7 Reasons Why Millennials Need Insurance

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Entering adulthood can be scary and exciting at the same time. You will be making some of the best and worst decisions of your life when you are young! These are the sort of decisions that will have a great impact on your future. Hence, it is important to make wise decisions at this age, like purchasing insurance. We know you are wondering why would you need insurance at this age! Allow us to explain!

When you are young you are likely to be earning around S$3,000 to S$4,000 a month (more or less). From this you need to pay the bills, buy things for yourself, have a good time when you go out with friends, and probably also give some money back to your parents. You feel that there simply isn’t enough money to go around. With some insurance policies costing as much as S$2,400 a year (minimum premium), you may think that it’s not for you, not now but you’d be wrong.

Here are 7 arguments we wish to make, that could help you change your mind.

1. It provides a plan B

The main thing about insurance is that if the worst should happen, you are covered financially. Imagine, god forbid, you are diagnosed with a critical illness or have met with an accident that has left you disabled. There is no way you can go back to the old job and get a source of income going again. What are you going to to do for money?

If you have a life insurance policy in place then such eventualities can be taken care of by the policy. It will ensure that you are not left penniless without a source of income.

Related: Does Your Insurance Policy Cover Your Active Lifestyle?

2. The younger you are the cheaper it is

One look at the insurance market will show you that the older you get, the costlier premiums become. The main reason for this is that the younger you are, the lower the risk of you falling ill. This means that you are not likely to require that insurance in the immediate future which makes you a low risk individual. If you go for it at an early age, you get to start building your protection net. Do you really want to wait till it gets expensive before you start buying in insurance? Furthermore, if your health deteriorates or get injured before you get a policy, that condition will likely be excluded from the policy’s coverage.

3. Your debt doesn’t become a burden

Imagine losing your source of income due to unfortunate circumstances. What happens when the monthly payment for your education loan or that personal loan that you took comes due? If you can’t work anymore, or are not around to pay your bills, who is to do it? Would you really want your loved ones to deal with your debt? A proper insurance plan can make sure that your debt is not a burden to you or your family.

4. There is no dearth of choice

Between the various insurance companies operating in Singapore, you have ample choice when it comes to insurance plans. For the purpose of investments you have the investment-linked policies and for the purpose of pure protection you have term insurance. You also have the option to go for critical illness plans that provide financial aid if you are diagnosed with a critical illness. You even get the option to add riders (add on cover) to your policy to enhance the protection you get from it.

5. Investment or Insurance?

You may say that you have just started working and that you are not making enough, or that you can either make investments or pay premiums. Well you may not have to choose because some life insurance products can be used as investments. One option available to you are Investment-linked insurance policies (ILPs) which allow your money to grow and protect you at the same time. If you feel that these are a bit on the risky side, you can go in for savings plans that still provide insurance cover but also provide maturity benefits that can help pay for college or houses in the future.

Related: 10 Questions to Ask Your Financial Consultant When Getting Insurance

6. It provides for the future

Most savings or investment insurance plans come with an investment horizon of 5, 10 or more years. If you are patient with it over time, the invest could mature into an amount that is perfect for your next house or for your child to use for university education. Even if it can’t pay for all of it, it might be enough to pay for a part of the expense.

Related: 4 Simple Ways Teach Your Children a Few Money Saving Habits

7. CPF is not enough

You may say that you are making regular contributions to your CPF accounts and earning an interest but the fact is that when it comes to savings and retirement or unforeseen circumstances, CPF won’t suffice. You will need to have another source to invest and grow your money, or at least protect you financially. This can be done if you add a life insurance policy to your portfolio. As we said earlier, not only do you have ample choices in this regard, you also get a choice in the type of plan you are comfortable with.

Oh and speaking of not enough, even the insurance your employers provide, is not enough. First of all, there is every chance that the insurance is invalidated when you stop working for that employer. Second, there is no guarantee that the new employer will provide you with insurance or an amount greater than the last employer.

Now that you know how important insurance is, how about you head to an insurance provider the next Friday instead of your local bar? We promise that you won’t regret it!

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