In The Edge Magazine Personal Wealth, it discussed that in a 2011 AIA Singapore Nationwide Protection Survey, it highlighted that only one in 10 Singaporeans is deemed to be adequately insured while nearly one in 4 perceived insurance is too costly.
To buy term or ILP depends alot on budget, needs and getting the best overall protection.
If I have $200 a month to spare I could get ILP and all e necessary full protection package. But if I have $100 a month to spare, term will be a better choice than ILP, as you need other parts of the cash for critical illness, accident and hospitalisation plans etc.
When I asked my friends do you think you are fully insured for health protection, most of them will say yes. But when I were to sit down and take a paper and summarise their coverage, all of them are way under-insured.
Within this group of friends I asked, alot of them got ILP from companies like Prudential, AXA etc. And it cost them $120-180 a month, the higher end due to the critical illness rider, but death coverage maybe just $50-100K. Is 50-100K enough for your family? With average annual income of $30K, $100K will be depleted in 3-5 years.
Even if I were to recommend an additional $50 a month to cover all the places they are lacking, they are also unwilling to make any changes, even if they have additional $1000 surplus a month from their salaries.
I asked them why not pay another $50 for basic full protection coverage, much better than what you have now? Then they will reply they are reluctant to do anything to change their situations, do not want to spend much on insurance. As nothing has ever happened to them yet, so they cant see the importance. To make things worse, some want to have better coverage but can't cancel the ILPs as they will make a loss, so they are like stuck for at least 20 years to make some profit from the plans and then see how. Some really do not have additional $50 budget.
This left me thinking, hopefully in 20 years time, when they reach 45-50 years old, no accidents or illness strike them and they are still in their pink of health to get the plans they are lacking all along.
I always feel the agents who approached my friends are not doing their jobs well enough, they never really ensured my friends are fully protected anot with that budget, so I feel they only care about selling something which they could earn the most out of it.
Some people even complained to me they are not being offered the other options in the first place. We are underinsured because cost of living is going up, but it could also be due to some of the insurance agents' main objective is geared towards filling their wallets and secondly to make sure the client’s needs are fulfilled.
My personal agent is the only agent I met so far who is concerned about my needs and coverage first, last his salary. He always makes sure that I gain the best coverage with my limited budget, and all available choices are presented and explained to me. No one has ever go to this extent, I am truly thankful for all he has done for me, my family, my friends and all people who have given him a chance to be customers aka partners.
My rule of thumb is to always get the best overall protection with the budget and needs you have.
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