My company provides insurance coverage for me. Do I still need one?
As an employee, we work hard to increase productivity and profitability for the company. In return, companies take care of their employees’ wellbeing in remuneration and other benefits such as insurance perks. The most common coverage includes the hospital & surgical (H&S) as well as group outpatient policies. H&S covers for hospital bills whereas group outpatient policies will take care or subsidise your visits to GP or specialist. On top of these, other group insurance available is term life, critical illness and disability etc. In short, coverage that you can buy as an individual is also available as a group policy. With that in mind, many of us would believe that we are secured since our companies have already provided us with insurance. However, here are some factors that we need to consider. The needs of our loved ones In 2012, a study conducted by the Life Insurance Association Singapore (LIA) on under-insurance identified a $462 billion gap for working Singaporeans and permanent residents. Most of the group coverage provided by our employers is usually insufficient to encompass the total amount we need in times of crisis. For instance, the group insurance policy offers coverage up till $100k, which might be sufficient if you are unmarried and do not have any dependents. However, the amount one requires would be much more if we account for the needs of our loved ones as well. Uncertainties in the future Loving your job and doing it well does not necessarily equate to staying at it forever. Financial crisis and retrenchment are examples of external factors that might disrupt our plans. As much as we hope that this will not happen to us, it is terrifying to be out of job and left without any insurance coverage as the insurance policy from the company will cease when we are no longer a confirmed employee of the company. In addition, the company decides the coverage that we are entitled to. This means that when company makes changes to their benefits program down the road, the type of coverage and sum assured might be affected which may result in gaps in our insurance portfolio. Medical conditions that comes with age We can get ourselves covered at lower premiums when we purchase life insurance policy while we are young and fit. As we age, the probability of being diagnosed with chronic conditions increases. This means that it might be difficult or impossible to get coverage at a later stage if we are diagnosed with certain health conditions. Even if we manage to get the life insurance policy, the premium will be adjusted according to our risk profile, which will make it more costly. Having said that, group insurance is valuable to employees. It is definitely beneficial to have complimentary insurance coverage offered by the companies we work for. However, in this era, employees are no longer working for the same company from graduation until retirement. While we cannot rely on our companies to look out for all our needs, it is a good supplement to our existing portfolios.