You will be able to write a household insurance plan and a one-page brief you can take to any adviser.
Jun Hao, the course's example learner, has six files saved from earlier lessons: a premium breakdown (lesson 1.4), a sum assured sheet (2.4), a three-structure model (3.6), a shield plan comparison (4.5), a critical illness sizing sheet (5.4) and an income protection map (6.4). Looking at them together, he sees that none would give his partner Mei the full picture, and none is something he could send an adviser before a meeting.
Each of those files does its own job properly. What's missing is a single place showing what the household has, what it lacks, what closing the gaps would cost and which to close first. Over about 45 minutes, you turn your own earlier files into two documents. The household insurance plan stays with you. It has a section per risk showing what you hold, what you need and the gap, followed by the gaps in ranked order, your budget and a review date. The adviser brief is a one-page summary you can hand to any adviser, covering your household, ranked gaps, budget, preferences and questions.
Open a new document and give it five short sections, always in this order: life, critical illness, income and disability, long-term care, hospital. Under each one, note what you hold, what you need and the gap. Take the figures straight from your earlier files as they stand; there's no need to work them out again. Your lesson 2.4 sheet gives the life cover gap and term, and your lesson 3.6 model gives the structure of that cover. The critical illness gap is on your lesson 5.4 sheet. Lesson 6.4 supplies both the income gap and the care gap. Your lesson 4.5 comparison holds the hospital decision.
For life, Jun Hao needs S$950,000 (an example figure, as are all his numbers below) less his DPS payout. He reached that by taking the S$900,000 gap on his 2.4 sheet and adding S$50,000 to allow for the accelerated critical illness rider. All of it is term cover, split as S$760,000 running to age 54 and S$190,000 running to age 58. His critical illness section shows a gap of S$100,000 of early-stage cover, which could be standalone or additional. Under income and disability, he is short S$3,500 a month once eight months of leave and emergency fund are used up, and that shortfall could run for 30 years. Long-term care leaves him S$3,000 a month short, minus his CareShield Life payout. Hospital shows no gap. He keeps his A class plan and rider and has noted a review of the rider at age 60.
Use the ranking method from lesson 6.4. Damage is the size of a shortfall together with how long it could go on. Likelihood is still part of the judgement, though a rare event that would ruin the household goes above a likely one the household could cope with.
Jun Hao puts income first, for the case where he can't work. Life comes second, critical illness third and long-term care fourth.
With the order settled, write down what you want for each gap, starting at the top. For income, Jun Hao wants a disability income policy paying about S$3,000 a month, an own-occupation definition if the price allows, the deferment option nearest to eight months, and benefits paid to age 65. For life, he wants the term cover already set out. For critical illness, he wants S$100,000 of early-stage cover. For long-term care, he will get one quote for a long-term care supplement and leave the decision to his next review.
Your premium budget is the total cash the household is prepared to pay each year for existing and new insurance combined. There's no single correct figure. Work yours out from your take-home pay, your other goals and what your lesson 1.4 premium breakdown showed you. Put the number in writing before any quotes arrive, so the quotes can't set it for you. Take away what you're paying now, and what remains is the room you have for new cover.
Jun Hao caps his cash premiums at S$5,500 a year, roughly 8% of his take-home pay. His current policies cost S$2,850, which leaves about S$2,650 for anything new.
Quotes may add up to more than the budget. If they do, go down your ranking and close the top gap, then the one below it. Before giving up on a gap altogether, try changing the terms of the cover. Start with a longer deferment period. If that isn't enough, take severe-stage cover in place of early-stage cover. Shortening the benefit period is the last option. Jun Hao's fallback is to close income and life first and to price severe-stage critical illness cover to bring the cost down.
Keep the brief to one page. An adviser should be able to read it in five minutes, understand where you stand and arrive at the meeting with options that fit. It has five parts:
Household: ages, dependants, income, and your home loan with the year it ends. Ranked gaps, each with its amount and terms. Budget for new premiums, split into cash and MediSave. Preferences, such as term rather than whole life for life cover, or no replacing existing policies without a written comparison. Questions drawn from lesson 7.1, "How advisers are paid and what they must tell you".
Attach your lesson 1.4 premium breakdown so the adviser knows what you already hold. Ask for the reply in writing, with a product summary and benefit illustration for every recommendation.
The same brief can go to more than one adviser. Because each adviser works from an identical page, you can set their recommendations side by side. Jun Hao sends his to Ryan and to one other adviser and compares the two sets of recommendations that come back.
Choose a fixed month for your yearly review, for example the month your hospital plan renews, and enter it in your calendar. Underneath, list the life events from lesson 7.4, "When to review your cover as life changes", that would make you review sooner. Jun Hao's review falls each March, when his shield plan renews. He would bring it forward for a second child, a move to a bank-financed home, Mei going back to full-time work or a change of job.
Check your two documents before you stop. You need a section for each of the five risks with hold, need and gap filled in, the gaps ranked by damage, a premium budget in writing, a one-page adviser brief with household, ranked gaps, budget, preferences and questions, and a review date with its triggers.
This course is education rather than financial advice, so take the brief to a licensed adviser before you buy, and decide on the recommendations with the plan in front of you.
Write your household insurance plan and your adviser brief, then put a review date in your calendar.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).