How to Determine the Ideal Life Coverage

Death  is inevitable. Almost everyone wants a peaceful death and there are many who pray for a sudden death. If you are one of them, death might be a release from suffering for you, but what about your family if you have not planned your finances properly? What if your life cover is insufficient? As a breadwinner of your family, you need to understand how you should plan for and secure their future before praying for a sudden or peaceful death.

Simply buying an insurance plan is not enough for securing the financial future of your family. Rather, you need to analyze your current obligations and needs, as well as future goals, to  purchase a life insurance with the right amount of coverage.  It is quite common for individuals to opt for any insurance which might not even fit their requirements in the hurry to just have some insurance coverage. The best way to analyze your financial requirements and goals is to spend some time with your financial adviser, who will then be able to recommend a suitable life coverage policy.

Evaluation of your assets and financial obligations is necessary to understand the right amount of life coverage you need by your loved ones. The first step of the evaluation process is to take note of the debts you have. Your financial coverage from the insurance must be more than the amount of debt you have in your books. For example, if you have taken a mortgage loan for $1,000,000 and a car loan for $500,000, then your insurance sum assured must be above the total value of the loans, i.e. $1,500,000. The coverage will have to be more as the interest is not included in this value yet. If some unfortunate event does happen to you, then your family will be able to pay off these debts easily.

The second step is an analysis of your income and expenses. The primary purpose of buying life insurance coverage is to help  your family carry on with their lives without worrying about the financial burden. A statement of your income and expenditure can be drawn up so that you have a good idea of how much you get from different income sources and how much your family needs annually.  This estimate has to be multiplied by the number of years for which you believe your family would need. If your children are young, you would need to buy insurance with higher life coverage as your kids will need to finish their education before they start working.

The next part is to analyze your financial goals, such as your children’s higher education or a second property. These financial aspirations do not need to be given up when you die if you plan your finances properly.

Finally, add up the sums from the above and you can derive the value of your required sum assured. You can then look for the most suitable policies to meet your needs.

How Can You Analyse and Manage Your Debts?

Debts are part and parcel of life for almost all the middle-income Singaporeans. However, when our debts grow beyond our potential of repayment, it becomes a major source of concern. The most common debts for Singaporeans are home loans, car loans and credit card loans.

Signs of Debt Crisis

To build an effective plan for managing your debts, you and your financial consultant must find out and analyze the situation as soon as possible. Firstly, you need to calculate your debt ratio. If 80% of your monthly income is used for paying various loans, you are already in a crisis situation. One unplanned expenditure, such as a medical crisis, can  affect your instalment payment for a month and even more. The situation will continue to worsen if you do not take the right steps now. Other signs are rejection of credit request from your bank and minimum repayment amount of your debt each month. You are in a debt crisis if you have to choose between your necessities of life and your debt repayments.

Steps to get out of Debt Crisis

These four steps can help you get out of your uncontrolled debt if implemented in the right manner.

  1. Acceptance is the first step: If you are in debt, there is no need to hide it from your close friends and family members and maintain the same lifestyle just for the sake of it. It will do nothing more than land you in bankruptcy . Accept the fact that you have loans to repay and prepare yourself to curtail unncessary expenses.
  2. Establish goals to get out of debt: You need to prioritize your goals in life, whether financial or personal. This would help you understand which loans to repay first and which to delay. Break your entire debt into smaller parts and repay the ones which are most essential. For example, your home is an absolute priority but not your car, so if you are in debt, try to pay off your home loan first and let your car loan to take a back seat for some time or sell off your car. You can also choose to pay the loan with the higher interest first, follow with the rest. This will certainly reduce your burden and anxiety.
  3. Don’t avoid your creditors: One of the biggest mistakes you can do while in a debt crisis is to avoid the creditors. You are obviously in a difficult situation but avoiding the calls will land you in dire straits. It is better to talk to them while you are restructuring your plan for repayment and let them know the truth.
  4. Control your expenses: Once you have repaid all your loans and mortgages, try to avoid them in the future as much as possible. If you need to take up any debt, make sure it does not go out of your control.


