While we’re still young, it’s easy to think that we are invincible. After all, we are healthy, energetic, and bursting with youth; retirement and old age can seem like a very distant future. In fact, it’s never too late to get yourself insured because accidents can arise when you least expect it – that’s why they’re called “accidents”. One could be careless, or just super suay for being at the wrong place at the wrong time. And worst of all, accidents can be harsh on the wallet too.
So what can you do to ensure that you are protected financially in the event that you do become super suay? A good advice is to sign up for a personal accident insurance policy, which is a type of general insurance providing benefits in the case of accidental death, disability and injury. The specific type and level of coverage depends on the personal accident plan your purchase, so do get yourself acquainted with the type of benefits below!
There are people who need a personal accident insurance plan more than others, and they are included in this listicle. If you find yourself under one of these 5 categories but haven’t got a personal accident insurance plan, you know what to do!
1. Those who are self-employed
Those who are self-employed may enjoy the freedom of being their own boss, but they lack the advantages of company-sponsored insurance. If a person who is self-employed gets into a major accident, they would have to fork out a large sum of money for medical bills and lose wages by taking time off work. By getting a personal accident insurance plan, you will be offered coverage for accident-related medical bills and a weekly income benefit to make up for lost wages.
2. If you participate in sports and risky activities
Athletes get injured – a lot – so it’s no wonder they have a spot on this list. Since athletes are exposed to risk most of the time, a personal accident insurance may well benefit sportsmen. On the other hand, if the riskiest activities or sports you do are typically done when you travel, a solid travel insurance may suffice and there is no need to sign up for a personal accident insurance. Travel insurance will be good enough in covering accident accidents, injuries and death while travelling, and it can also cover lost baggage, trip cancellations and flight delays.
3. Those who are the family’s sole income-earner
If something happens to you and you’re the sole income-earner, your family may be heavily impacted in terms of financial security. Homemakers are also highly recommended to have personal accident insurance because the household may fall apart without him or her being there to assist in family matters! If you aren’t the breadwinner of the family, you can skip the personal accident insurance plan and sign up for an emergency budget or life insurance policy instead.
4. Those who are accident-prone
Some of us may be more prone to slips and falls than others, and constantly find ourselves limping in and out of the hospital like it’s our second home. If this is you, please get yourself some form of protection!
You should also consider getting a personal accident insurance plan if you have elderly parents or young kids at home because these are the people who need coverage the most. In the case of elderly parents, they would need to be cleared during health checks as pre-existing health conditions would not be covered under the plan. Only accidents with no links to health conditions will be covered.
5. Those with risky professions
Are you working in construction, as a bungee jumping instructor, or a lifeguard, perhaps? If so, you require the highest level of protection because your life is constantly at risk! If you’re a hawker, carpenter, technician, or taxi driver, you also fall into this category of “risky professions” and are a good candidate to get a personal accident plan.
If you like to find out more about how you can cover yourself with a Personal Accident Plan
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Is money ever enough? That is the BIG Question!
It is never enough. At least for me.
One of the key learning points during this Covid-19 pandemic is that I need to always have my emergency savings with me.
To be honest, towards the end of 2019, I have lost close to 10 thousand dollars due to the closure of my foot massage store in Serangoon Gardens! But luckily for me, I also sold my Feet Haven Katong in Jan 2020 before the Covid-19 virus became a pandemic. I was able to minimise and contain possible further losses.
Ever since the start of the Covid-19 Circuit breaker, I have been counting on my part-time teaching as a main source of income. I know that a lot of freelancers like actors, emcees, events managers, singers, coaches, have lost their income as gigs, shows, assignments and performances were cancelled.
Luckily for me, I am not just counting on acting as my main source of income. Apart from my part-time teaching with the various universities here, I am also a Financial Adviser with AIA. Thanks to my good friend and mentor Alex Chong, I have taken the various financial tests required in 2018, and by Dec 2018, I was certified as a licensed financial advisor and began to sell protection, personal accident, health and retirement saving plans to my friends and customers.
So, if you like, I am currently counting my income from teaching, financial planning, acting, public relations and referral marketing. I also do adhoc stuffs like pitching production projects, writing a book or trying to stage a play.
