Navigating the world of insurance for the first time can feel like trying to learn a new language. But just like any other skill, you’ll be fluent in no time with the right guidance and a bit of practice. This article is your “starter pack” for understanding the essentials of insurance, tailored specifically for young adults stepping into the realm of financial and personal responsibility. Let’s break it down.

What policies will I need?

First, you’ll want to assess your needs and discern the difference between good-to-have vs must-have. There isn’t a cookie cutter template when it comes to making big life decisions like these – your income and emergency funds will come into consideration as well. The Financial Planning Guide from MoneySense recommends that everyone sets aside a sum of money that can cover at least three to six months’ worth of expenses in emergency funds. The guide also recommends getting insurance coverage of 9x your annual income against Death and Total Permanent Disability and 4x your annual income against Critical Illnesses. For starters, these are some must-have policies for consideration:

MINDEF and MHA Group Insurance Voluntary Schemes: If you’ve served NS (National Service) or are a regular serviceman, this might be a great start to getting your bases covered at very affordable prices, starting from S$0.17/day*. When bundled together, the Group Term Life, Group Personal Injury and Living Care riders essentially provide you coverage against death, total permanent disability, accident and critical illnesses.

Medical Insurance: It’s tempting to skip medical insurance when we’re young and healthy. Whether you’re a corporate employee or freelancer, having your own medical insurance helps keep you protected against unexpected illnesses or injuries. This is especially if you switch jobs frequently, as there would be times when you’re in between jobs and won’t have corporate health insurance or income to pay for medical bills out of pocket. Hospitalisation costs do add up, especially if you require additional procedures to make a full recovery – you’ll be glad you have it!

Here are some resources to help you make better-informed decisions:

• Guide to MINDEF & MHA Group Insurance scheme
• 4 must-know medical insurance facts for first-jobbers
• Choosing a medical insurance plan: 5 starter questions to ask

What should I look out for?

Every insurer has unique strengths and expertise. It’s good practice to do your research, read customer reviews and gather feedback on these points when choosing your potential insurer:

• Company reputation
• Customer service
• Claim processing time
• Financial stability

Staying abreast of these points helps you to choose the insurer most aligned with your needs. Personally, doing my due diligence gives me greater peace of mind and satisfaction when I eventually make my choice.

It’s also useful to understand your short-term financial commitments as well, as this helps you to consolidate your monthly disposable income before committing to insurance policies. Keeping track of your expenses, monthly subscriptions and forecasting your travel budget will help you arrive at a number. The bottom-line: being over or under-insured isn’t a good thing, no matter how kiasu you might feel.

How do life changes affect my needs?

You might be planning to get married, or balloting for a BTO (Build-to-Order) home with your life partner. Perhaps you’re planning to add a little one to your current family. These potential life changes come with large financial commitments and it’s good to factor in these big-ticket items when working out your income and budget – this is a great time to start considering Term and Whole Life plans, which can help make it easier to keep up with these financial commitments should anything unfortunate happen to you.  

Also, changing jobs and buying your first home can call for greater financial assurance due to higher liabilities. At this stage, making portfolio adjustments might be necessary to accommodate for renovations or beefing up your emergency funds. For instance, if you're transitioning to a job with a different benefits package or perhaps a variable income structure, you might need to adjust your health or disability insurance to ensure continuous and adequate coverage. Purchasing a home might prompt you to increase your life insurance coverage or add home insurance to protect your new asset. These adjustments ensure that your portfolio is in sync with your evolving responsibilities and can provide you with better peace of mind as you navigate through life's major milestones.
 

Ultimately, everyone has unique wants and needs and it’s a good practice to constantly review your financial and insurance portfolios, especially when you’re expecting any changes in the near to intermediate term. As you move through different stages of life, keep these tips in mind. Staying informed and proactive about your insurance choices will help you navigate through life’s milestones with confidence and security. For more insights into adjusting your financial plans and understanding insurance better as you hit major milestones, continue exploring with these articles:

• Things I’ve learnt from buying my own home
• Do you need maternity insurance?
• What happens after your CPF Special Account closes

Navigating the world of insurance and deciding on your first policy is no walk in the park, but doing your own research and understanding your needs can help. By equipping yourself with the right insurance and financial knowledge, you ensure that you’re not just surviving these changes, but thriving through them.

^Notes

^{*Premium shown is based on Group Personal Injury Plan monthly rate (rounding to the nearest cent) for an Insured Person, aged 70 and below at next birthday.}