New Norm 2021: Find out how to safe your financial savings with insurance
Congratulations! You are now building / expanding your emergency fund and making steady progress.
As we mentioned in ours Emergency fund article, it is also necessary to provide your emergency fund with insurance plans such as B. to strengthen / secure foundation plans.
We can go a step further and add more insurance to protect your hard-earned savings (because we know how expensive medical bills can be and how difficult it is for one parent – when the other is sick – to juggle household and finances ).
Why do I need to secure my savings?
In financial planning, each budget created serves a specific purpose. For example, savings for your child's future education, savings for renovating your home, savings for retirement and of course your emergency fund (liquid cash you need for a rainy day, at least 3 months of your monthly expenses).
While you don't have to save up for the $ 5 cai-png you eat every day (although a monthly grocery budget might be reasonable), it's a good idea to save for short- to medium-term planned purchases or expenses like home repayments Education, a vacation, the Brompton bike, etc.
It doesn't feel good when you have to put some (or most) of your carefully planned and hard-earned savings into circumstances for various purposes that you might already have been protected for, such as accidents or illness. This is where the concept of protecting your money (and goals) with insurance comes into play.
I have additional savings, is that enough?
Even if you tucked a million dollars in a cookie jar under your bed, having savings alone is not enough. People tend to Underestimate how much medical bills can put a strain on your finances. I'm sure you'd rather invest in real estate and get insurance (much cheaper in comparison) to cover your medical bills.
Big financial obligations are also a stress point, especially if you are the family's sole breadwinner. By protecting your savings, you can recover healthily and financially faster (because you used insurance funds and not your own savings).
Pay attention to the gap
If you are not sure whether you have protection gaps, the protection space is a handy feature in POSB's NAV planner tool. Here you can enter information such as the details of your relatives and existing insurance plans as well as retrieve data from SGFinDex (if you allow this). This enables NAV Planner to correctly measure your existing assets and automatically calculate your gap based on your liquid assets, information on relatives and existing protection plans (e.g. health insurance, accident, life, term, etc.). Hooray!
Here are some ways to protect your savings with insurance so that you don't have to dig into your hard-earned cash in times of need.
Have adequate health insurance
Health insurance usually covers a wide range of things, including hospitalization and surgery, critical illnesses, medical treatments, post-hospital treatments, outpatient procedures and treatments, rehabilitation, a visit to a specialist, and more. This can also include worldwide insurance coverage, ambulance fees and a lump sum payment.
It is also good to have a personal accident plan, especially if you are in a higher risk job (such as a restaurant kitchen or factory). Some plans like MultiGen protection even allow you to have tailor-made insurance coverage for the whole family and specifically cater to the type of protection that adults, children and grandparents need.
Health insurance coverage also extends to long-term care such as chronic illness, lengthy treatments or Disability that affects the ability to be independent.
Meanwhile, the injured or unwell can no longer take care of their family, so lump-sum payments make sense.
All of these can result in a huge financial loss, and unless you are a billionaire, all your savings alone will not be enough to cover these costs.
With adequate health insurance, you don't have to draw from your own savings – and protect them.
Tip: You can use the Make Your Money Work Harder feature of POSB NAV Planner to learn more about various insurance products, including endowment insurance, investment-linked policies, income stream products and more. These insurance products could help you build on your hard-earned savings.
Foundation as a supplement to your savings
An endowment plan is a plan where you invest money (one-time or recurring premium), wait for it to be due, and then withdraw the lump sum, which includes both guaranteed and non-guaranteed returns. Since this is an insurance plan, it usually offers some protection that can also be helpful.
Having an endowment plan is especially useful when you have your Emergency fund and would like to strengthen it further.
Some reasons people buy Foundation plans B. retirement, education (your further education or that of your child) or a source of income (the foundation plan pays out regularly from a certain point in time).
If foundation policy allows, you can even tailor it to specific needs. For example, your child is now 8 years old and you want to prepare for college education 20 years later. You can buy an endowment fund such as Savvy spring To add to this savings goal – if it is due 12 years later, the due payout time will be based on your child's university education.
