6 Check Points in Your Life You Need to Review Your Insurance Policy

You would likely already have gotten the advice that you need to review your insurance policies with your financial consultant from time to time. While this is good practice, one question that arises is how regular these reviews should take place?

While some may prefer an annual review session with their financial consultant, this can be viewed as too often or too long to wait for others.

In general, there are six major check-points in your life where your financial planning needs can change drastically. During these check-points, you should arrange for a review of your plans and policies with your financial consultant to identify new protection gaps.

1. Getting your first job

Once you start earning your keep, you naturally ween off any parental financial support you may have and start paying for your living expenses. Of course, insurance premiums will form part of your living expenses once you start purchasing policies by yourself.

Before you even speak to a financial consultant, you should talk to your parents about the policies that they may have purchased on your behalf, and you might consider taking over the premium payments. These could include some form of health insurance, for instance, in the form of an Integrated Shield Plan (IP) or critical illness policy for you. Another common type of policy you may have under your name is a life insurance plan. Understanding which policies you currently have will give you a better idea of what you may need when you do meet with your financial consultant.

You can also choose to go online to find out more information, including reading articles on our AXA blog, or visit compareFIRST, an initiative by the Monetary Authority of Singapore (MAS).

One important plan that your parents may not have set in place for you is for your retirement. From the moment you start working, you may have close to 40 to 45 years to accumulate a retirement nest egg. To avoid stressing yourself out in your later years, you should start retirement planning from the day you earn your first pay cheque.

2. Getting married

Two becomes one does not just refer to your heart, your individual plans for your life need to synchronise to form one holistic plan. This includes, among many other important life plans, your insurance, investment and retirement plans.

You should first talk to one another to understand each other’s goals and wants. Some compromise will need to be struck as no two people will have the same goals in their life.

Once this is done, you can begin to spot potential gaps in your merged plan. Even if nothing else has changed in your life, you still need to account for the fact that the two of you are working towards one retirement plan now, and any illness or accident to one spouse may derail the entire plan for the other spouse.

3. Buying a home

When you buy your first home, you want to ensure that you have adequate home insurance. Policies such as AXA SmartHome, provides comprehensive coverage beyond the mandatory HDB Fire Insurance, with protection for your home contents.

Besides protection for your home, you also need to protect yourselves against a mortgage that will likely last two decades or more. Again, should the unforeseen happen to one of you, you need to ensure that the other spouse can continue to live in the home and afford the mortgage payments.

For those purchasing an HDB flat, you have the option of being covered by the Home Protection Scheme (HPS), a mortgage-reducing insurance protecting against death, terminal illness or total permanent disability (TPD). For those buying a private property or investment properties, you can seek private solutions or increase your life insurance coverage.

4. Having a child

Having a child is a beautiful experience. While enjoying the ups and downs of parenthood, you should not neglect another appointment with your financial consultant for this new insurance gap.

Firstly, during the course of the pregnancy, you can consider a pregnancy health coverage. These typically provide coverage against pregnancy complications for mothers, and congenital illnesses for the unborn baby. AXA Family Advantage is AXA’s version of maternity insurance.

With AXA Family Advantage, you also have the option of applying for an investment plan to build an education fund for your child’s tertiary studies or even to kickstart their retirement nest egg from age 0.

With the additional mouth to feed, you can also consider upgrading your life coverage to include additional living expenses that your newborn will require till he or she can enter the working world to financially support themselves.

Your baby will also require similar health protection under an Integrated Shield Plan, such as AXA Shield, that your parents bought for you. This is to protect yourself against large hospital bills.

5. Getting a promotion / advancing in your career

As you progress in your career, you will start earning more and possibly experience lifestyle inflation. This presents another potential protection gap, especially if you want your dependents and spouse to be able to continue living the same lifestyle in the event that you are no longer around to provide for them.

As you mature in your life and your career, you need to be mindful that your parents are also getting on in age and are likely retiring or have retired. If they are unable to provide for themselves in retirement, you may need to contribute to their retirement income. This is another protection gap you may wish to plug.

As you earn more and also spend more, you should remain prudent and allocate more towards your investments and/or retirement plans, to boost your nest egg in the future. This can give you the freedom of an enhanced retirement income or the flexibility of an early retirement, should you choose to do so.

6. Entering the home stretch of your retirement

This check-point should not be confused with starting your retirement plans. As mentioned earlier, you should already have started retirement planning at the point of getting your first salary, and regularly reviewing your retirement plans as you entered different stages in life.

During the home stretch of your retirement, your children will likely be grown up and starting their careers, your home would likely be paid off, and many of your other financial liabilities likely diminished. This shifts your attention away from life coverage and focus it more towards healthcare and boosting your retirement nest egg to eventually supplement your CPF LIFE monthly payouts.

At the same time, you should also consider, if you haven’t already done so in your earlier years, legacy planning and estate planning. If you want to leave behind a legacy for your loved ones, make sure you draw up a will so your family know how you want to distribute your assets and other belongings. You also need to do a separate CPF Nomination, as your CPF funds do not form any part of your estate when you pass on.

Identify your insurance protection gaps early

Circumstances in life are never static. As you enter new life stages, your priorities and responsibilities will change. This is why you need to regularly review your insurance policies to ensure that your existing coverage continues to be sufficient for the new stages in life that you have entered.

You should not just wait for these check-points either. It can be prudent to regularly speak to your financial consultant as they may know more about your protection and long-term plans than yourself. Another benefit is that you may be kept in the loop regarding new insurance and investment products and also government policies that may affect you.

The earlier you identify your insurance gaps, the earlier you are able to cover it, and the less risk you expose yourself and your loved ones to. It is best to speak to a qualified financial consultant so they can advise you on a product that suits you best based on your current and future financial needs.

Disclaimer:

This article is for general information only and does not take into account the specific investment objectives, financial situation or needs of any particular person. The views expressed herein do not necessarily reflect the views of AXA Insurance Pte Ltd and should not be construed as the provision of advice or making of any recommendation. There is no intention to distribute, or offer to sell, or solicit any offer to purchase any product. We recommend that you seek the advice of a qualified financial advisory professional before making any decision to purchase an insurance or investment product. Whilst we have taken reasonable care to ensure that all information provided was obtained from reliable sources and correct at time of publishing, information may become outdated and opinions may change. We are not liable for any loss that may result from the access or use of the information herein provided.