So here's the situation: your monthly bank balance is somewhat depressing. You're struggling with finances and the thought of getting it in order is daunting.
First of all, take heart that you're not alone. There are plenty of resources available and experts you can speak to without obligation, such as financial adviser representatives.
Secondly, just because money is tight doesn't mean that it's impossible to save or put insurance as a last priority.
We get it, most of your cash is for living expenses – after all you need to feed yourself and have money to get around, even if it's just to go to work and earn the bare minimum.
Nevertheless, with a bit of planning and consideration, it's possible to have enough to save and set aside for a bare bones insurance portfolio.
I am broke! Where do I begin?
If you have a stable income, no matter how small, you're not broke, at least you do have some cash-flow to work with, so that's a good starting point.
First thing you need to do is to draw up a monthly budget of daily expenses, regular bills and what you need to put aside for debts incurred. The last one is crucial – you cannot begin to start saving properly until you clear your debts, especially unsecured bank loans and credit cards.
Once you've allocated your monthly expenditure, you should use the balance amount to purchase insurance and set aside an amount (no matter how small!) for savings. The remaining cash can then go towards miscellaneous purchases and little treats.
Why allocate an amount to purchase insurance?
Because in the event that you're compelled to pay a huge bill – be it due to an unexpected illness or an accident – you're not likely to have the cash to do so. Having insurance can save you from this nightmare.
Get a hospitalisation plan
If you have absolutely no insurance, the first one you should purchase is a hospitalisation plan. If you're lean on savings, you'd need all the financial help you can get if ever you fall ill and need to be hospitalised or undergo treatment or surgery.
You may not be able to afford a plan that covers you for stays in private hospitals and Class A wards , but having basic coverage is better than having none at all. In Singapore, health and hospitalisation plans are called "Shield" plans, so named because it is a companion to your MediShield Life account.
What's great about these plans is that they can be paid using your Medisave so that you don't have to use any cash out of pocket (unless you've exceeded your Medisave withdrawal limits, in which case you'll have to pay by cash!) – all the better if you're on a tight budget!
Take out a basic life insurance plan
Next up, it is recommended for you to have a life insurance plan and this is extremely important if you're married, have children or other dependants (like your elderly parents or younger siblings if you're the breadwinner).
With you gone, so is their financial provider. Having basic life coverage will at least give them a sum to tide them over – especially if your savings is meagre!
With a small budget, your best bet is to opt for a term life plan. Term plans are typically more affordable than whole life plans as they only give you coverage for a limited period.
You should also check if you're eligible for a group insurance plan, if you're part of an organization.
For example, if you are part of the Ministry of Defence (MINDEF) or Ministry of Home Affairs (MHA) then you and your immediate dependants (spouse and children) can get coverage via the MINDEF & MHA Group Insurance plan for as low as S$1.37 a day1.
Consider a personal accident plan
Ok, so you already have life and health insurance taken care of with some money left over– how awesome!
But before you start spending on peripherals like coffees and movie tickets, consider another plan that's pretty vital, more so if you want to ensure your loved ones are taken care of.
This is the Personal Accident insurance. Having a Personal Accident plan is especially necessary for those who are on a tighter budget.
Accidents and injuries can be expensive affairs and the worst thing that can happen to someone who doesn't have a large emergency fund is being forced to spend every last penny paying for a mistake. I mean, if you had the cash, you'd want to use it for something nice, wouldn't you?
Aviva's MyAccidentGuard plan is an accident cover which insures anything from freak injuries (like falling down the stairs) to accidents on public transportation (including Grab). It also gives you a daily allowance if ever you're injured which is really useful if you're self-employed.
Review your portfolio as your budget changes
As your budget changes at life's different milestones, remember to speak to a financial adviser representative and review your portfolio regularly. To review your portfolio, speak to your preferred financial adviser representative or leave your details below and we will get back to you at your preferred time!
1 Terms and conditions apply.
2 For each complete 24-hour period that you are confined as an in-patient at a Hospital for the sole purpose of treatment of Your Accidental Injury.
Updated on: May 2017