You will map every source of income replacement and long-term care cover and list the gaps.
Jun Hao's premium breakdown from lesson 1.4 listed what he pays. His sheets from modules 2 and 5 sized his life and critical illness cover. Neither answered the question lesson 6.1 asked: if he couldn't work, what would pay the bills each month, and for how long? This exercise builds the one-page map that answers it, for your household.
It takes about 30 minutes. You need your policy documents, your HR benefits handbook, the CareShield Life website, and your essential expenses figure from lesson 5.4, Size your critical illness cover in years of expenses.
Make a table with one row for each thing that would pay you, or pay for your care, if illness or injury stopped you working. Include all of these if you have them:
paid medical leave from your employer, in months group disability income cover from your employer a personal disability income policy lump-sum total and permanent disability benefits on life policies and the Dependants' Protection Scheme critical illness cover, which pays only for a listed diagnosis CareShield Life or ElderShield, and any supplement your emergency fund, in months of essential expenses
Some of these will be empty. Keep the empty rows. A row that says "none" is the most useful thing on the page.
For each row, add four columns: whether it pays monthly or as a lump sum, the amount, the waiting or deferment period before it pays, and when it stops.
Be exact about what triggers each payout. TPD benefits get the note "total and permanent only", and critical illness cover gets "listed diagnosis only". Beside CareShield Life, put "severe disability, measured by activities of daily living", and beside anything from your employer, "ends when I leave the job". Those notes decide which rows would actually pay in a given situation.
Put your essential monthly expenses, from module 5, at the top of the page. Then test the map against three situations:
A year off work after an injury, then a full recovery.
A permanent condition that stops you doing your job, but not every job, from now to retirement.
Severe disability needing daily care, later in life.
For each one, read down the table and write which rows would pay, how much a month, and for how long. Then write the monthly shortfall against your essentials.
Rank the gaps by how much damage each could do to the household: the monthly shortfall times how long it could last. A small monthly gap that could run for 30 years can matter more than a large one that lasts a few months.
All figures are examples.
Essentials: S$3,500 a month that his household relies on from his pay.
His rows start with two months of paid medical leave at full pay, which is what his employer's policy allows in this example. He has no group disability cover and no personal disability income policy. Next is a S$100,000 TPD benefit on his whole life policy, total and permanent only. A DPS TPD benefit, total and permanent only, amount from the CPF website. His S$50,000 accelerated critical illness rider, listed diagnosis only. CareShield Life, for severe disability only, monthly amount from its website, no supplement. An emergency fund of S$21,000, six months of essentials.
In the year off, medical leave pays for two months and the fund for six, which leaves four months, or S$14,000, with nothing paying.
The permanent condition that stops him doing his job, but not every job: medical leave and the fund carry him for eight months, and after that nothing pays, because TPD needs him unable to do any work. Critical illness pays only if the cause is a listed illness. His shortfall is S$3,500 a month for up to 30 years.
Severe disability needing care: CareShield Life pays its monthly amount. Against his estimate from lesson 6.3 of S$3,000 a month for care, the gap is S$3,000 minus that payout, possibly for years, while the household also loses his income.
His ranking: first, the S$3,500 a month gap for a long or career-ending disability, because it could run for decades and nothing in his cover touches it. Second, the long-term care gap of S$3,000 minus his CareShield Life payout. The four-month gap in a one-year absence came third, because the family could cover S$14,000 by cutting back.
Lesson 6.2, Own occupation, deferment and benefit period, gives him the terms to look for in closing the first gap: a deferment period around eight months to match his leave and fund, a benefit period to 65, and the strongest definition he can afford.
One page. A table of every source, including the empty ones, each with how it pays, the amount, the waiting period, what triggers it and when it stops. Your essential monthly expenses at the top. The three situations tested, each with a monthly shortfall and how long it could last. Underneath, your top two gaps, with the monthly amount each one leaves uncovered.
Build your income protection map and write your top two gaps with the monthly amount each one leaves uncovered.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).