List every premium you pay and estimate how much goes to cover and how much to savings.
Open a blank spreadsheet and gather three things: your insurers' apps or policy schedules, your CPF statement (for anything paid from MediSave or your Ordinary Account) and your HR portal (for group cover). If you don't yet know where each one is kept, Lesson 4.4, "Find the gaps in your cover", in the course "The Singapore personal finance system, end to end", shows you. With the documents ready, the exercise takes about 25 minutes.
Most people who list their policies this way find at least one surprise. The real total is higher than they thought, part of it comes from MediSave without them noticing, or most of their biggest premium is not buying cover.
Jun Hao's sheet is the example throughout. All of his figures are invented for the exercise and are not quotes from any insurer. If you had asked him beforehand, he would have put his insurance spend at "about two and a half thousand". When he added it up, the real figure was higher, part of it was coming out of MediSave without him noticing, and most of his biggest premium wasn't buying cover.
Create these columns: policy, type, premium, frequency, yearly premium, sum assured, premium term, cover term, level or stepped, paid from, and estimated savings share.
Each policy gets its own row, and so does any rider with its own premium. A hospital plan and its rider go on two rows because they are priced and paid differently. Group cover goes on the sheet too. If your employer pays for it, enter a premium of zero so it still shows up in the list. National schemes that charge you also belong here, such as the Dependants' Protection Scheme (DPS) if you are covered by it. For the DPS, check your coverage status on the Providing for your loved ones dashboard on the CPF website by logging in with Singpass, and get the current sum assured and premium from the CPF Board instead of guessing them.
Convert every premium to a yearly premium using monthly premium x 12 = yearly premium, and convert quarterly premiums the same way. Some insurers charge a little more in total for monthly payment than for one annual payment, so if the gap is large, note it on the row.
Jun Hao's sheet has these rows:
A whole life policy with a sum assured of S$100,000 and a built-in S$50,000 accelerated critical illness rider, at S$2,400 a year, payable to age 65, with cover for life. An Integrated Shield plan at S$700 a year. A Shield rider at S$350 a year. Group term life of S$100,000 and group hospital cover, both free from his employer and entered at zero. The DPS, paid from his CPF, with his coverage status checked on the CPF Providing for your loved ones dashboard.
Use Lesson 1.2, "Why premiums rise with age, and how level premiums hide it", to label each row. Mark a premium level if one premium runs for the whole premium term. Mark it stepped if the documents show a premium table by age or say that premiums can be revised.
Then fill in the paid from column: cash, MediSave, CPF Ordinary Account, or a split. For an Integrated Shield plan, the MediShield Life part and part of the private part can be paid from MediSave, and the rest is cash. Riders are paid in cash. Your CPF transaction history shows the MediSave deductions. MediSave money is still your money, and whatever goes on premiums won't be there later for other medical bills, so count it in your total instead of treating it as free.
Jun Hao's whole life premium is level and paid in cash. His Integrated Shield plan is stepped, with S$600 from MediSave and S$100 in cash. His Shield rider is stepped and paid all in cash, and the DPS is paid from CPF.
The savings share is the part of a premium that goes to savings and its costs instead of cover. Estimate it only for policies that build a cash value, such as whole life or an endowment. Pure protection, meaning term, hospital plans and riders, gets a savings share of zero.
The method is deliberately rough. Get a term quote from compareFIRST or an insurer's website, using the same sum assured, a sensible term and, where you can, the same riders. The term premium is roughly what the cover alone costs, and the rest of the savings plan's premium is mostly the savings part plus the costs that come with it. The formula is:
savings share = (savings plan premium minus term premium) / savings plan premium
This slightly overstates the savings share, because whole life keeps covering you after a term policy would have ended. It is still close enough to show whether the policy is mainly cover or mainly saving.
Jun Hao's term quote for S$100,000 to age 65 with the same CI rider is S$300 a year. His savings share is (2,400 minus 300) / 2,400 = 87.5%, so roughly S$2,100 a year of his whole life premium goes to saving and its costs, and about S$300 pays for cover. His Shield plan, Shield rider and group cover all get a zero.
Below the rows, add up the yearly premiums twice, once for cash only and once for cash plus CPF. Divide each total by your yearly take-home pay, which is your monthly net pay x 12, plus any bonus you can rely on.
Jun Hao's cash total is 2,400 + 100 + 350 = S$2,850 a year. Adding the MediSave portion gives S$2,850 + S$600 = S$3,450 a year, before the DPS premium. His take-home pay is S$5,800 a month, which is S$69,600 a year, so his cash premiums come to about 4.1% of take-home pay and cash plus MediSave to about 5.0%.
There is no correct percentage of take-home pay to spend on premiums. You are recording your figure now so you can compare it later with the premium budget you set in Lesson 7.5, "Write your household insurance plan and adviser brief".
Two findings stand out on Jun Hao's sheet. Of his S$2,850 in cash premiums, S$2,100 goes to savings and its costs. Two of his premiums are stepped, so the lines that cost him least today are the ones that will grow. His group term life and group hospital cover also end when he leaves his employer.
A finished sheet has every policy and rider you hold on its own row, each one marked level or stepped and by payment source. Anything that builds cash value has a savings share, and pure cover has a zero. The two totals and their share of your take-home pay go below the rows. Finish by adding one short note on anything that surprised you, because that note is usually where the next module starts.
Make your premium breakdown sheet now. Include every policy you hold, the yearly totals and the estimated savings share of each premium.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).