The importance of Financial Planning. Always review your existing insurance policies as you move to different stages in your life. Please do not be mistaken that by just buying one plan is good enough to last you for the rest of your life.
The life insurance industry paid out to policyholders and beneficiaries has fell to S$6.79 billion in 2014 which is attributed to a drop in the paid out amount for matured policies. The rise in pay out for death, critical illness or disability claims however rose by 13% from 2013. On the whole, weighted new business remained the same as per last year while annual premium sales fell to 1.928 billion compared to 2013. The Life Insurance Association Singapore (LIA) said that the re-pricing exercise of Integrated Shield Plans (IPs) has seen a rise in premiums. In 2013, single premium sales increased to S$860.8 million and in 2014, the amount of new health insurance premiums fell by 42% to S$266 million from 2013. IPs and IP riders account for 92% of new health insurance premiums. LIA said that one in two individuals in Singapore has health cover, with premiums amounting to S$1.6 billion as of December in 2014. With the establishment of MediShield Life in end-2015, LIA would continue to collaborate with the Government and IP insurers to raise better public awareness and education on health insurance and on how MediShield Life and IP work.
What do all these figures mean to you? By looking at the increased in pay outs for death, critical illness or disability claims and the increase in new health insurance premiums, this shows that these areas are a concern of the people here. How about yourself? Are you covered too and is your coverage sufficient?
Singapore’s three-pronged approaches in having a good healthcare system are: – Firstly is to focus on public health such as investing in basic sanitation, compulsory vaccination and mass education. Secondly, a system that allows one to pay for his medical treatment via his insurance coverage Thirdly, to balance in healthcare financing between individuals, insurance and government, with official grants augment by mandatory savings in the form of Medisave, MediShield and Medifund. With MediShield Life being a more encompassing scheme and insurance premiums will go higher, the government is subsidising the insurance premium to keep them affordable, particularly for the lower-income households. Sustaining a good healthcare is an on-going challenge due to progression in medical science, ageing population and the increase in diseases.
In these aspect, Singapore has made four shifts to its healthcare approach.
- Provide an all-inclusive support through the Community Health Assist Scheme to subsidies outpatient treatment for lower or middle-class Singaporeans at private GPs.
- MediShield Life to replace MediShield to better manage high medical bills.
- Give people better, less-costly healthcare in their vicinity by building community hospitals and improving access to polyclinics and GPs.
- Campaigns to promote healthier food choices and Active Ageing such as cycling connectors to encourage Singaporeans to be more health-conscious
Do you already have an existing comprehensive medical insurance in place with the private insurers or do you prefer to get yourself protected with MediShield Life? When it comes to big medical bills, do you have enough savings to pay for it if you are under the MediShield Life Scheme? How about your health? Do you exercise regularly to keep yourself fit and healthy?
National Trades Union Congress (NTUC) said an advisory panel’s proposal to revaluate the CPF Minimum Sum to the Basic Retirement Sum is good as it is a more achievable amount for most employees to achieve retirement adequacy. NTUC supports the use of long-term inflation to accustom the Basic Retirement Sum, which could provide more predictability. NTUC also urged the Government to make sure that the public is well informed beforehand on any adjustments to the Basic Retirement Sum to ensure transparency on the calculated adjustments. NTUC also suggested that the government introduce incentives to encourage members to retain their retirement savings so that their monthly pay outs will not reduce.
Do you agree with the new proposal of having the basic retirement sum is a good idea? Will you be able to hit the basic retirement sum when you retire? However, is the basic retirement sum sufficient to sustain your ideal retirement lifestyle?
Knowing your net worth will give you an accurate picture of your financial status which allows you to access your financial advancement or regression.
Your net worth is calculated by adding up the value of everything you own (assets) and deducting the sum of all your debts and liabilities. Having more liabilities than assets, will create a negative net worth. Over-borrowing or poor financial management could also snowball to a large amount of liabilities.
The truth is that increasing your net worth only comes from decreasing your debt and increasing your assets. Professionals recommend reviewing your net worth every six months to a year. Be reminded that your net worth is not constant and could be irregular throughout your adult life, varying on your income level and spending habits.
Successful growth in your wealth does not happen at an instant and requires cautious and continuously planning. This first step will give you an insight of your progress and foresight to improve your financial outlook to provide yourself with a financially sound future.
Have you calculated your net worth? Do you have positive or negative net worth? Which area of your expenses can you cut down to increase your savings? With the increased in savings, what are the financial instruments can you invest in to grow your funds for your future?
Prostate cancer is the third most common type of cancer diagnosed in Singaporean men after colorectal and lung cancer. The cancer forms in tissues of the prostate, which is a gland in the male reproductive system below the bladder which surrounds part of the urethra. Prostate cancer generally affects men who are above 50 and is mostly diagnosed in men above 70. The degree of seriousness of this disease is determined by the state of health, degree of the disease and response to the therapy.
