InsuranceAAM We have life Insurance, but is our cover adequate?

We have life insurance, but is our cover adequate?

There are two key elements in assessing the level of cover that is appropriate. The first is the amount you owe and the second, what your essential living expenses are. It is important to work out a household budget and look at what you and your family would need to cover if you were unable to work, or even worse die prematurely.

Life cover is about ensuring there is enough money when you pass away, but it is also important to consider what would happen if you were ill and unable to work for a long time. Ideally if finances permit, at least essential expenses should be met by income protection insurance which will provide replacement income if you are ill and unable to work.

The biggest financial obligation that anyone has is almost always a mortgage. In some countries, like Ireland, it is compulsory to take out life cover with every mortgage purchased. While this isn’t the case in Singapore it is essential that a mortgage should be paid off on the death of one partner. This not only removes a financial burden and the worry about whether the remaining partner can continue to live in the family home but also provides a remaining partner with an asset that may be used to support them in a different financial environment.

The other major issue is affordability. What ‘affordable’ means will vary from family to family and is dependent not only on your income level but on your priorities.

One important point is that you should buy cover as young as possible. Generally, life insurance is less expensive the younger you are when you initially purchase it.

You should also review the small print if you took life cover out in your home country. Some policies become void if you are not resident for a certain time in the country you took out the policy. So, you may be paying for something that won’t actually cover you.

If you would like to discuss your protection needs or book a complimentary financial review please visit or call 6653 6652.


Important information

This document is intended for general circulation and for information purposes only. It may not be published, circulated, reproduced or distributed in whole or part to any other person without prior consent of AAM. This document/article should not be construed as an offer, solicitation of an offer, or a recommendation to transact in any products mentioned herein. The information does not take into account the specific investment objectives, financial situation or particular needs of any person. Advice should be sought from a licensed wealth manager regarding the suitability of the investment product before making a commitment to purchase the investment product. Whilst we have taken all reasonable care to ensure that the information contained in this document is not untrue or misleading at the time of publication, we cannot guarantee its accuracy or completeness. Any opinion or estimate contained in this document is subject to change without notice. The above report may contain data obtained from third parties and as such we cannot guarantee the accuracy of this data. AAM advisory Pte Ltd is licensed by the Monetary Authority of Singapore, FA Licence no 100032

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