$1,000,000 coverage for less that $100

Yes, you read right. It's $1 million dollars death coverage for less than $100, or $88 to be precise for a man who is 40 years old for a 20 years coverage. It's even cheaper than your mortgage insurance (where the sum assured is reducing each year).

Before we continue, we are talking about a "term" insurance:
Term is a type of life insurance that provides a potential death benefit for a fixed period or "term." This is commonly a flat premium for say, 5, 10, 15, 20, or 30 years. After the end of the term the policy no longer provides a death benefit
Source: https://www.investopedia.com/ask/answers/08/term-life-insurance.asp
To add, it has no cash values at the end of the term. It's just like your car or mortgage insurance or even your electronic good insurance (fridge, washing machine, etc.).

Do I need a million dollar coverage? Well it depends.

Below are 3 commonly consideration you might want to take note:

A) Current Debts (house, car, etc.)

Do you know that you can use Term insurance to replace your HDB's Home Protection Scheme (HPS)? With this Term plan also, you do need to get a new HPS when you get a new house, which is usually more expensive because the HPS is based on your current age and not the younger you whom 10 or 20 years ago took up HPS when you got your first house.

B) Family regular living expenses

You can just use your monthly expenses and multiply by the number of years you need to support your family.

E.g. A new born just join the family and assuming your monthly expenses is $2,000. So for the new born to be independent, we assume he/she will take about 25years. So we just multiply accordingly: $2,000 x 25y x 12m = $600,000.

C) Children Education

For a 3 years course in a local universities (NUS/NTU), based on inflation rate of 5%, in 20 years time, the course fee will come to about $71,000. If we add in the living expenses with an inflation of 1.6%, the grand total comes to $142k.

And if we are talking about overseas education, like Australia, the total cost will come to $440k

Still unsure if you really need the $1mil coverage? Talk with your financial advisor and they are the best person to advise you.

What is Insurance?

Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. 

The above is extracted from Wikipedia. And you can easily find several other "textbook-like" variations on the definition of Insurance via the Internet search engine(s). While the meaning from multiple sources could arguably be standardised in a way or another, the diversification largely stems from one's relativity to the value(s) of such a hedging tool and/or potential loss to be covered.

Consumerism is a social and economic order and ideology that encourages the acquisition of goods and services in ever-increasing amounts. 

In my opinion, one of the main deterrents to transferring contingent loss to Insurance is a comprehensive set of normative beliefs that doing so would inevitably incur high costs. And such valuations is especially subjective while the benefits that the product/service could bring about, is intangible.

Insurance, in its native origins, is simply a plain vanilla pooling-of-risk instrument. However, this instrument has been evolving and undergone a series of transformation into sophisticated insurance products that you can find today. It could be bundled with investment/savings; includes extensive coverage via means of a multiplier till certain age; offers a wider spectrum of coverage to include for eg., early-stage Dread Diseases; etc. This would concomitantly explain why the cost of insurance has moved northwards with the evolution of it. Having said that, the plain vanilla form of Insurance remains available till date. However, shoppers for insurance are increasingly spoilt (or confused) with choices. 

Hence, it remains important (if not, even more important!) to engage a trusted Advisor who champions your interest in helping you understand your options. If you ain't sure what are the qualities of a trusted Advisor, then don't stop short of contacting either one of us!

Pre-existing condition and not covered for ADL (Activities of Daily Living)?

If you don't have Eldershield nor coverage for Acitivites Daily Living, you can still be covered under Aviva which has a Guaranteed Issuance Offer (GIO) plan.

If you already have coverage for ADL, then how about simplified coverage for loss of use of one limb OR loss of sight of one eye OR loss of speech OR loss of hearing from NTUC Income which is also a GIO plan?

Advance Medical Directive (AMD)

An Advance Medical Directive (AMD) is a legal document that you sign in advance to inform the doctor treating you (in the event you become terminally ill and unconscious) that you do not want any extraordinary life-sustaining treatment to be used to prolong your life.

Making an AMD is a voluntary decision. It is entirely up to you whether you wish to make one. In fact, it is a criminal offence for any person to force you to make one against your will.

Source: MOH

The AMD must be made through a doctor (you do not need either a lawyer or legal advice to make an AMD). The doctor has the responsibility to ensure that:
1. You are not being forced into making the AMD.
2. You are not mentally disordered.
3. You understand the nature and implications of making an AMD.

You need to have two people witness you sign the AMD and they must sign the form as witnesses in your presence. One witness must be the doctor. The second witness must be 21 years or above and can be the doctor’s nurse, or any other suitable person.

If the witnesses are relatives, so long as they have no vested interests in your demise, they would be allowed to act as witness.

Since it's a requirement to get doctor to certify, it's best to do it during LPA application.

FAQ on LPA

What is the difference between a Will and a LPA (Lasting Power of Attorney)?
A Will is effective only after death. A LPA is effective when you loose mental capacity e.g. when one is in coma or dementia.