It sounds like there’s a lot on my plate. And yes, it is definitely achievable.
Obviously, I have been doing a lot of reflection, particularly on my finances. I have been thinking about how I spent my money, my savings, my insurance, my house, my car, my expenses and my sources of income.
End of the day, money fuel our passion. And passion brings us back our money. So I was particularly interested in knowing the recent Financial Impact Survey for Covid-19 conducted by OCBC bank.
This is not a sponsored post. I chanced upon the report and thought I should highlight some of the key findings there.
OCBC surveyed 1,000 working adults in Singapore to find out how COVID-19 has affected their finances and what actions they are taking in response to the crisis.
Here’s 5 interesting points:
1) Only a third have enough funds to last them more than 6 months if they were to lose their jobs now; more than half have reduced their savings.
This is rather interesting. Assuming your monthly expenses Is $3K, this means that 70% of the people do not have at least $18,000 in their savings account. Based on the 1000 people surveyed, 50% earns $2000-$4999, 31% earns $5,000 - $9,999 and 19% earns $10K and above.
It has already been well established in the financial management world, most experts believe you should have enough money in your emergency fund to cover at least 3 to 6 months' worth of living expenses. This is indeed a worrying trend. Perhaps most people are either not earning enough, or have spent way beyond their earning capacity.
2) Retrenchment and wage cuts were their biggest worries. Some are working harder to keep their jobs or taking up online courses to better prepare themselves.
Based on the survey, 46% of the respondents are worried about retrenchment. This is a valid concern since we have seen many reports about companies closing down due to the covid-19 pandemic. 36% of the respondents were concerned about pay cut.
This is also a key concern as I have had many friends telling me about their pay cuts. Some were even forced to take more no-pay leave during this period.
3) In the same survey, it was also reported that 31% intend to take up a second job and more than 53% attended more online courses then before.
I believe the Covid-19 circuit breaker got many thinking about their job and how recession-proof their profession could be.
Based on a Sunday Time Report dated 14 June, it was reported that Singaporeans deem Artists, Telemarketers, Social media Managers, Business Consultants and Human resource managers as non-essential jobs. So exploring a second income stream is definitely a good income generating strategy.
4) 4 in 10 are worried about having sufficient insurance coverage, yet 12% of insurance policyholders intend to decrease or terminate their policies.
This is very true. I have seen a lot more friends asking about their insurance coverage during this period. Perhaps when we are now caught up at home, and not doing much, we begin to re-look into the existing policies we have. As a guide, based on an insurance guru, Dr Sanjay, suggests that 10x of annual income should go towards our Life Cover. 5x of annual income should go towwrds income protection. 20% of the income should go towards retirement planning and 5% of the income should go towards kids education.
It is no wonder that most people have insufficient coverage based on these formulas.
5) Those in their 20s are the group making the most out of the Circuit Breaker; 64% are taking more online courses than before, and 23% are setting aside more funds for retirement
This is an interesting trend. Much have been said about the millennials being the strawberry generation. This Covid-19 Pandemic could in fact be their first taste of hardship or an uncertain future to come. The percentages suggest that perhaps this group could be more resilient than we think they are. Based on the results, 64% [Against Average 61%] are saying they are working harder. 64% [Against average of 53%] are saying they are taking up more online courses.
38% [against average 27%] have increased their savings. This could suggest that they have stopped spending on luxury items and unnecessary items. 30% [against average 26%] have indicated that they intent to increase their investments. 23% [against 19%] have indicated they are setting aside more funds for retirement. Perhaps the circuit breaker has given them a taste of what retirement could be like, and sparked their curiosity on retirement planning.
So what do I see might be the trend in the next few months?
1) More people will definitely explore a second source of income.
2) More people will go online and start their own personal and professional initiatives.
3) More people will be concerned about their insurance coverage and the lack of it.
4) More people will reduced their expenditures, and spend on things that are more essential at this juncture.
The above statistics and Information are retrieved from OCBC Financial Impact Survey. Thank you for the survey, OCBC. [https://www.ocbc.com/group/covid19-support/assets/pdf/ocbc-financial-impact-survey.pdf]
If you like me to assist you in your insurance planning, and perhaps explore a second income stream; I welcome you to WHATSPP ME. I would love to explore the options with you.
