Start your Financial Planning right: Know what you have
Many people embarking on financial planning for the first time may be stumped, or simply overwhelmed by the endless 101 financial planning guides telling them to do different things. This can mean anyone, not just the usual “millennial” crowd that refuses to adult.
The truth is if you are an employed working adult, you are rarely starting from ground zero. Here is a list of things that you might already have as part of your arsenal of financial protection that you should be aware of:
1. Dependants’ Protection Scheme
If you are a Singaporean or Permanent Resident, age 21 and above you will automatically be enrolled into the Dependants’ Protection Scheme (DPS) when you start make contributions to your CPF Accounts. DPS is a term insurance with worldwide coverage that provides insured members and their families with a maximum sum assured of $46,000 up to the age of 60, should the insured members pass away, suffer from Terminal Illness or Total Permanent Disability.
You can check out the CPF website for the most updated information, but this should be something to have in mind when you plan your life insurance coverage.
2. Company’s Group Health Insurance
In Singapore, most companies would provide a group health insurance for their full-time employees. If you are currently employed, the first thing you should do is obtain and review policy documents of your company’s group health insurance to find out what it covers (e.g. hospitalisation and surgical expenses, outpatient treatments, personal accidents, critical illness etc.) and what are the policy limits/payouts.
Once you know the details of your group health insurance policy, you can maximise it by using it whenever possible. The biggest mistake of understanding your group health policy is that you may not use it because you do not know what you can use it for. In such cases, people usually end up using their private health insurance policies for hospitalisation, treatment and medical expenses.
3. Checking in with your folks
For a lot of younger Singaporeans, your parents might already have purchased insurance plans for you when you are young. However, if this information was not passed on to you, you might find yourself purchasing duplicate insurance plans, or policies with overlapping coverage.
Therefore, it is important to have this conversation with your parents as soon as you step into the workforce, or even earlier if you want to kick start your insurance planning. This process will help you understand what you already have and greatly assist you (and your potential financial consultant) in coming up with a suitably insurance plan.
Reviewing gaps and overlaps in coverage
Once you are armed with knowledge of what you have, your next step is to review the gaps and overlaps in coverage. These gaps and overlaps present an opportunity to remove or add coverage to your private insurance policies. For example, if you have a personal accident insurance policy but your group health policy covers it, you may want to avoid the overlap and save on premium payments by sticking with the group health personal accident coverage if the protection is sufficient. Alternatively, if your group health policy doesn’t have personal accident coverage and you’re not covered for it by your existing private policies - you can fix this gap by adding it as a rider or new policy.
Knowing where to start
Starting out on a clean slate with financial planning can be a daunting one, but there is always somewhere to start if you feel hesitant to speak with a financial consultant before doing any research. More often than not, you would already have some form of insurance protection before you know it. Arm yourself with the right information and start your financial planning process right!
If you are ready to kick start your financial planning review, reach out to us for a conversation.
These insurance products are underwritten by Manulife (Singapore) Pte. Ltd. (Reg. No. 198002116D). This advertisement has not been reviewed by the Monetary Authority of Singapore. Buying a life insurance policy is a long-term commitment. There may be high costs involved if you terminate the policy early, and your policy's surrender value (if any) may be zero or less than the total premiums paid. Buying health insurance products that are unsuitable for you may affect your ability to finance your future healthcare needs. This advertisement is for your information only and does not consider your specific investment objectives, financial situation or needs. It is not a contract of insurance and is not intended as an offer or recommendation to purchase the plan. You can find the full terms and conditions, details, and exclusions for the mentioned insurance product(s) in the policy contract.
This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the LIA or SDIC web-sites (www.lia.org.sg or www.sdic.org.sg).
We recommend that you seek advice from a Manulife Financial Consultant or its Appointed Distributors before making a commitment to purchase a policy.
https://www.businessinsider.sg/how-to-retire-by-40-2017-6/2 - Tan, L (2018, November). 8 Myths About Retirement. Retrieved from: Straits Times
https://www.straitstimes.com/business/invest/8-myths-about-retirement3 - Tang, S.K (2019, August). NDR 2019: New retirement, re-employment ages of 65 and 70 by 2030; higher CPF contributions for older workers. Retrieved from Channel News Asia:
https://www.channelnewsasia.com/news/singapore/ndr-2019-retirement-re-employment-age-cpf-contribution-118191744 - Money Sense (2018, October), CPF For Your Retirement, Retrieved from Money Sense:
https://www.moneysense.gov.sg/articles/2018/10/managing-cpf-for-your-retirement5 - Ng, J,S (August, 2019). (Ng, 2019) The Big Read: The dreaded ‘R’ word — why Singaporeans need to start thinking seriously about retirement. Retrieved from Today Online: