Just Started Working? Consider Term Insurance!

(If you have just started working, or going to graduate soon, you've gotta read this!)

Ever remembered the days when you just started working, and someone told you that you have to get some insurance cover? And remember that after paying off your study loan, this loan, that loan, buying work clothes, paying for your handphone bills, giving an allowance to your family, buying that nice bag, and other doodads, there's almost nothing left from that miserable little pay cheque? 

 No money left for insurance? 

 That doesn't take away the importance of insurance, and the possibility of one suffering a misfortunate such as premature death, disability, or major illness.

 Well, here's a solution. Look at term insurance. They're cheap, they're simple to understand, and they suitable for most young people who just started on their career.

There are 5 good reasons why someone who is in the early stages of his/her career needs to seriously consider starting an insurance plan (or term insurance if budget is a constraint).

Our parents have spent an enormous amount of money, time and effort to give us a good education, comfortable life and lots of love and care while we are growing up. In the unfortunate event of a serious illness, one will not only be unable to repay his/her parents through working and providing an allowance for them, he/she will become both a financial burden, as well as an emotional burden for the parents. Insurance helps to relieve the financial burden, which is the biggest contributing factor for people’s emotional burden.

When we are early in our career, we usually start off with debt, and then slowly repay the debt by working and setting aside part of our income for loan repayments. Debts include study loans from the bank, study grants from our parents’ CPF, car loan, etc. In the unfortunate event of our demise, these debt will not be paid off, and passed to our family members. Insurance can help to pay off these debts so that our loved ones can continue life without getting into financial troubles.

When we are young, insurance is at the cheapest. One who reaches the 30s may find him/herself paying 1.5 to 2 times more than someone in the early 20s. Therefore it absolutely makes good sense to start an insurance plan early on.

When one has a medical record (e.g. hospitalised, or treated for an illness), insurers will either charge him/her extra premiums (a.k.a. loading), do not cover certain conditions (a.k.a. exclusion) or totally reject the person’s insurance application (a.k.a. declination). I have known of many people in their 30s who are unable to buy insurance at standard rates and conditions due to common conditions such as high blood pressure, kidney stones, or even injuries from accidents. With the modern city lifestyle, it is a common trend for people to suffer from all kinds of medical conditions when in the 30s. Therefore it is important to buy while we are young, as our health is in the best state to buy insurance at the cheapest price.

Most term insurance plan (like the one that I have attached) contains a ‘convertibility clause’. This means that you can ‘convert’ the plan to a whole-life insurance plan, savings plan, or investment-linked plan in future, when your budget increases and can afford to set aside a bigger amount of savings every month. This means you can ‘lock in’ your good health and not wait until your budget increases, as conversion do not require medical declaration and check-ups.

So if you're a fresh graduate or beginning your career, my advice to you is to start your insurance early. You'll never ever go wrong. Been there, done that!