What is the most important asset class?

Equities? (stocks)
Fixed-income? (bonds)
Cash equivalents? (money market instruments)

Think again. What generates the capital that is used to purchase these asset classes?
You!

In Buy Term Insurance, and Invest the Rest, I mentioned my term insurance coverage which comes up to around $400,000 in total. Not the best case scenario yet, but it is about the best I can do at the moment.

Term Insurance provides coverage of financial responsibilities in the event of (a) death or (b) total and permanent disability. When the worst case scenario happens, the least I can do is to enable my family to be debt free (cover all loans etc), while the remaining sum of money will help to partially make up for lost income.

Critical illness insurance or critical illness cover is an insurance product, where the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the critical illnesses listed in the insurance policy.

My Coverage = SGD$325,000

[1] NTUC Family Insurance Policy (Living Benefit) = $200,000

The Family Insurance Policy from NTUC Income is in fact an empty policy in which you can place any riders to provide the specific coverage that you want. Instead of a Term rider, I chose to include the Living Benefit rider, which pays the sum assured upon either (a) death, (b) permanent total disability or (c) diagnosis of a specified dread disease to tide over a period of prolonged illness and loss of income.

[2] SAF Living Care = $100,000

I believe that my coverage isn’t sufficient, which is why I chose this low cost option to beef up my Critical Illness coverage as an interim solution. Up to age 45, the premium is pretty affordable at $10 per $100,000. Moving forward, the challenge would be to find a way that provides Critical Illness coverage above age 45.

[3] AIA WholeLife Policy = $25,000

The policy wasn’t my choice, it was one of those that my parents bought for me when I was young, and happened to have term coverage. Anyway, I’m not inclined towards buying whole life policies, but it makes no financial sense to cancel it now, so I might as well see it through maturity I guess.

More Than Index Investing

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