You Should Avoid These Mistakes When Getting Life Insurance in Singapore

Insurances for death, illness, and accident are probably the last things you’d think of while enjoying adulting life in your 20s. Insurance might be confusing and stressful at first, but it is generally designed to hedge financial losses in case of any injury or liability.

For starters, one of the most important insurance policies to buy in Singapore is life insurance with payout benefits, which vary according to the severity of the situation.

As a future policyholder, you should avoid these common mistakes when getting a life insurance in Singapore.

Mistake #1: Not Understanding the Types of Life Insurance in Singapore

There are three different types of life insurance: term, whole, and universal. Each life insurance differs based on your needs and goals.

The term life insurance is the most affordable as it provides basic life protection from five to 20 years only. Policyholders may opt to renew and apply for the updated premium rate. On the other hand, whole life insurance offers lifetime coverage and its cash value could possibly increase over time depending on the agreed contract. Meanwhile, universal life insurance also provides lifetime coverage but is flexible in terms of your monthly premium.

Jumping into a life policy without understanding how it works may lead to unfavorable circumstances. To make an informed decision and know the best life insurance to purchase, you may seek help and discuss with your family the policy terms, cost per month, and other relevant options.

Mistake #2: Impulse Buying

Sure, the urge of impulse buying is hard to resist but remember that your lifestyle can either make or break your financial goals.

This rule of thumb is also applicable when getting life insurance in Singapore. As the COVID-19 pandemic continues to impose risk against our health and mortality, having life insurance is the next right thing to do. But acquiring life insurance requires time to evaluate the insurance broker, dependents’ lifestyle, and your income stability. Apart from that, policyholders should assess the insurance features, risks, returns, and limitations.

Mistake #3: Being Over-Insured

If there’s such thing as underinsured, there are also people who purchase a life insurance with more features and benefits than they need as they see the policy as a retirement vehicle.

Undeniably, having a life insurance in Singapore is essential but the consequences of being over-insured would only increase your monthly spending due to unnecessary riders (optional add-ons), instead of adding these payments to your savings.