What's the ideal percentage of your income you should allocate to insurance?

[sardonyx]

What's the ideal percentage of your income that you should allocate to insurance premiums?  This includes life, health, disability insurance, etc...

[xtine]

For me its 10% of net salary (not gross).  That should be enough to be able to leave something for
expenses, luho and savings.

[smartstarter]

it depends on your capacity to pay

[blooming]

Hindi ba the other way around?  Ang alam ko kasi Life/disability insurance is dependent on how much you are earning.  How much ang mawawala sa pamilya mo once you stop earning, kaya dapat sila i-insure.

As for health, I havent really thought about it because I always use the company's health insurance for me and my family.  Pero for old age, wala na sigurong health insurance company tatanggap ng premiums, kaya save save save nalang.

[smartstarter]

a simple calculation illustrated from Bo Sanchez group is if multiply annual expenses by 10. so if you spend 100,000 a year you need 1M insurance. Why the amount? Let's say you need you spend 500,000 for your family needs, so you get 5M insurance. Knock on wood,  incase of death, your family could spend little by little until it becomes smoke or until your family become financially wise to invest it and make a living out of it. Just PM me if you need a direct answer for your insurance needs.

[ms.rain]

there's really a computation on how much insurance one needs depending on his/her obligations etc.

but for those who just want to jump start in getting a life insurance plan since they know eventually they need to get one, i'd say you can allot 5% to 10% of your income for that. hope this helps.

[sardonyx]

thanks for the replies. after doing a complete financial needs analysis with independent financial consultants (they're not connected with a particular insurance company - which is good  ), they advised us that we should allocate 10% of gross pay to insurance premiums. it's based on gross pay since income tax here in singapore is negligible (around 3%).  they proposed a number of insurance plans that we're still studying.  currently, we have some insurance plans already. 

but we also do not want to spend too much on insurance because we can't let all our money go there and sacrifice our present needs and wants.  IMO, it's more important to save more for wealth accumulation.  we may be lucky to live till age 65 and then realized that we don't have much money for retirement because we spent too much of our salary on insurance.  i came across a blog which is owned by a former CEO of a local insurance company here and he said that you should not spend more than 3% of your income on insurance.  IMO, as long as you have accumulated much savings, you don't really need a big life insurance.  and if you have no dependents, you don't need one. we're more interested with disability insurance since  a long-term disability can drain your life savings.

[smartstarter]

tama sister. the good thing that you have insurance at the same time even when you are old is that. when you pass away you dont become a burden leaving your family enough money to augment for the burial with karaoke and disco pa, kahit sa hotel pa ang pakain after ng libing and pag ganoon. palakasan ng iyak ang mga kamag-anak tsaka naambunan. smile everyone.

[ikaela]

sardonyx: I've been researching a lot on insurance too and I also came to that same conclusion. Would you mind sharing the link to that fromer CEO's blog? Thanks.

[sardonyx]

ito sis:

Tan Kin Lian's Blog: Tips on Personal Insurance

[ikaela]

^Thanks sis.  Started browsing through it and it's a really informative blog!

[kruukuu]

Hi, new to GT and just posted to share my experience... closed one insurance policy in favor of another...

I realized that although I paid 1,200 per month on my old policy the returns was VERY VERY terrible. It was small.. realized it was just scraps I was about to get. Now that I have something higher, and with more awesome returns to me. I dont regret quitting AXA in favor of Pru Life UK.

[swit_squiggle]

yeah iv'e read it and maganda ang point of view nya.sa akin lang ha, hindi ata na ley in ng CEO na taga Singapore ang effect ng inflation rate. lets just say it, year 2010, kumuha ka ng 10M na life insurance term which is lets say 30k anually for 5 years.after 5 years 2015, may savings ka nang 3M, so you only have to renew the policy and get a lower premium which is 7M which will cost you now 22K for 5 years. still you have a contingency of 10M incase you die combined your savings and insurance. another 5 year passed 2020, may savings ka ng 7M. ngayon 3M insurance n lang ang kailangan mo.renew ka ulit sa insurance company, this time you paid 15k  annually for another 5 years. within that year namatay ang insured ngayon ito ang tanong. within that span of 10 years 10M ang total assets na naiwan sa namatayan. comparing 10 years ago ang mga bilihin ba hindi nagmahal?kung 10 years ago syang namatay, ang kabaong ay 20k lang, after 10 years 30k n.total burial expense if 2010 syang namatay is only 300k. here comes 2020 burial expense would now rocket at 500k. and needs have changed 10 years after. just a thought to consider.

[sardonyx]

^^^ you're welcome, ikaela

[thestargazer]

I was offered by a friend ng sun life...ang taas ng premium...

[swit_squiggle]

There are premiums as high as millions and there are premiums as low as 4K a year on individual insurances. But of course it would all depend as to what is your financial goal in life.

[blooming]

thanks for the replies. after doing a complete financial needs analysis with independent financial consultants (they're not connected with a particular insurance company - which is good  ), they advised us that we're going to need insurance around 10% of gross pay. it's based on gross pay since income tax here in singapore is negligible (around 3%).  they proposed a number of insurance plans that we're still studying.  currently, we have some insurance plans already. 

sis, 10% of gross annual pay will be the premium or the amount of insurance?

pag amount ng insurance, parang maliit ata yun. that's equivalent to only 1month+ of your pay? pag may nangyari sa iyo, 1 month pay worth of insurance is kulang

pag premium naman, parang sobrang laki naman na premium yan.

[sardonyx]

^that's premium pala sis.  malaki nga. kaya be careful when buying insurance. do your homework before you commit. 

[swit_squiggle]

wouldn't it be nice and sweet if we compute first the insurance need? rather than allocation?

insurance coverage =  monthly expense x 12
                                                 3.75%

3.75% is the prevailing time deposit interest. You can also use the prevailing inflation rate which runs around 4-5% just to cope with the increasing goods.                       

[sardonyx]

^ this would also result to paying the highest premiums and insurance companies would be very happy.  what are the chances that you would be hit by a dreaded disease? we need a formula that includes the risk factor.