No one really knows the answer.
Until we get there ourselves, it will always be a mystery.
I have been thinking more about retirement during the circuit breaker period. Perhaps, this CB has been a close simulation of what life will be like during our retirement days. Staring blankly at the walls doing nothing? Spending 2 hours for lunch? Zoom calls with friends and catching up on life?
So, when do we retire, really? At age 50? At age 55, when we say goodbye to our OA and SA, and welcome our RA? At age 65 when we can finally smell our CPF Life payout of approximately $1500 per month [assuming we leave $181K in our RA account]. Or never?
The average retirement Age in Singapore remained unchanged at 62 in 2019 from 62 in 2018. This means I would probably work for another 19 years before I can officially enjoy my retirement.
How much do I really need by then? Assuming my average expenses are $1390 today, by retirement age at 65, it would have increased to $2,279. By 80 years, this amount would have snowballed to $3000.
If I need $2000 per month for a period of 18 years ( 80-62); the amount I’ll need will be $2000 x 12 x 18 years, which is approximately $432,000.
Wow, that’s really a huge sum of money. I didn’t really think about it. Looking at the diagram below, based on our earning capabilities, we only have approximately 35 years to accumulate our funds and earnings. Assuming I have another 19 years to accumulate my funds, I will probably need to save approximately $22,736 per year to get there.
Of course, our CPF Life does help. Assuming we have $181K put into our RA account at the age of 55. By 65 years old, your monthly payout should be approximately $1500. This amount will still be insufficient when we match it against the amount $2,279. There’s still approximately a short fall of $700.
This is not including any emergency expenses like medication, major home repairs, etc, and assuming all important insurance needs have been taken care of: Health, Life, Critical Illness and Personal Accident.
The truth is, based on a survey done by NTUC Income on retirement, 6 out of 10 people started saving only at age 45, and starting late is the primary reason for the inability to retire comfortably.
But how can we blame them? Who is to teach us how to retire? Schools? Parents? Society? Friends?
Retirement is really a far-fetched concept for everyone.
We all have dreams to retire early. But in the harsh realities of life, we could possibly only scramble our way there. Why is this so?
Perhaps it’s the inevitable social and political system Singaporeans have been caught into, making it difficult for us to fully lead a financial-free life. Why is this so?
Let me explain.
Most of us were taught to believe that having a degree is akin to having a guaranteed success in life. We spent our earlier years working hard in University, aiming for a high CGPA to get a second upper honour’s degree. If money is not a critical issue, most would have focused on studying and not taking any part-time job. We have lost an opportunity to earn some income here. By the time we graduate, most would be at the age of 24.
What do we do now? Singaporeans take a gap year touring around the world with friends. If not, people with burning passion in life will take a while to decide what they really want. Most will not take on a full-time position, but buy time to slowly understand the harsh realities of ‘adulting’, the painful truth of growing up and taking personal responsibilities for themselves.
Say we get ourselves a full-time job, Fresh grads took home a median gross monthly salary of $3,600 last year in 2019. After paying 20 percent to CPF, the take home is $2880. We assume the expenses for a young adult are as follow:
1) Payment to Education loan [$950] source for Valuechampion.sg
2) Payment to insurance [$432] If I take 15 % for Insurance
3) Payment to Grab, transportation $800 [ $20 x 2 x 20days]
Just looking at the three above costs, an average young adult is probably left with $700 to save. $700!!! How to survive?!
We have not even included our daily expenses like food, shopping items, clothes, pocket money for parents. Let’s not even talk about traveling.
No wonder it is ‘Money not enough’ for most Singaporeans. As one save up with more years of working, we then turned our attention to higher valued items like cars, gadgets and IT stuff. Most Singaporeans dream of owning a car for mobility. Or perhaps as a lifestyle statement. Little do we know that we are buying into a ‘want’ that is depreciating fast every year. The 10 year COE concept has made it exceptionally expensive for us to own a car. For those who aspire to have one, the additional expenses include road tax, insurance, parking, petrol and occasional servicing and maintenance costs.
