Insurance matters

In my journey as being a steward, I have recently been thinking about the area of insurance coverage.

Most if not all of us do buy insurance and we need it. But there are so many types of insurance out there and in most case, we will probably buy whole life insurance thinking it will be double as savings. However, through the regular insurance statements, the recent financial climate had eroded the 5-9% interest rate. Hence, it would be better to buy term as much as possible and invest the rest. This is applicable to Education insurance policy too. This I hope to pass down to my children so that they will learn and move forward.

Why buy term insurance?

It is for coverage purposes and has no investment return values. That's fine as we build our financial wisdom and gather little by little. Returns are higher as well as we are able to participate in certain corporate actions like rights issues which is typically under valued. For a small sum, we are well covered and can use the rest for investments.



Some adovcates:

Tan Kin Lian
From his website on Personal Insurance , he mentioned this about critical illness:

“There is no need to buy insurance to cover critical illness. Your Medishield or private Shield plan can cover most of the medical expenses.

The chance of making a critical illness claim is small. Less than 5% of people make this claim during their working life.

If you wish to have insurance to provide a cash payment, a sum of $50,000 should be adequate. The cost of critical illness cover is high. You should not spend too much premium on this risk, as the return is poor.”


Suze Orman:


Dave Ramsey: