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Top 5 Mistakes When Buying Insurance in Singapore

Have you ever heard yourself or heard someone feedback that they had obtain the wrong life insurance policies? I have been in insurance industry for more than 10 years and I had met with many different prospects, heard and handled many objections and reason on why they do not require insurance, this reminds me of a joke; “I was trying to educate life insurance policy to a prospect, and explain the importance in having adequate life insurance coverage, who kept insisting to me that his wife could always get remarried. Finally, I blurted out ‘have you looked at her lately?’ He took the policy …” 


1. Under Insured

Will you drive a car without an airbag installed, or will you buy a car with an airbag which is smaller than the recommended safety airbag size is? I believe the answer is no, because your life depends on it when accident occur. It is the same in obtaining insurance. One of the most common mistakes is that many do not obtain adequate coverage. According to research done by Life Insurance Association in 2018, Singaporean lack 80% in critical illness protection needs. How much sum assured is enough? The rule of thumb for life insurance is 10 times your annual income and 5 times your annual income for income protection insurance planning.

2. Medical Insurance is Enough

Many had mistaken that as long as they have medical insurance, they do not require life insurance and income protection insurance, thus they stop at medical insurance. Medical insurance will help with your medical and surgical expenses, like in-patience surgery or day surgery costs. Medical insurance will help to deal with your large medical expenses, but will not provide you with a lump sum pay-out to replace your income.

3. Stop Shopping for Life Insurance!

Have you ever spent a lot of time comparing different types of policies from as many companies as possible? Stop shopping for insurance. Do you agree that insurance companies are out to make money? It is a definite yes. It is also a very competitive industry; most insurance companies’ products are relatively the same. If there is a big difference in premium, there will be something that is missing (when premium is cheaper) or an additional feature (when premium is higher). Have you encountered that your financial consultant kept changing, it is a frustrating experience? So, spend your time on selecting your financial consultant instead, as they will be your life time partner on your financial planning needs, as it is their duty to provide you a lifelong service.

4. Too Soon, Too Late

I once met a prospect who told me he will only obtain life insurance for his kid when he turns 18 years of age. Please do not make that mistake, as it is a known fact that premium will be more expensive as age increases, thus new-born is the best time to obtain life insurance same for children education saving. Another common mistake adult made is, they stopped enhancing life insurance when they get older in their mid-40’s, until it is too late when they hit their age 60’s and regretted that they did not enhance their insurance while they are still healthy or while the premium is still low.

5. Term Plan is Enough

Many made the mistake in believing their good old term plan is adequate without knowing the end date of the term insurance. Most term plan which was obtained from the past may only cover you till 65 years old and if at age 66 something is to happen to you, no pay-out to you or your family. Thus, please ensure your term plan is able to cover you till at least age 99 or beyond. Along the years insurance had evolved as our mortality rate increased. There is term life insurance, whole life insurance and whole life term life insurance, to help you understand better, I had created, Best Type of Life Insurance Comparison in Singapore.


One Last Thing

I will want to further share my knowledge and create a part 2 on this topic to address on some other mistakes when buying insurance, also an article on mistakes when buying endowment saving plan. Meanwhile, if you have children, there is an article for you, Best Tips on Raising Financially Smart Children. I also created Best Top 10 Financial Tips in Year 2019 some useful tips for your financial planning, before year end, and help you on your money management for the coming new year. And another 16 Financial Tips for your reference, hope it will help you in managing your financial seamlessly.


Note: Opinions expressed are solely in Mr. Chan Kong Meng’s personal capacity and neither express the views or opinions of Prudential nor represent any professional advice in Mr. Chan Kong Meng’s capacity as a PACS representative.


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