 New Graduates – It’s Never Too Early to Start Saving and Investing

Every year, thousands of people graduate in Singapore and the economy accepts the new workforce with open arms. Flushed with the notion of earning their own money, it is common for these young people to start spending their paychecks on good food and luxury items. However, those with the financial discipline to start saving a portion of their income from the time they start working will find themselves having a more secured financial future.

Here are a few tips to start your savings and investment journey.

Make Savings a Habit

From the first paycheck you receive, you should deposit a portion of your income into your savings account. Build up a reserve fund that can help you tide over six months if you stop working or are unable to work.

Start Investing to Grow your Money

After you have set aside a portion of your income as emergency funds, you should start investing to grow your money.

As a young graduate, you can take a lot more financial risk as you have a long investment time horizon. Thus, you could invest in instruments which have high risk and return ratio, such as equities, debt capital and structured products. If you prefer not to take direct risks, you could choose mutual funds which are index linked and Investment-Linked Policies (ILP). The investments you choose should be based on your risk appetite and knowledge of the financial instruments. Do not rely on hearsay and always do your homework.

Don’t Wait to Pay Off your Study Loan

Most graduates take a loan for their higher studies and if you are one of them, do not wait long to start paying off your loan. The longer you wait, the greater the compound interest of your loan, and it will be a burden on your savings and investment plan.

Enjoy Greater Peace of Mind with Policy Riders

Buying one insurance plan to cover all your needs is not easy. The reason is that insurance companies provide different benefits in different policies and more often than not, it is not possible to cover all your needs with one policy.

A way to mitigate this issue is by buying policy riders. Policy riders, also known as supplementary benefits, provide additional advantages to the insured person. If the primary policy can meet your main objective and you want to enhance it by adding one or two more benefits, you can always opt for supplementary benefits to customize your plan.

Benefits of adding a rider to your primary insurance policy

Riders can be very beneficial as they provide –

  • Extra coverage: Riders are meant to provide extra coverage for peace of mind. These benefits cater for various complementary purposes besides the main benefit. For example, if you are critically ill, you and your family might face a loss of income. If you have attached a critical illness rider to your primary policy, the amount you receive can help to defray your household expenses and allow you to continue with your treatment without worrying about your family’s finances.
  • Reasonable premium: You only pay for what you need. Riders are supplementary benefits which are tied to a main plan, so the premium is lower than if you purchase the same benefit as a standalone benefit.
  • Option for customization: Riders allow you to customize your own insurance policies. You can add different riders to any type of insurance policy, whether it is a whole life policy, term insurance or endowment plan.

Which rider can you buy?

There are different types of riders which you can buy according to your needs.  Here are three key riders to consider:

  • Waiver of Premium Rider: This rider is usually tied to the diagnosis of critical illness. When the insured person is diagnosed with a critical illness that is covered by this rider, he does not have to pay the premium for the policy any longer. The rider will kick in to pay for the premium, allowing the policy to continue till maturity.
  • Accidental Death Rider: The cost of an accidental death rider is quite low, which accounts for its popularity. This rider provides additional payout if the life assured dies or become totally and permanently disabled due to an accident. There may be other benefits, such as medical reimbursement or hospital income, under this rider.
  • Critical Illness Rider: This rider is usually added to a whole life or term life plan. It provides a lump sum payout when the life assured is diagnosed with any of the listed medical conditions.

There are various other riders which you can use to enhance your main insurance policy. These riders are available at a nominal cost and provide peace of mind in times of crisis. Do consider adding these benefits to your main plan.



Your Financial Wellness is Just Like Your Physical Well-being

Your financial wellness is just like is your health. You know that it is your responsibility to stay as healthy as possible, and it requires you to be physically active. You care for your health and wellness by exercising, maintaining a healthy diet and equipping yourself with knowledge of how to take better care of yourself.