Do you always go for full body annual medical check up? What happens if you are diagnosed with prostate cancer? Do you have a critical illness plan in place should you are diagnosed with cancer? What will happen do your daily expenses should you can’t work for a period of time during treatment?
The top concerns of Singaporeans are retirement adequacy, healthcare and cost of living. Singaporeans fear having inadequate funds after they retire to cover their daily expenses and higher living cost, especially for those who are still paying their housing loans. Some Singaporeans foresee gaining help from the Silver Support scheme, while some believe that depending on oneself is crucial to pay off home loans and to prepare for their retirement. There is also a greater pool of people requesting for more withdrawal flexibility from their CPF accounts upon retirement.
Many are concerned that healthcare and hospitalisation costs may be very expensive especially for critically ill patients. Such problems will still persist despite of MediShield Life scheme that will be administered in end-2015.
Many Singaporeans also request for more financial assistance to subsidies “everyday goods and services”. Some felt that the government should relief financial burden on food such as distributing grocery vouchers.
Do you share the same concerns as what is stated above? Or do you have other concerns? Are you adequately prepared for your future in terms of medical costs, increasing cost of living and your retirement? If you don’t prepare and delay it longer, the shorter time you have left. Financial planning starts now and you re-adjust your financial plans as you pass through different phases of your life. Do you want to be in control of your finances without any uncertainty or do you want to delay your planning and live life full of uncertainties?
The Monetary Authority of Singapore (MAS) have issued a set of proposals aiming to fix the problem of bad writing that is a common in the financial industry. Financial products issuers have to write their prospectus in plain English; information has to be clear and avoid unnecessarily long sentence structures.
Over the years, MAS noticed that the prospectus is filled with more technical jargons which investors find difficulty understanding. Another issue is the use of complex statement and vague disclosures that may not be meaningful to investors. MAS emphasised the need to draft prospectuses with retail investors in mind for they are the target audience with the greatest need for information in the prospectuses.
Do you also face the same problem when you buy an investment policy? Do you understand the terms and conditions of the investment plan? What do you suggest for the issuers to improve?
As more and more millennials are graduating with a degree, they are able to earn good income after working for two to three years. However, this sudden burst of income can have a negative impact if they do not plan their expenses properly. The bad habits formed, if not changed, will definitely be a problem to them in future.
In Singapore, the percentage of credit cardholders with incurred debts beyond their annual income is about 3 per cent. Life-changing events such as marriage, financial downturn or medical problems can also cause a huge change in your financial stability. Acquiring good money habits will protect you from ‘financial storm’. One should be prepared to tackle money issues at any point in time, regardless how comfortable we are in our finances.
The 13 bad money habits that young people have include splurging on a car, not saving, taking up unnecessary loans, being a spendthrift, living on credit, not keeping track of their expenses, failing to invest, investing too aggressively, expecting their parents to save the day, not understanding finance, copying their friends’ spending habits, lending money to others and not having insurance.
Do you have the 13 bad money habits too? Are you savvy in budgeting – are you aware how many percent of your income goes to expenses and how many percent do you save? Which part of your expenses account for the highest percentage in your expenditure? Do you know any ways to save more money for your future or do you have any expenses which you can cut down more?
The Minimum Sum is the amount that must be retained in Central Provident Fund (CPF) for retirement when a member turns 55. 50% of the sum can be in the form of a pledge from a property purchased with CPF savings. The Minimum Sum provides CPF members with monthly payouts during retirement. It varies from the age of individuals and is adjusted with inflation. When a member turns 55, money from his Special and Ordinary accounts will be transferred into a newly-formed Retirement account. The Retirement account will hold up to S$155,000 or it varies with his age-group. Any extra will continue to grow in his respective accounts.
A member can still withdraw up to the first $5,000 from his CPF account even though he is unable to meet the Minimum Sum as the CPF board will immediately pledge the property he purchase during his CPF for up to half the Minimum Sum. Upon reaching 65 years of age, members will get monthly payouts, depending on the cash savings he has in his Retirement account. For members who do not make any withdrawal, money in their Ordinary account will earn up to 3.5% per annum. For Special, Medisave and Retirement accounts, the current interest rate is up to 5% annually.
Members can choose not to set aside the Minimum Sum unless they have purchased life annuity with payouts that is equivalent or more than their expected retirement sum. Over the years, the minimum Sum was set at $80,000 in 2003 and has rose over the years to match up with inflation and higher standard of living.
Will you reach the minimum sum when you retire? Are you aware how much do you need for retirement? Besides CPF’s retirement account, do you have other sources of money for retirement? What happens if you do not have enough for retirement and you are too old and weak to work?