This article is updated as of 31/10/2024.
The best thing you can do about financial planning is to start working on it, upon receiving your first paycheck. Instead of waiting for a pay raise, make it a habit of setting aside a portion (say 20%) of your current take-home pay. Never wait for your pay to increase so that you do not need to set aside a budget for financial planning.
The simplified reason being that your lifestyle wants and needs increases, along with your new found increment. You can trust us on that, otherwise just try asking your parents for some money. Once this is clear to you, start to make realistic plans for your financial portfolio.
Getting your first Insurance policy?
Not all insurance policies are created equal. As your income is still low, seek to gain protection and health coverage with financial accumulation. Your first policy should enable you to have decent insurance coverage for life, while you are still healthy. We feel that a Whole Life Policy or Term Life Insurance will be the most suitable options at this point in time.
Premiums will be significantly lower in your 20’s compared to when you are in your 30’s or 40’s with medical conditions. Both policies mentioned allow a high level of insurance coverage with a whole life insurance having cash value accumulated for the later stages of life.
Read about: How exisiting medical conditions will affect your insurance application
At this point in your life, an Endowment policy should not be the primary focus. Its primary selling point on the flexibility for withdrawal will likely not contribute to your long-term financial priorities.
Read About: Saving Plans and Endowment Policy: Why it is not the best option
What should I consider for my first insurance policy?
Aim for the highest insurance coverage within your budget on your first insurance policy. This allows you to focus on wealth accumulation without constantly getting another policy to coverage your insurance shortfall.
Read About: How much life insurance coverage do you need?
Option 1: Coverage via a Whole Life Policy
A Whole Life Policy can provide one of the highest coverage when an insurable event such as Death, Early Critical Illness, Critical Illness, Total and Permanent Disability and Terminal Illness occurs. The policy accumulates cash value and can also be surrendered for cash, in the later stage of the policy owner’s life.
Check out the different whole life plans offered by insurers, know their features and benefits and get your quote today! Our friendly advisors will understand your needs and assist you in your comparison to offer you the best deal!
Read About: Whole Life Policy: How does it work?
Read About: 3 Best Whole Life insurance policies in Singapore (Updated)
Option 2: Coverage via Investment Linked Policy (ILP)
An Investment Linked Policy is a life insurance plan that is made up of 2 components: An Term Life portion which provides you protection, and an Investment portion which gives the policy its cash value. The cash value of the policy comes from the investment units in the Unit Trust Fund(s) you invested into. The level of coverage provided by Investment Linked Policy is similar to a Whole Life Policy.
However, unlike a Whole Life Policy, there is no Guaranteed surrender value in an ILP. The surrender values are based on the actual underlying investment performance of the Unit Trust and Unit Trust Sub-funds. However, with proper managing of funds and long term dollar cost averaging, the funds will be performing well most of the time.
Check out the different Investment Linked Policies offered by different insurers, know their features, policy charges, benefits and get your quote today! Our friendly advisors will understand your needs and assist you in your comparison to offer you the best deal!
Read About: Investment Linked Policy: How does it work?
Read About: 6 Best Investment Linked Policy in Singapore (Updated)
Your Second Insurance Policy (and third, fourth, and there on)
Now that a part of your protection coverage is in place, you may start to seek out other types of insurance policies depending on your financial goals and objectives.
If you are seeking higher coverage
Look for a Term Policy, another Whole Life Policy or Investment Linked Policy to cover the shortfall in your insurance coverage.
A Term Policy is a type of life insurance with high health and protection coverage. The default coverage is for Death and Terminal Illness. To enhance the coverage offered by a Term Insurance, riders for additional insurable events can be included in the main Term Insurance policy.
Such insurable events include:
- Total and Permanent Disability (TPD)
- Early Critical Illness (ECI)
- Critical Illness (CI)
Term Policy typically offers the highest coverage for the premium paid, at the drawback of the policy not accumulating any cash value over time.
Editor note: In the event that the claim payout for an insured event being the same as the main policy sum assured, the policy will fully expire.
Read About: Term Policy: How does it work?
Read more: 5 Best Term Life Insurance in Singapore (Updated)
If you are seeking higher financial returns
Now is the time to consider Endowment Policy if you have goals to accumulate a specific amount of funds in a specific number of years. Options are available for Limited premium and Regular premium with flexibility for partial withdrawal. For the purpose of higher financial returns, we highly recommend to pay your premiums via Limited premium payment, allowing your endowment plans time to roll for returns.
Check out the different endowment plans offered by insurers, know their features and benefits and get your quote today! Our friendly advisors will understand your needs and assist you in your comparison to offer you the best deal!
Read About: 4 Best savings endowment plans (Updated)
Read About: 3 Best savings endowment plans in Singapore for lifetime wealth accumulation (Updated)
If you are seeking even higher financial returns
If the returns above does not satisfy you, it is time to look into building your Investment Portfolio. You may also be exposed to higher financial risk and it is important to fully understand your risk profile and product suitability.
Alternatively, an Investment Linked Policy with minimum coverage can allow you to accumulate wealth at a higher rate and also gain access to restricted funds only avaliable to accredited investors.
Read more: 6 Best investment-linked policy in Singapore for wealth accumulation.
When is the best time to act on financial planning?
Like the saying, “The best time to plant a tree is ten years ago, and the second best time is now“. The best time to start working on your financial planning has passed, so make the best of now. Understand that the effects of compounding returns work best the younger you are. Leave your contact details below and let us assist you on your financial planning today! No strings attached! Sharing is caring!
Read About: Missing out on compound returns?
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