This article was updated on 04 January 2019.
Getting adequate life insurance coverage is one of the most important aspects of our financial planning process. The payouts that our loved ones receive is meant to replace our income and provide the financial resources to tide through our absence.
Yet, according to the Life Insurance Association (LIA), the mortality protection gap is Singapore stands at an astounding $1.5 billion as at 31 December 2016. This means that on an aggregate basis, we typically don’t have sufficient life insurance coverage to cover the needs of our loved ones, including ageing parents, young children and non-working spouses, to allow them to continue living a similar quality of life in the unfortunate situation that we are no longer around.
While we may not be thinking about this topic every day, we have the responsibility to understand the implications our absence will have on our loved ones, as well as knowing how we can best protect them. Here are five tools we can use to help us achieve this.
# 1 Blogs
One of the first things we can do in our journey to understand our life insurance coverage needs is to brush up our knowledge by reading more. We’re much more fortunate that the generations before us as the digital sphere provides access to an almost unlimited resource of information online.
We need to know where to start looking for quality information. Here are some established and well-regarded blogs you can turn to.
Launched in 2003, MoneySense is a national financial education programme which aim to help Singaporeans with money management and the ability to make sound financial decisions on their own. Beyond life insurance, the blog also discusses other important areas in personal finance.
ii) Insurance Blogs
Insurance blogs such as Clearly Surely provides a fresh take on life insurance matters in Singapore. It covers a wide range of topics as well, including latest product and industry updates, interviews with real people and commentaries to ensure we understand the topic and are in a better position to take charge of our life insurance matters.
Of course, many personal financial websites, such as MoneySmart and DollarsAndSense, as well as blogs, including For Tomorrow (by Temasek), Seedly and Investment Moats also do occasionally discuss insurance topics.
iii) Insurance Company Blogs
Many insurance companies run their own blogs, providing valuable information, stories and updates on the life insurance industry. AIA manages its own “Life Matters” blog encouraging people to live better lives, Aviva has its Money Banter blog to discuss a wide variety of topics within insurance and other personal finance topics, Prudential also runs its own Life Matters blog and NTUC Income maintains a comprehensive blog as well.
Besides reading their consumer-friendly articles, we can also head to its product pages to learn more about the actual insurance products the companies are selling.
# 2 Calculators
i) CPF Board
ii) Life Insurance Association (LIA)
iii) Great Eastern
Many government-related entities, industry associations and even insurance companies themselves have robust life insurance calculators to aid you in tabulating your insurance requirements, based on the scenarios you face, the purpose of this insurance and the gap in coverage you currently have.
Many of these calculators are based on the same logic. You add your outstanding liabilities, immediate expenses and needs of your dependents in the long-term, and subtract your assets from it. The figure you receive at the end is what your life insurance coverage needs to be. Going further, your insurance protection gap is the difference between your current life insurance policies and your total life insurance coverage needs.
# 3 Chatbots
Insurance can be a daunting topic and nobody enjoys any form of interaction with pushy salespeople. The problem this exacerbates is that we may neglect our insurance coverage needs. This is where chatbots can come in to solve this problem.
We can use chatbots, such as TokioMarine’s TOMI, to ask any questions we want or things we’re not comfortable asking agents. We can do all this without having to commit any personal information and with the knowledge that we can close the session any time we desire.
This is a good avenue for those who understands the importance of insurance but do not want to interact with a salesperson yet. We also need to understand that while it’s an interesting tool, it’s also very new and driven by methodology rather than machine learning.
# 4 Q&A Platforms
If we’re hesitant about the benefits of using chatbots but are looking for good quality information and want to remain anonymous, fundMyLife might be the solution you’re looking for.
fundMyLife allows users to ask their personal insurance questions to well-regarded and knowledgeable financial planners in the industry. We are also able to maintain our anonymity and can decide, on our own accord, if we want to make our details known to the financial planners for the purpose of finding out more and eventually buying the insurance products from them.
# 5 Aggregators
Today, we spend so much of our time online. We talk to family on WhatsApp, send business emails, keep in touch with friends on Facebook, find our way via Google Maps, read DollarsAndSense (haha, yes!), and of course, buy from the thousands of online stores that’s proliferated in recent years.
It makes sense then that insurance would be sold online. There are many aggregators that have come about to start this movement, letting us compare insurance policies, letting us know the best deals and telling us how the policies differ.
CompareFIRST, launched by MAS in 2015, requires insurers to submit information to it for consumers to be able to compare premiums, key benefits and features across different insurers on one platform. CompareFIRST compares life insurance, endowment products and investment-linked products.
Building on this, other aggregators have come into the market offering better deals to utilise their platforms to buy insurance, and other financial products. Some of the more popular aggregators include Money Owl, PolicyPal and MoneySmart. There are also many other online insurance aggregators that are currently only comparing general insurance products, and it is a matter of time before more go into the life insurance market.
Getting The Right Amount Of Life Insurance Coverage
We can’t overstate how important it is to ensure we have adequate life insurance coverage. This provides our family a financial safety net in the event we are no longer around to fend for them.
Regardless of your impression on the insurance industry or whether you already have some life insurance coverage, it never hurts to check if you’re adequately covered. These tools provide a great resource for us to find out with just several clicks, so there’s no reason to avoid doing so.
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