Likewise, your financial wellness requires your active participation. You need economic discipline to cultivate and maintain healthy habits to keep to your investment plans and work towards your wealth accumulation goals.

The journey towards financial freedom is tough and requires that you switch off from your daily chores and spend some time to review your current position and come up with a roadmap to your financial destination.

Where is your Starting Point?

You cannot know where you are heading unless you know where you are! You must, therefore, bring yourself to understand your current financial position. If you can list your monthly income and expenditure, then you have already found your current location.

So, what is the difference between your income and expenditure, in other words, your net income? If it is a negative value, then your financial health is severe and it needs to be taken to an “economic intensive care unit” to reverse the situation.

To heal your ailing financial status, you need to cut down on unnecessary expenses. Have a leaner budget and survive with less. Only if you are able to set aside some money each month can you start a wealth accumulation plan.

Where is your Destination?

Once you know your position and are ready to take off, the next step is to identify your financial destination. What are your financial objectives? What are you looking to achieve and what is time frame? It is at this point in financial therapy that you create your goals, both long and short-term. For example, in the long term, you may be dreaming of owning a home, whether through a mortgage or other available arrangements in the Singapore property market.

Offload the Unnecessary Baggage

Reduce the load that may drag you down on your way to financial independence. Such baggage may include high interest charges on loans and credit facilities. Reducing them leaves you with more disposable income that, with time, would yield tangible results. You need every cent in this journey, and hence, should not tolerate wastage.

The Reserve Fund is your Energy Drink

As mentioned earlier, the path to financial wellness is long and tedious. Therefore, you need an energy drink for any emergency. Remember, you have already reconfigured your finances and they are now in shape. You have laid down a plan to success and what remains is putting it into action. At this point, you do not want an unplanned event that may require you to incur an unexpected expense to ruin your plans.

However, we are not able to control some situations. Thus, you need cash savings that are easy to access as your contingency plan. For example, when you have an uninsured medical treatment, you can resolve the problem by using your cash savings, and this will not interfere with your investment plan. Experts recommend that your emergency savings should be at least six times your monthly expenses.

Bottom Line

You will not achieve financial wellness overnight! You must be realistic and set the right priorities that will work for you. And remember, your plan is not cast in stone; it will change according to the economic situation and your different life stages. The bottom line is, once you take control of your finances, you need to actively participate and keep it on the path towards your goals.

Term or Whole Life, which is the Ideal Life Protection Option?

Most financial advisers, not only in Singapore but the world as a whole, agree that life insurance constitutes an integral part of financial planning. However, despite the acknowledgement that life protection plans are important, there are still people who are misinformed, confused or just skeptical about owning one.

While every person has his or her preferred choice between term and whole life policies, the question most people ask is, which one is the ideal option for them? The answer to this question lies in your understanding of the two options.

What is Life Insurance?

Life insurance is a contract between you, the policyholder, and the service provider that an agreed sum of money is paid to you if you are incapacitated or paid to your estate when you die. In layman’s term, it is a protection plan for your family against your death or incapacitation.

There are two types of life insurance policies, namely term and life. The principal difference is their coverage period. Term insurance provides coverage for a limited period, while whole life provides coverage for life.

Comparing Whole and Term Life Policies

If you compare whole and term life insurance with the same amount of coverage, whole life policyholders often pay higher premiums since it is considereda “sure bet”, i.e. it provides coverage till age 99. In contrast, term insurance plans provide the death benefit for only a fixed number of years, although there are now plans which offer coverage till age 99 as well.

In many cases, whole life policies inculcate a savings element such that the policyholders can surrender the policy and still get a payout, albeit less than the amount that would be paid out if you saw the contract through. It is this attribute, known as “non-guaranteed return”, that lures most Singaporeans to choose whole life over term insurance.

