You will be able to name the events that should prompt an insurance review and say what to check at each one.
Find your oldest insurance policy and note the year you bought it. Next to that, write what your life looked like then: who depended on you, what you owed and where you worked. Then write the same three things for today. A policy can be fine in itself but still not match your life once that life changes. Comparing those two lines is how you find out whether yours still matches.
Jun Hao, an invented example, bought a whole life policy at 26. He was single, rented a room and had no dependants. Eight years later he is married, has a daughter and a flat, and owes S$280,000 on the flat. His cover hasn't changed since he was 26. The policy has nothing wrong with it, but his life has moved on and nobody, including him, has compared the two. This is the usual failure: the policy and the life are never put side by side.
Insurance needs tend to change in steps at particular moments, not gradually. Those moments are what you watch for.
Most changes in what you need come from a short list of events: marriage, a child, a home loan, a job change, and leaving work.
Marriage brings a partner who may rely on your income, and often a shared home loan soon after. When you marry, check your life cover using the needs method from lesson 2.1, "Needs-based cover beats a multiple of salary", and update your nominations.
A child is usually the biggest single change. It adds years of support and education costs, and it can extend your cover term by two decades. In the lesson 2.4 example, a second child raised Jun Hao's gap by S$248,000.
A home loan adds a debt your family would inherit. Check whether the Home Protection Scheme (HPS) applies and what share of the loan it covers. HPS applies only to HDB loans paid with CPF. If you move to a bank loan or a private property, HPS no longer covers that loan, so the gap HPS filled opens up again.
A job change can end your group cover and change your income. Your income affects how much disability income cover you can buy.
Leaving work can mean retiring, taking a career break or stopping to care for family. It ends group cover, removes the income that needed protecting, and makes your premiums a larger share of a smaller budget.
Group cover is the insurance your employer provides: group term life, group hospital and any group disability cover. It usually ends on your last day of work or soon after. Between jobs, you could fall ill while uncovered, or your next employer's cover may not start straight away. A condition diagnosed while you relied on group cover can also make personal cover harder to buy later.
Before you resign, check three things in your benefits handbook. First, which group cover ends, and when. Second, whether any of it can be converted to a personal policy, and the deadline for doing so. Third, when your new employer's cover starts. If these show a gap, decide whether to close it with personal cover. Ideally, buy it while you are still healthy and employed.
Reviews are about more than adding cover, because needs also fall. As children become independent and loans shrink, your life cover need goes down. Lesson 2.3, "Set the term from your youngest dependant and your loan", showed Jun Hao's support need halving by age 44. You may be paying for cover you no longer need. If you split your cover into two policies, one of them may now be ready to end.
Holding cover far beyond your need ties up cash. Reducing it can free money for things that matter more, such as retirement savings or rising hospital premiums (lesson 4.4). Reduce cover with care, though. You can always cut cover later, but adding it back after a change in health may not be possible.
Between big events, a short yearly check catches most problems early. Do it on a fixed date, for example the month your hospital plan renews. Each year:
Compare every premium with last year's, and note anything that rose and why. Check your cover against your needs sheets from modules 2, 5 and 6, updated for any change in income, debt or family. Check your nominations on CPF and on each insurance policy, and whether they still say what you want. Look for policies that have ended, lapsed or become paid-up, and for any automatic premium loan quietly growing on a whole life policy. Review your group cover if your job or your employer's benefits have changed.
A nomination is an instruction that sends your CPF savings or insurance payouts to the people you name. CPF savings and insurance payouts with a valid nomination pass outside your will, so an out-of-date nomination can send money to the wrong person. Lesson 8.2 of the course "The Singapore personal finance system, end to end", titled "CPF and insurance nominations", explains how nominations work.
Jun Hao wrote down the events he expects over the next five years, with the cover each one would change.
He expects a second child within two or three years. That would raise his life and critical illness needs and push his term to 58 for the whole amount.
He may move to a condominium with a bank loan. The new loan would fall outside HPS, so it would add a debt with no HPS behind it.
Mei expects to go back to full-time work once both children are in school. That would lower the support his pay needs to provide, and so reduce his life cover need.
He may also change jobs. That would end his group cover, so he would check his personal cover first.
Now make your own list. Your list may be shorter or longer. Write the events you actually expect, not every event that could happen, and the cover each one would change. Those become the triggers in the plan you write in lesson 7.5.
List the life events you expect over the next five years, and next to each one write the cover it would change.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).