At least for me, I had my first car when I was 26. I bought a Hyundai Getz and I was extremely satisfied. Little did I know that the reliance on cars have stucked with me till now. I have changed my car later to a Subaru Forester, a 2.0 Litre that comes with higher road tax and insurance premiums, and then a second-hand beetle, all eating into my additional funds and savings, without me knowing. I am now smarter. Recently I bought a 20 year old Suzuki Jimny car at $25K ( After minusing my Beetle trade in), and I just need to service a $25K loan for 7 years. I still can drive it for another 9 years! That, to me, is more financially savvy.
My point is, most Singaporeans do not really know how to plan their finances. Or perhaps the lack of awareness of it has made it hard for us to plan. Most aspire to own a house by 30. If you get married, then owning a HDB house with a value of $300K at age 30 might be easy. If you are single, you need to wait till 35. It should be relatively hard to buy a private property worth $800K at age 35 if you are just an average earner.
I was slightly lucky. I bought my property at the age of 34. I was scouting around for a private property and got my first property at $683K at Flora drive area. It was a dream come true as I always wanted a house of my own. Buying a property was partly due to the limited financial knowledge I have (before being a financial Planner), that property should appreciate over time and that it might prepare me well for old age. Of course, it’s not that simple.
Ok, I think I have been digressing a bit. I guess my point is that no one is born to plan for retirement. Or perhaps it is just a far-fetched notion that we simply choose to ignore? Do we even want to imagine ourselves growing old? Most of us choose to live in the present and adopt the ‘come what may’ attitude.
How many of us have the foresight to look beyond the present and predict what is to come? How many of us actually want to know what is to come?
Hence, preparing for retirement can actually be painful. We don’t want to see our future. We don’t want to even grow old. We don’t want to get there. We just want to be young forever.
Is this possible? We ask ourselves.
But the financial hard truths about retirement remain the same. We can choose to ignore them. If we don’t start planning for our retirement, we might see ourselves facing the same situation met by our older generation. Talk to most pioneer and Merdeka generation folks; a large number of them will tell you that they have failed to plan for their retirement. Some are even unaware of the importance of insurance.
One such person is my dad. When he passed on at the age of 56, he did not insure himself against his life and property. My mum and family were left with nothing and had to strive hard for ourselves. I don’t blame him. He did his best to provide for my family.
What’s your retirement like? Have you started thinking about your retirement? If you have not, you should start thinking about it. Think about what you might do after retirement. Think about the age you want to retire and whether you have the financial capabilities to sustain your daily living.
If you have a sum of SGD181K by age 55 in your RA account, Congrats, you are somewhat covered and safe as you will get payouts from age 65 to 80. If you have not, you need to start thinking of ways to earn that money whether it’s through your property or investments or passive income.
To be honest, if you have been reading and following my train of thoughts, what I am really hoping is to get you to save up for your retirement. One effective and cool way is really to invest in an endowment saving retirement plan. You force yourself to save by locking your monthly saving into a retirement plan.
Retirement Saving Plan
You can enjoy the freedom to spend your retirement the way you want with a guaranteed stream of income over your choice of 15 or 20 years. Plus, every dollar that you contributed is guaranteed at your selected retirement age, so rest easy and look forward to the best years of your life!
Take charge of your retirement insurance plan by choosing how much monthly income you want to receive, as well as the age to begin receiving it – either 50, 55, 60, 65 or 70.
This plan cushions your retirement dreams against the impact of inflation and enhances your retirement income through potential monthly dividends that will increase by about 5% every year, starting from your selected retirement age. To celebrate a life well lived, a potential one-off dividend may be added as an extra bonus to your retirement funds or a token for your loved ones.
You can pay a single premium if you have a lump sum to set aside; or you can spread your premiums over a longer period (5, 10, 15 or 20 years, or pay to retirement age) for regular, more affordable payments.
To illustrate, if you are 35 years old, if you invest $6490 per year for 10 years, by the age of 65, you will get a monthly payout of $500 plus monthly dividend. The cumulative amount received by the end of the term could be close to $236,140 vs the amount $64,900 you invested.
It is a good way to prepare yourself for retirement against the CPF Life which you have been painstakingly accumulating.
Alright, I think I will end here. If you want to know more about the Retirement Saving Plan, do WHATSAPP me via this link WHATSAPP ME