I had been brought up in a typical Chinese family.
My parents believed in the Taoist-Buddhist way of life.
Visiting temples and offering joss-sticks were part and parcel of my formative years.
At the same time, there was an increasing Western influence on the society as I was growing up.
Naturally, a wide-eyed Chinese kid like me was confused.
I could not understand the whole concept of Christmas.
But when I saw my first Santa Claus, a warm feeling of familiarity permeated my body.
Without any doubt, I ran over and hug the plump figure.
As he passed me a gift, I uttered,
“Xie Xie, Cai Shen Ye (Thank you, the god of Wealth).”
Despite the immediate laughers of my family and their subsequent explanations, I was still secretly convinced that I was right.
Santa Claus was actually God of Wealth in different red costumes.
I tried to peek under the robes of Santa whenever I had the chances, looking for gold ingots.
What a silly boy!
Thankfully, my conviction about Santa is non-consequential to the latter stages of life.
Most misbeliefs tend to be.
But when it comes to insurance, certain false beliefs will turn out to be life-altering.
Let’s take a look at the common misconceptions about life insurance, shall we?
Insurance is an investment.
You have to pay a premium for insurance.
Investments require payment too.
But make no mistake – they are as different as day and night.
The purpose of insurance is to create a safety net when bad things such as death, illness or disability occur.
On the other hand, investments are supposed to help you grow your wealth for retirement.
Even with such polarised intents, it is not difficult to find people who are convinced that they are the same thing.
The reason for the confusion is obvious.
The protection element of insurance is often bundled with the saving/investment units and sold as a singular product.
Whole life, endowment and ILPs are the backbones of the life insurance industry and thus, the lines between insurance and investment are blurred.
Given the conservative nature of insurance plans, it is customary for financial advisers to advise their client to include them as part of their financial planning.
After all, life insurance is relatively safe when compared to equities, futures and other derivatives.
One need a balance to have a solid, well-rounded financial plan.
Therefore it is not optimal to plan your retirement future, utilising solely on insurance.
With modest returns of usually less than 5%, insurance is not an investment and therefore should not be treated as such.
On the other hand, an investment-only approach will place you in a vulnerable position if calamity strikes.
If you have this wrong concept about insurance, it is not too late to start reviewing your financial plans.
Get going and don’t let it ruin your fiscal future.
CPF insurance scheme is good enough.
Admittedly we have a good insurance system in Singapore.
The government has formulated a series of insurance products that could be paid for by our enforced savings in CPF board.
DPS, Eldershield, Medishield Life are some protection policies that could be purchased with your hard earned CPF monies.
Even if you buy every single one of them, the protection value is grossly insufficient.
We have said our piece about the inadequacy of Medishield Life here.
A fully integrated Medishield plan, preferably with a rider will do a much better job.
DPS provide a basic cover of $46,000.
Even with some extreme scrimping, most families cannot survive a year on just that sum.
A basic Eldershield pays $300 monthly for a maximum of 60 instalments.
It is definitely insufficient for even subsistence living.
The recent increase of Public Assistance allowance to $500/month demonstrates the point.
Should you be relying solely on your CPF for your protection, think again.
You can get insurance at any time.
You want to save on premiums by not getting insurance when you are young.
After all, the chances of dying before the age of 40 for a Singaporean resident is less than 1%.
As a betting man, you like your chances of surviving the early years.
Insurance can wait.
You have assumed wrong!
In the world of life insurance, pre-existing (preX) condition is taboo.
Before you reach the age of 40, it is not uncommon to experience certain health scares.
Yes, your survival rate is rather high, given the advanced medical treatments available here.
However, this becomes part of your preX conditions.
This is where technology will work in favour and against you.
In this digital world, your medical history can be traced easily.
No hospital stores your information in metal cabinets anymore.
Your medical history can be accessed easily via the intranet.
It helps the doctors find out about your allergies and medical records when you are unconscious and in need of emergency procedures.
However, this also makes it easy for insurers to get information about your preX conditions.
This trend is not going to reverse any soon.
Insurance companies had, have and will never wish to insure customers with adverse risk.
That is what you are if you have preX conditions.
Buy early, buy now.
Don’t let the insurers turn you down when you need it the most.
Insurance is expensive.
Your colleague had been humble-bragging about how his insurance plan is making him bankrupt.
You consulted with a financial adviser on your ideal financial protection portfolio and got a shock when you saw the final figure of the premium.
Obviously, you cannot afford insurance with your measly pay and sky-high expenses.
Still too costly.
Let us help you find some group-buy discounts.
Some misconceptions are harmless.
But insurance ones are not.
If you miss on getting yourself insured, you put your retirement plans at risk.
Your loved ones may be affected too.
Financial dreams shall be shattered.
Never let these false beliefs destroy your financial safety net and retirement plans.
Not even Santa Claus can help you if you do not take action today.
After all, he may just be too busy in the non-peak period, moonlighting as God of Wealth!
www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.