You will be able to rank risks by how much harm each would do to you and your family.
Get a blank sheet and list every way your money could take a hit in the next twelve months. Keep product names off it. Next to each item, write what it would cost you and what it would cost anyone who relies on you. Finish the sheet before you sit down with anyone who sells insurance.
There's a practical reason for doing it in that order. A list of products can't tell you what you need, because cover only makes sense when you measure it against a risk you've already written down. So the ranking comes first. Products come afterwards, and only for the risks that end up near the top of it. Nothing below recommends a particular product.
For most first jobbers, two events cost more than anything else: a large hospital bill, and losing the ability to earn.
A serious illness or accident can cost far more than most people in their twenties have saved. MediShield Life helps with large bills in subsidised wards, and while you're employed, your company's group plan may help with hospital bills too. Even after both have paid, some of the bill can still land on you. That's more likely if you stay in a higher ward class or go to a private hospital.
Your income is probably the largest financial asset you own. Over the next forty years it pays for everything else. If illness or injury keeps you away from work for months, or for good, the pay stops coming in. Few first jobbers spend much time on this risk, and group plans often cover it lightly or not at all.
Smaller events do far less damage. A minor accident, a dental bill or a short illness that your sick leave already covers can be absorbed by sick leave and an emergency fund. Lesson 4.3 is where you build that fund.
Life insurance pays out when you die, and the money goes to other people. It only matters if somebody would be financially worse off once your pay stopped. Many first jobbers have no dependants, so often nobody would be. Parents who don't rely on your money would grieve for you, but a payout wouldn't replace anything they need. If you do support your parents, the answer is different.
Your age and your health don't decide this. The question to ask is whose budget includes your income. Arjun, another first jobber, gives part of his pay to his mother every month, and she relies on it. If he died, she would be short of that money, so for him life cover sized to the gap starts to make sense. Death and disability both sit higher on Arjun's list than on Hui Min's.
If you find you need life cover, your DPS cover is a starting point (Lesson 6.1). For working out the size of the gap a dependant would face, go to Lesson 4.2 of The Singapore personal finance system, end to end, "Term life: replacing income for people who depend on you".
Hui Min is a first jobber. Over coffee, a friend who works as an insurance adviser opens a tablet showing six products: a hospital plan, a critical illness plan, a whole life policy, an accident plan, an investment-linked plan and a savings plan. He tells her most people her age take "a basic package" of four (also invented). When she asks which risk each product is meant for, he has to stop and think before he can answer.
She already knew one gap. The benefits map she drew in Lesson 3.4 showed that her group plan covers loss of earning ability lightly or not at all.
Her situation: she sends her parents S$400 a month (an invented figure) and is paying off a loan. Both her parents still work and don't depend on what she sends. She has a buffer of savings and she has sick leave. She ranks five risks by how hard each would hit her this year, starting with the worst:
An illness or injury that keeps her off work for a long time, because the S$400 a month to her parents and the loan repayments would still be due. A large hospital bill in a ward above what MediShield Life is designed for. A serious diagnosis while she depends on group cover, which could make it harder for her to get personal cover later. Her own death, placed lower because her parents both work and don't rely on her allowance. A minor accident or short illness, which her buffer and sick leave can handle.
Damage alone set that order. The adviser's pitch had no part in it. The only products she now needs to look at are ones for the risks at the top.
If a big hospital bill ranks high for you, as it does for Hui Min, one option to look into is Integrated Shield Plans. Insurers sell these private plans on top of MediShield Life. They pay for stays in higher ward classes or private hospitals, which MediShield Life on its own isn't designed to cover. You can use MediSave for part of the premium, up to the withdrawal limits the CPF Board publishes, and pay the remainder in cash.
Riders are optional extras you can add to a shield plan to lower the amount you pay yourself when you claim. MediSave can't be used for them, so the whole cost of a rider comes out of your cash.
A shield plan is worth having or not depending on three things: the ward you'd want to stay in, what you can afford each year, and what your group plan already pays for. Check the MediSave limits on cpf.gov.sg and read the Ministry of Health pages on Integrated Shield Plans before you decide. For more on how individual insurance products work, how to compare them and how much cover to buy, see Module 4 of The Singapore personal finance system, end to end.
Go back to your sheet, judge each risk by the damage it would do this year to you and to anyone who depends on you, and put five in order before you look at any product.
Rank five risks, from a hospital stay to your own death, by how hard each would hit you or your family this year.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).