Have you taken the time to sit down and plan how much money your family would need if you or your partner were no longer able to do their job? Being an expat and living away from your usual support networks means that you need to be a bit more thoughtful about your life planning. Whether it is due to illness, injury or death, taking the time to sit down and calculate how much life insurance you will need in Singapore is a proactive step to take care of your loved ones. It need not be difficult; just take the time to sit down and talk about what your expectations are from your life insurance.
Sitting down and calculating your life insurance and critical illness insurance needs is not an exercise exclusive to breadwinners, either. If you are a stay at home parent and were unable to continue caring for your household, how would everyone manage? Life insurance is about making sure that people are protected in these scenarios. Make sure that anyone that needs it has life insurance.
What do I need to think about when I calculate my insurance amount?
The gold standard of 1 million dollars that everyone usually insures themselves for just doesn’t cut it these days. Going by the latest figures from Business Insider, you will need at least 1.75 million dollars to retire on if you live on 70 thousand dollars a year. It is advisable to have some of these retirement savings included in your insurable amount.
In addition to that, you will need to factor in your expenses pre-retirement. It all adds up pretty quickly when you start to ask yourself these questions:
What are my debts?
If something happened to you, how would they get paid? This is your mortgage, your loans and those credit cards bills. Remember, this is isn’t temporary. Ideally, these will be paid off in full. Add up all of your debts and make sure that they are covered by your insured amount. Leaving a whole pile of unpaid bills to your loved ones would not be an ideal legacy.
What are my ongoing fees?
Next, think about ongoing fees. These would be rent and expenses like insurance; health insurance, car insurance, home insurance and travel insurance. If you have children, you will have to factor in school and college fees. This is tuition, uniform, books, travel and board until the finish university. If you have 2 kids, double that figure. One year of international school fees averages at around S$30,000. 13 years of schooling for one child will cost $390,000. Add university on top of that and you are easily looking at over $500,000 per child. There are 1 million dollars accounted for already in tuition fees alone.
What are your lost wages and earnings if you lose someone or they become permanently unable to work?
Life doesn’t go back to normal after something big like this happens. Everyone will need to take time out from their jobs and lives to recover or grieve or maybe even become a permanent caregiver. This is why making sure that you have cover for all eventualities like total permanent disability and critical illness is so important.
Can you pay the bills?
Will you have enough money left to cover the funeral costs if someone dies? If one of you become permanently injured or sick, your lifestyle will need adjusting and your home may need modification so everyone can continue to live comfortably.
Ideally, none of this will happen. It may seem like an unnecessary amount now, but when you add it up, it escalates quickly. The point of life insurance is to protect those you love the most by making sure that they are taken care of if something happened to you.
The original blog post in fully with more information about Expat Insurance was published here.