Unlike the whole life policy, term life insurance’s only intention is to protect individuals against the loss of life within the specified period. For example, if a 25-year-old man bought 30-year term life plan, then it means that his life is covered until he is 55 years old, after which the contract expires. If he decides to renew the coverage, he would have to pay higher premiums than the initial arrangement since he is now older and at greater “risk” of dying.

Life Protection Plan is Not a Savings Plan

Having a higher payout via the non-guaranteed return in the whole life policy may seem attractive to many, but when you examine it more closely  the policy performs quite dismally as a savings plan. Hence, don’t buy the idea that you could use your life protection plan as a savings plan. There are some financial consultants who may try to sell this idea to you.. In reality, there are endowment plans or other investment tools which offer better returns to meet your long-term savings objectives.

Final Word

Ultimately, the choice of whether to purchase a term policy to offer protection for a specified term or a whole life policy with cash value is really up to the individual’s objectives and budget.

For young people, one suggestion is to buy term life policies as they are cheaper when you are young and healthy, and consider saving and investing the rest of your money elsewhere.




Manufacturing Boosts Singapore’s Performance to Beat Forecast

Singapore’s manufacturing sector’s resurgence has captured the attention of the global wealth management investment service providers. Our economy is expanding at its fastest pace in the past three years, with the third quarter recording a 4.6% growth rate, beating the 3.8% predicted by economists, thanks to the surging manufacturing sector.

The third quarter economic growth rate is the fastest quarterly expansion since 2014. The manufacturing sector has expanded over 12 straight months, including the period between July and September 2017. This data is according to Singapore Institute of Purchasing and Materials Management.

In the preliminary estimates by the Ministry of Manpower (MOM) dated Friday, 27 October 2017, the overall unemployment rate is gradually declining, from 2.2% in June 2017 to 2.1% in September 2017. In the same period, 2,500 new jobs were created, with Singaporeans taking 1,300 job opportunities while the rest went to non-citizen residents. In this final quarter, the demand for labour is expected to surge.

The institute attributes this growth to the new orders, exports and factory output, and foresees that growth of the sector will spill over to the next year. This has got tongues waggling, with investment advisors considering jumping into the bandwagon.

A healthy economy is an allure to the global investors. The revelations, coupled with our resilient and well-diversified economy, could be the reasons why investors may troop in Singapore.

Seeking Alpha, a premier website for stock market opinion, analysis, and intelligent finance discussion, ran an article recently citing Singapore as one of the hottest investment destinations.

Investment Options in Singapore

Are you interested in investing in Singapore? Do you have an investment plan? If you don’t have one, you first need to set your objectives in line with your financial goals. Some reasons for investing include growing your wealth, saving for retirement and earning higher returns.

There is a long list of products available in the market, such as bonds, shares, unit trusts, ETFs, whole life and investment-linked insurance products. The ideal product mix will be different for different people, depending on your age, income and risk profile.

Once you know your objectives, it becomes easier for you to choose the right investment options.

Different age group will need to do different investment plans. Young people often choose to invest in products that are readily convertible to cash and devoid of substantial losses which as a norm, capital is supposed to generate income and preferably regular income. A tailored product that meets such criterion is the Singapore Savings Bonds, which allows you to withdraw your investment whenever you needed it.

While other age group like people in their thirties and forties with a family may choose to invest in products that offer protection for their family in the event of uncertainties happen and they need to sustain the living cost as well as the education cost for their children. This is where their investment will take care this matter for them. For people of the age group more than fifties, they often choose to invest in products that can provide the continuity of some amount enough for their retirements and spend their golden age doing things they love with friends and family. This can be planned as early as when they start working too.

You can talk to your investment advisor to help you review your investments periodically and adjust them according to your changing financial goals.


The expanding manufacturing sector means more jobs and more investment options for both locals and non locals here in Singapore. It is up to you to decide which portfolio is the best for you, after you have identified your financial goals. Consult your investment adviser on the best options available for you in the market as we celebrate our economy’s ballooning performance.

