Bridging The Protection Gap At Different Stages Of Life

Having sufficient insurance coverage will always be a fluid situation for people. As we enter different stages of our lives, insurance coverage that used to be sufficient in the past may no longer be adequate or even suitable.

One common problem is underestimating the risk of being under-insured when a person transits from one life stage to another. Often, people don’t even recognise that their protection needs have changed until a life crisis hits. By this time, it is often too late and individuals are left to bear the full consequence of being under-insured.

What can a person do to ensure that they are not at risk of being under-insured?

One simple trick is to re-look your existing coverage levels each time you enter new stages in life. Here are some common life stages that will have the greatest impact on your protection needs.

One of the first things any responsible adult should do upon entering the workforce is to get themselves insured, if they haven’t already. The reason is simple – being young and with the potential of a long and bright career ahead, the biggest risk you face is an unexpected accident or illness restricting your ability to earn a livelihood for yourself and/or your family.

The easiest way to jumpstart your insurance planning journey is to set up an appointment with a trusted financial advisor. This could be an advisor that has been working and servicing the family for many years, or a trusted AIA financial services representative.

It’s important to openly discuss any existing insurance policies that you may already have. This could be policies that may be bought by your parents while you were a child or provided by your employers. It is equally crucial to discuss your financial commitments and requirements with your advisor. Only when your financial advisor is armed with this information, can they accurately identify possible protection gaps that you may have.

Generally, for young working adults who do not have any dependents yet, common insurance policies to consider would include a private integrated shield plan (IP), critical illness coverage, disability income protection and a personal accident policy.

You can find the suite of products that AIA offers to guard against these risk areas.

After working for a few years, many people settle down and start a family. This is where it’s timely to review your existing insurance coverage to identify new protection gaps that may have formed.

For a start, you should ensure that you, as well as your spouse and children, have the right health insurance policies to protect the entire family against hefty medical bills. This should include a private integrated shield plan (IP) like the AIA HealthShield Gold Max. For added peace of mind, you could also consider purchasing a rider to reduce your co-payment and deductibles on medical bills.

Beyond just health plans, having sufficient life insurance coverage is crucial at this stage in your life. That’s because as a parent, you need to ensure that your spouse and children are able to continue life at the existing standard of living they are used to if something were to happen to you. Life insurance policies are a great tool to ensure that sufficient insurance payout is made to cover your family’s future needs.

The Life Insurance Association of Singapore (LIA Singapore) has a useful protection gap calculator that can be used by individuals to calculate if you have enough life insurance coverage.

Alternatively, you can work with a trusted advisor to calculate the amount of coverage that you need, and discuss the best way to close any existing shortfall.

If you would like to find a trusted advisor from AIA, you can contact us here.