Likewise, SavvySpring's customizable premium payout duration could come in handy when getting a retirement plan. You can choose whether you only want to pay premiums for 3 or 6 years, with the Guaranteed Cash Benefit covering the premiums until the policy matures.
Tip: Determine the annual premium amount (at least S $ 2,381) by considering what age you want to retire at, how much you need for retirement (taking into account your CPF funds and other assets) and build this in your foundation plan. Not sure how to imagine this? POSB NAV planner (available from your POSB Digibank) can show some estimates of how much you might need and / or the shortfall (if any).
|By April 10, 2021, enter the promo code “SSCASH” to receive a cash reward of S $ 150 when you sign up for SavvySpring.|
Protection is an ongoing process
At this point, even if you've closed all of your protection gaps, you're not done. Protection needs can change at different stages of life – and if you have a family, you know that the needs of your growing children will change too.
Just like we do health checks, you should reassess your needs and review your coverage every few years. You can do this through your POSB NAV Planner tool or seek advice from a financial advisor.
For example, you can use NAV Planner's shelter to make your existing plans more robust (e.g. residents), purchase a Careshield Life supplement, increase your sum insured (especially if you took out life insurance in your early twenties and are now in the life phase where you need more coverage as you prepare to start a family, buy a home, etc.) etc.
Use NAV Planner's Make Your Money Work Harder feature to learn more about insurance plans that can contribute to income growth, such as: B. Foundation products such as Savvy spring which we mentioned earlier.
Go ahead, secure / strengthen your savings with an insurance plan like the POSB SavvySpring. This year it's time to ride the ox by the horns – make sure your protection is solid, with no gaps or weak spots in your armor.
This is the final article in New Norm 2021, a series of 6 articles written in partnership with POSB to help young families make smarter money decisions in this new ox year.
Disclaimers and Important Notice
These items is for information only and should not be used as financial advice. Any views, opinions or recommendations expressed in this article do not take into account the specific investment objectives, financial situation or special needs of any particular person. Before making a decision to buy, sell, or hold any investment or insurance product, you should seek advice from a financial advisor as to its suitability.
For savvy spring
SavvySpring is owned by Manulife (Singapore) Pte. Ltd. ("Manulife") (Reg. No. 198002116D) and distributed by DBS Bank Ltd ("DBS").
This policy is protected by the Police Owners ’Protection Scheme administered by the Singapore Deposit Insurance Corporation (" SDIC "). Insurance cover is automatic and no further action is required on your part. For more information on the benefits that are covered under the scheme and, where applicable, the coverage limits, please contact (name of insurer) or visit the websites of the life insurance association or the SDIC (www.lia.org.sg or www.sdic.org.sg).
This ad has not been verified by the Monetary Authority of Singapore.
These items is not intended for distribution or use by any natural or legal person in any jurisdiction or country in which such distribution or use would violate any law or regulation.
For MultiGen Protect
MultiGen Protect is underwritten by Chubb Insurance Singapore Limited ("Chubb") and distributed by DBS Bank Ltd ("DBS"). It is not an obligation, deposit or guarantee by DBS. This is not an insurance contract. Full details of the terms and exclusions of the insurance are contained in the contract texts and will be sent to you after Chubb has accepted your application. All MultiGen Protect benefits (with the exception of daily hospital benefits and reimbursement of medical expenses for insured illnesses) are only due in the event of an accident during the insurance period. You should carefully consider whether you intend to change your accident insurance as this could be detrimental to your current and / or future needs. You may want to seek advice from a financial advisor before committing to purchase this policy. If you decide not to seek advice, you should carefully consider whether the policy is suitable for you.
You have a free viewing period of 30 days from the date on which you receive the policy. If you decide to cancel the policy within these 30 days, please notify Chubb in writing and they will cancel the policy from the start date and reimburse the full premium paid if no claim has arisen.
This policy is protected by the Police Owners ’Protection Scheme administered by the Singapore Deposit Insurance Corporation (" SDIC "). For more information on the schema, see General insurance company or SDIC Web pages.