US-North Korea Feud and How This Could Impact on Your Wallet

It is no longer news that the United States and North Korea are sworn enemies. The war of words between the two countries had escalate recently, with its peak coming a month ago when US President Donald Trump warned of “fire and fury”, while his North Korean counterpart said they “carefully examining” their plan.

The tension between the two countries was invoked when North Korea launched two intercontinental ballistic missiles, which the world superpower deemed as an attempt by the Kim Jong Un administration to threaten South Korea and Japan.

While many observers and analysts have downplayed the possibility of war in the Korean Peninsula, businesses globally have braced themselves for the fallout as the U.S. sanctions against North Korea take effect in the global supply chain. What does this mean for the people of Singapore and the Southeast Asian nations?

Why US Sanctions Matter to Singapore and ASEAN

According to Alex Capri, a senior fellow at the National University of Singapore Business School, the U.S. has significant influence in the global supply chain and any decision it sanctions affects many economies.

The US is asking its allies and the members of the United Nations to strictly enforce sanctions imposed in August 2017, including minimizing diplomatic relations with Pyongyang.

Capri argued that the sanctions were likely to have a domino effect on the movement of goods, since businesses would have to acquire licenses from authorities if they needed to handle commodities classified by the US as “strategic goods.”  This move, Capri argued, would mean extra costs for businesses, thus decreasing their revenue, and this would impact the entire supply chain from manufacturer to the end user.

Despite the difficulty in implementing the sanctions on Pyongyang, it would be imperative for Singapore to do so which can foster the economic restructure in other countries in the region. This would raise economic growth rates in Asia and would in turn benefit Singapore.

So how does this affect your wallet?

Singapore has minimal trade activities with North Korea. Its primary link in this conflict is its Washington interests. However, should the current verbal gaffe escalate into war, then, like other Asian nations and other global economies, Singapore will suffer devastating effects on its economy and subsequently your wallet.

Jamie Thompson, head of Oxford Economics, and its economist, Oliver Salmon, argued that a full blast war on the Korean Peninsula would cause the collapse of equities, turmoil in exchange rates and the fall of bonds in the region. It could also trigger a decline in Chinese businesses and consumer confidence, which would slowly spread to the other Asian economies, including Singapore and Malaysia.


While the US-North Korea conflict is not a Singapore affair, it has a bearing on the country’s economy. We can only hope for a peaceful way out of the current impasse as the impact of war would be too devastating to bear.

How Not To Let The Economy Affect Your Financial Status?


The individual financial status of the nation builds an economy; it is the per capital income of the people in the country which is one of the key factors to judge whether the economy is progressing or drowning in a financial crisis. Similarly, the economy also affects the financial status of an individual as there are various financial and other aspects which are determined by the economy as a whole. But as the breadwinner of the family you would want your family to be secure even when the economy is going through turmoil, won’t you? This is a natural human instinct to protect his or her family in the time of crisis and to do that, you need to plan your finance in such a way that it gets affected minimally by the economic ups and downs.

There are certain aspects of the economy and you as an individual need to keep those elements in mind to plan your finance properly. Firstly, inflation plays a significant role in determining the economic condition and thus your financial status. When the prices of the products rise on the whole, and the currency value diminishes, it is termed as inflation and to cope with this; you need to have substantial investments which should overdo the inflation rate and provide you with interest which you can maintain your financial status. In Singapore, the current inflation rate is around 0.6% which has increased from earlier month, so you might be worrying about your consumption as inflation affects it the most.

