00:25:49,490 --> 00:25:52,189 Speaker 1: need to live a life right now right. That's important. 487 00:25:52,190 --> 00:25:54,939 Speaker 1: That's important. Right after I have set aside money to 488 00:25:54,940 --> 00:25:56,610 Speaker 1: live a life right now that I look at myself 489 00:25:56,609 --> 00:25:59,070 Speaker 1: and say do I still have spare cash and if 490 00:25:59,070 --> 00:26:00,690 Speaker 1: I have spare cash and I go and buy those 491 00:26:00,690 --> 00:26:03,159 Speaker 1: things I may not need it right now. But I 492 00:26:03,160 --> 00:26:05,320 Speaker 1: don't mind buying it out of love for the child. 493 00:26:05,330 --> 00:26:08,430 Speaker 1: So we have to think like that. What happens though 494 00:26:08,440 --> 00:26:12,649 Speaker 1: if you realize you've bought too much insurance and now 495 00:26:12,650 --> 00:26:13,369 Speaker 1: you're thinking 496 00:26:13,830 --> 00:26:16,619 Speaker 1: man I'm still paying for things I don't really need 497 00:26:16,619 --> 00:26:20,440 Speaker 1: and I feel like I'm locked into this plan. What 498 00:26:20,450 --> 00:26:25,220 Speaker 1: do I do? Yeah. So my experience is most singaporeans 499 00:26:25,220 --> 00:26:29,939 Speaker 1: by too much insurance in terms of premium payments. Okay. 500 00:26:29,950 --> 00:26:34,090 Speaker 1: But they might not be coverage sufficiently. So when we 501 00:26:34,090 --> 00:26:35,590 Speaker 1: say buy too much, I don't mean that they are 502 00:26:35,600 --> 00:26:39,119 Speaker 1: overcovered is they buy the wrong sort. The premiums are 503 00:26:39,119 --> 00:26:41,640 Speaker 1: just too high Now, what do you do 504 00:26:41,930 --> 00:26:45,030 Speaker 1: now? I think it's a complicated process, but you need 505 00:26:45,030 --> 00:26:47,770 Speaker 1: to sit down and ask yourself firstly whether you can 506 00:26:47,770 --> 00:26:53,590 Speaker 1: still afford those premiums secondly, whether you need more coverage 507 00:26:53,600 --> 00:26:57,590 Speaker 1: now if you need more coverage, but you can still 508 00:26:57,600 --> 00:27:01,460 Speaker 1: afford those premiums don't terminate because early termination usually means 509 00:27:01,460 --> 00:27:04,040 Speaker 1: you lose money, then you got to buy some more 510 00:27:04,040 --> 00:27:08,010 Speaker 1: insurance but please now by the right ones. But if 511 00:27:08,020 --> 00:27:09,889 Speaker 1: you need more coverage 512 00:27:10,050 --> 00:27:12,190 Speaker 1: but you have no more money to buy because your 513 00:27:12,190 --> 00:27:15,189 Speaker 1: existing insurance is so expensive already. Then you need to 514 00:27:15,190 --> 00:27:19,220 Speaker 1: sit down with a trusted advisor to restructure your insurance, 515 00:27:19,230 --> 00:27:22,810 Speaker 1: the insurance that you have bought, find out whether you 516 00:27:22,810 --> 00:27:25,280 Speaker 1: can go back to the insurance company and lower the 517 00:27:25,280 --> 00:27:29,040 Speaker 1: premium payment is possible. You go back to the insurance company, 518 00:27:29,040 --> 00:27:31,010 Speaker 1: you tell them I want to lower my insurance premiums 519 00:27:31,010 --> 00:27:32,600 Speaker 1: so the coverage will also drop 520 00:27:32,800 --> 00:27:37,400 Speaker 1: or you can say that. Well I really don't need 521 00:27:37,400 --> 00:27:41,699 Speaker 1: this insurance anymore. If your child is old enough assign 522 00:27:41,700 --> 00:27:44,060 Speaker 1: the policy to a child, your Children continue to pay 523 00:27:44,060 --> 00:27:46,900 Speaker 1: for you or you may say that I really don't 524 00:27:46,900 --> 00:27:50,590 Speaker 1: need this insurance anymore. I want to terminate it. Well 525 00:27:50,590 --> 00:27:53,510 Speaker 1: there are now third party buyers that buy insurance off 526 00:27:53,510 --> 00:27:54,760 Speaker 1: the secondary market. 527 00:27:55,040 --> 00:27:59,200 Speaker 1: That's one consideration or if all these choices they don't 528 00:27:59,200 --> 00:28:02,270 Speaker 1: work for you then finally you terminate but terminate insurance 529 00:28:02,270 --> 00:28:06,130 Speaker 1: is a very serious step to take because sometimes after 530 00:28:06,130 --> 00:28:09,280 Speaker 1: terminating you cannot buy anymore. So please sit down and 531 00:28:09,280 --> 00:28:12,200 Speaker 1: work with a trusted advisor before making that decision. A 532 00:28:12,200 --> 00:28:15,340 Speaker 1: lot of things for us to chew on chris and 533 00:28:15,340 --> 00:28:20,119 Speaker 1: that's including how we should understand our needs and understand 534 00:28:20,150 --> 00:28:23,899 Speaker 1: our family's needs. We should ask ourselves, how long do 535 00:28:23,900 --> 00:28:29,010 Speaker 1: we need coverage for and how much should we have covered? 536 00:28:29,020 --> 00:28:32,690 Speaker 1: And life insurance. It's not about growing your money, it's 537 00:28:32,690 --> 00:28:35,300 Speaker 1: not about preparing for retirement or saving 538 00:28:35,510 --> 00:28:39,920 Speaker 1: but it's really about replacing any income that would be 539 00:28:39,920 --> 00:28:42,740 Speaker 1: lost in an event that we pass away while we 540 00:28:42,740 --> 00:28:46,770 Speaker 1: have dependence. Absolutely that's a good summary. Thank you so 541 00:28:46,770 --> 00:28:48,730 Speaker 1: much for your time, appreciate it. 542 00:28:55,310 --> 00:28:58,690 Speaker 1: You've got the basics down and next week Chris returns 543 00:28:58,690 --> 00:29:02,180 Speaker 1: to talk about the most important insurance. Everyone needs to 544 00:29:02,180 --> 00:29:06,800 Speaker 1: have medical insurance. The team behind this podcast is Jacqueline 545 00:29:06,800 --> 00:29:10,860 Speaker 1: Chan Audrey one Danieli and Christina Robert and you've got 546 00:29:10,870 --> 00:29:12,440 Speaker 1: a refreshed slate of audio. 547 00:29:12,840 --> 00:29:15,820 Speaker 1: You can listen to on your commute or your workout, 548 00:29:15,950 --> 00:29:18,080 Speaker 1: go to the C. N. A. Website or app. Look 549 00:29:18,080 --> 00:29:21,050 Speaker 1: for the listen button and subscribe to the podcasts you 550 00:29:21,050 --> 00:29:24,010 Speaker 1: like if you have thoughts, ideas or even stories you'd 551 00:29:24,010 --> 00:29:26,700 Speaker 1: like to share. Please write to us the details are 552 00:29:26,700 --> 00:29:29,540 Speaker 1: in our episode notes. Until next time this is Sarah called.