What happens if I do not have a LPA?
Your family members will have to apply to Court under the Mental Capacity Act, to apply for someone to take charge of your personal welfare and property & affairs matters. Somewhat similar to someone without a Will, it's costly and time-consuming and you do not get to choose who's best to take care for you.

Can I assign my spouse to take care of my healthcare whereas my son to take care of my financial matters?
Yes. Basically LPA allows you to assign the following decision making:
1) personal welfare (which may include health care) and/or
2) property and affairs (including financial matters).
3) both personal welfare and property and affairs
So it's best to decide who's best to manage your healthcare and financial matter.

What happen if the assigned is not taking care of my affairs irresponsibly?
The Office of Public Guardian has the power to oversees the assigned do their job responsibly. If they don't they are held responsible and in worst case be fine and imprisoned.

What happens if I recover my mental capacity?
The LPA will not be effective. It's only effective when you are certified to be incapable of managing your own affairs.

Will my LPA be revoked or cancelled in any condition?
Yes, if the person you assigned decline to take the job, passes away, bankrupt or he himself lost mental capacity.
If the assigned is your spouse and there is a divorce.


Other than LPA, anything else I need to consider?
LPA is effective only when you lost your mental capacity. Upon death, LPA is of no use. Will is the only effective tool to help you.

What is Lasting Power of Attorney (LPA)

The LPA is a legal document which allows a person who is at least 21 years of age ('donor'), to voluntarily appoint one or more persons ('donee(s)') to make decisions and act on his behalf should he lose mental capacity one day. A donee can be appointed to act in the two broad areas of personal welfare and property & affairs matters.

Benefits of an LPA

• Early preparations to protect your interests should one become vulnerable one day. 
• Enables you to make a personal, considered choice of a trusted proxy decision maker, who is reliable and competent to act in his or her best interests.
• Alleviates the stress and difficulties faced by loved ones who need to apply for a Deputyship order, if you lose mental capacity without an LPA in place.

Source: Office of the Public Guardian

Do you know that the application is free at this moment:

(fee of $75 waived for another 2 years until 31 August 2020)

However applicants are required to pay a fee to engage an LPA Certificate Issuer to witness and certify their application. We last checked it was only $60 from a a medical practitioner accredited by the Public Guardian.
Please note that LPA application must be within 6 months from the date the certificate issuer signs on the LPA.
Click here to find out more who can certify your LPA.

What can I use SRS for? Not just leave it in the bank until I retire?

Now that I have save $1,756 on my tax for YA2018 with SRS (Supplementary Retirement Scheme), next year I got additional money to spend/ save/ invest. (Click here for the previous article on Tax Savings details).

Then how about the $15,300 I left it in the SRS account?

Well, with SRS you can do alot of things as it's as good as cash (in terms of investment wise).

1) Option 1

Well I have already saved & earned 11.5% with the tax savings, I'll just let it grow 0.5% yearly until I retire.
=> Leave it in the bank and don't need to do anything.

2) Option 2

I am a long term investor (or speculator, I wonder?) and would like to try my hands on current market high as there's still 30% of chances going up.

=> Link your SRS with your Stocks account, and you can start speculating.. I mean investing.

3) Option 3

I am a bit risk averse but I believe in stocks as it has always been and historically shown to beat the inflation. But which stocks to buy?

=> Invest in equities or balanced funds instead. E.g. of balanced fund "First State Bridge"

4) Option 4

I don't trust stocks and shares. I only believe in Corporate Bonds issued by reputable companies and Statutory Bonds issued by Singapore government. But I don't have $250,000 to buy them.

=> Invest in money market or bond funds instead. E.g. "United SGD Fund CL A ACC SGD"

Getting confused and not sure which option to choose? Perhaps it is good to know your own-self first before making any decision that you might regret. Check out this month article too on "Understand Yourself before making that Investment Decision"

5) Option 5

What? Still got Option 5?? I start seeing seeing stars already. I just want a stable retirement and it's best if I can use my SRS to pay myself when I'm retired or no longer working. Got such thing?

=> Fortunately yes! There are insurers who allows you to use your SRS to pay for their retirement plans. In fact nowadays almost all retail life insurers have at least 1 retirement plan in the market.

Check out below the available plans that you can use your SRS:

6) Option **

Now I really see stars and totally lost. I think I will go for Option 1, easiest. Let it grow for 20years from $30k to $33k and earn $3,000, guaranteed. Not bad as I don't even need to lift my fingers.

=> How about earning a guaranteed $7,200 and another ~$16,000 for your play cheque? In addition, you have extra protection for death & terminal illness for the "just in case". But this you need to lift your finger and just give us a call and we will advise you based on your risk appetite. Oh.. not only lifting of fingers but need to use your mouth to talk a bit also ya :)