We Asked You About Your Financial Needs, and You Said This!

Last December, we launched the 360-NeedsProfiler with our partner 360F, a tool to predict your financial needs and risk in terms of insurance protection and wealth accumulation. The tool was used by more than 600 people from 3rd December 2020 to 2 January 2021.

Here are our findings:

1. A small majority have life insurance, but only a minority have critical illness and disability protection

• 54% had life insurance
• Only 39% had critical illness protection
• Only 36% had disability protection

2. A significant minority were not sure about what type of coverage they had:

• 10% did not know whether or not they had life insurance
• 26% did not know whether or not they had critical illness protection
• 29% did not know whether or not they had disability protection

(These stats are worrying but understandable, we’ll talk more about this later)

3. Women are more likely than men to have insurance protection against death and disability.

• 85% of women surveyed had life insurance compared to 71% of men
• 61% of women had disability cover compared to 46% of men

4. Women are just as likely as men to have critical illness cover

• About 60% of both men and women had critical illness cover

5. However, women are more unsure about how much cover they need

• 45% of women are not sure about how much life insurance cover they need
• 61% of women are not sure about how much critical illness cover they need
• 58% of women are not sure about how much disability cover they need

In contrast, the proportion of men who are not sure about the cover they need are 23%, 21%, 31% for life insurance, critical illness and disability respectively.

Here are the key takeaways from the findings:

1. Find out what coverage you have

The survey showed that many of us do not know what type of insurance coverage we have. This is understandable, as our parents or our relative who was an insurance agent made those decisions on our behalf when first we started work. But do you know what you bought?

So the first step is to find out what you already have. Find out the insurance that was sold to you by your auntie when you got your first job, and for which you are still paying premiums 10 years later.

2. Establish what protection you need

We can write a whole essay on what you need. The best is to seek the advice of a licensed financial planner (notice, we did not say an insurance agent). But just for now, here are some rules of thumb:

• Everyone needs medical insurance
• Most people need critical illness and disability insurance
• People who have dependents who rely on them for financial support need life insurance

3. Calculate how much protection you need

Fundamentally, this is about how to ensure that you and your family have enough to live on and pay for extra expenses in the event of something untoward happening to you. The survey points out that many of us do not know how to calculate this.

To help you with this, please with our partner read this article on the amount you should insure yourself for in respect of life and total permanent disability insurance. You can even try out this calculator we designed.

4. There’s no shame in consulting a licensed financial planner

If all this is too much, do consult a licensed financial planner (again not an insurance agent) to have them advise you on the amount and type of coverage you need.

Don’t be afraid to be straightforward and ask up front how much their fees are and whether they take any commission on the products they recommend.

The view at Fi Life is that we prefer independent licensed financial planners who charge us advisory fees and nothing else (and any commissions received are returned to us). That way, we know they represent us, and not the product companies.

P.S. If you want to do a bit of self-discovery before you meet a financial planner, try out this 360-NeedsProfiler today. It will no longer be available after 31 March 2021.