To hedge the risk of inflation, you need to invest in gold and other commodities as prices of these items are less affected by inflation in the market. Moreover, it has been observed that gold is a safe investment in most of the situation. The next you can do is to invest in the indexes like S&P500 as the market return is always higher than the rate of inflation in your country. Insurances play a significant role in cutting down your expenses in the time of inflation as well. When there is inflation in the market, the prices of health and medical treatments as well as education which are the primary requirements beside food and consumer durables rises. You as the head of the family and the bread winner wouldn’t want to compromise on your family’s health and your child’s education, isn’t it? So, if you buy insurance which you can use at the time of medical emergency or the child education insurance for your child’s higher studies, you would be paying less than the market in reality as you had paid the premium earlier when there was no inflation or the rate of inflation was lower.

Another factor is interest rate which is also a key driver of your financial status and it highly correlated with the economic condition. The government and the central bank keep on changing the interest rate due to monetary and fiscal policies. This interest rate up and down affects your savings and investments, to keep your net worth intact, you need to find more stable assets to invest. Though interest adjustments influence the market as a whole but investing in insurances is advantageous in this case. As the sum assured for the policy you would buy is fixed, interest rate won’t affect it much. For example, if you have saved and invested in fixed deposits, with the interest rates going down, your investment would lose value, but it won’t affect your investments in the insurance. You would get the exact claim settlement amount when your insurance policy matures.

There are various other economic factors which affect the financial status of an individual, but if you analyze the different financial instruments, there are many to offset the economy’s effect on your financial situation and aspirations.

How Does Brexit Affect The World Economy And Financial Markets?

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Brexit which separated the UK from EU came as a shock to the whole world and the financial markets across the globe. Not only in EU or UK was taken away by the decision, it took few weeks for it to get back on the track. The financial market was surprised and became violent for covering up their losses or the potential losses which could arise from this Brexit. The nations across the globe which are an active participant in the globalization and global market got affected in various ways. The geopolitical uncertainty had taken on every country and financial market during those months.

The macroeconomic situation soon after Brexit was terrible, but it smoothened with time. The sharp fall in the EU and UK currencies against US dollars affected the nations in the sector of export and import.

Brexit along with Trump’s election was a blow to the head of the world economies. The US market faced several issues regarding the manufacturing sector as the USD grew stronger against US pounds and EU currencies.

After the EU and UK separation, there is no road map which they are following, or other nations are navigating through. There is a chaotic situation as the major two countries, US and UK have the most troubled geopolitical situation.

Since the EU and the UK markets are volatile at the moment, the investors are looking for a safe-haven. That safety has been provided by the US markets especially the treasury markets, and thus there is a continuous decrease in the interest rates in the US markets as well as their currency value is increasing against UK currencies which are in turn putting further pressure.

Not only US but a major portion of the investments from the UK and EU investors are getting diverted to the Japanese markets as they are providing real interest rates on the investments. Moreover, the higher value of the dollar and the yen have an adverse impact on the export sector of their economies only which in turn is affecting the world economy at large. This negative consequence is changing the difference between the steady inflation and sharp deflation in the service sector and goods sector respectively.

The Chinese market is stuck between these two super powers – EU and the US, thus it is getting pressurized by the US to lower its value of the Yuan so that the US can take the benefit.

Coming back to the financial markets across the globe, the effect of Brexit was huge as $2 trillion of money was lost on the day of the vote for Brexit, 23rd June 2016. On the whole, 2016 faced various issues and the markets were sluggish. Since this blow was massive, the markets are still recovering from it.

The British pound fell sharply to 31 years low in just a day as the money was getting withdrawn and investors were putting them in the government bonds to be on the safer haven. Due to the fear of the British vote, the market shifted to safe regions all of a sudden making massive losses for the world economy.

The IMF after Brexit cut down the growth forecast by 0.1% and the global growth forecast now stands at 3.4% for October 2017. For the upcoming year, 2018, the forecast is at 3.6% provided everything goes smooth and there are no significant geopolitical events like this.

The strength of the global economy will be the emerging markets for the coming years and the growth of the emerging markets will grow the world economy as a whole. The trades and manufacturing sectors will grow stronger in the emerging market adding to the potential of the global platform which is going to smoothen the world economic condition.