Financial Planning in Singapore

Life Insurance—How Much Is Enough?

2007-03-16T01:53:00.000-07:00

You are probably aware of the importance of having enough life insurance coverage to handle the financial contingencies that may affect your family in the event of your death. However, determining the necessary amount of life insurance can be complicated. One general rule of thumb is that you should have enough coverage to equal five to seven times your annual salary. However, you may want to determine the “right” amount of life insurance coverage with a careful needs analysis, rather than using an arbitrary formula.

The needs analysis approach incorporates an evaluation of your family’s most important financial obligations and goals. This leads to planning insurance coverage to help address mortgage debt, college expenses, future family income, and estate tax liabilities.

Mortgage Debt

The first point worthy of consideration is whether your life insurance proceeds will be sufficient to help pay the remaining mortgage on your home. If you are carrying a large mortgage, you may need a sizable amount. If you own a second home, that mortgage should also be factored into the formula.

College Expenses

Many people want life insurance proceeds large enough to help cover their children’s college expenses, and possibly, graduate school. The amount needed can be roughly calculated by matching the ages of your children against projected college costs adjusted for inflation. This calculation should be revised periodically as your children get closer to college age, and it may be a good idea to be as conservative as possible when estimating long-term savings goals.

Continuing Income for Your Family

The amount of income you will need to help provide for your surviving spouse and dependents will vary greatly according to your age, health, retirement plan benefits, Social Security benefits, other assets, and your spouse’s earning power. Many surviving spouses may already be employed or will find employment, but your spouse’s income alone may not be sufficient enough to cover the monthly expenses of your family’s current lifestyle. Providing a supplemental income fund can help your family maintain its standard of living.

Estate Taxes

Life insurance has long been recognized as an effective method for establishing liquidity at death to pay estate taxes and maximize asset transfers to future generations. However, this use of life insurance requires qualified legal expertise to help ensure the proper results.

Existing Resources

If your current assets and retirement plan death benefits are sufficient to cover your financial needs and obligations, you may not need additional life insurance for these purposes. However, if they are inadequate, the difference between your total assets and your total needs may be funded with life insurance.

There are many factors to consider when completing a needs analysis. In addition to the areas already mentioned, some other questions you might want to address include the following:

1. How much will Social Security provide and for how long?

2. How do you “inflation-proof” your family income so the real purchasing power of those dollars does not decrease?

3. What is the earning potential of your surviving spouse?

4. How often should you review your needs analysis?

5. How can you use life insurance to help provide retirement income?

6. How do you structure your estate to reduce the impact of estate taxes?

7. Which assets are liquid and which would not be reduced by a forced sale?

8. Which assets would you want your family to retain because of sentiment or future growth possibilities?

As you develop an insurance strategy, remember to analyze your existing policies. Calculate the additional coverage you may need based on your family’s financial obligations and any other resources, such as retirement benefits and savings. Remember, having the proper life insurance coverage can play a major role in any family’s financial protection.

Copyright © 2006 Liberty Publishing, Inc. All Rights Reserved.

Broaden Your Family’s Life Insurance Protection

2007-03-16T01:52:00.000-07:00

In today’s fast-paced world, many families find themselves caught up in a rush of activity, juggling home and work, familial obligations, and recreational pursuits. With so much happening, it’s easy to take the basics for granted¾the home you live in, the food on the table, the clothes in the closets, and the vacations that are enjoyed with family and friends.

However, life does not always turn out as you expect. The untimely death of a spouse could dramatically alter this picture, both now and in the future. For many families, two incomes are often necessary to maintain a comfortable standard of living. Even if only one spouse brings in cash income, the non-earning spouse may provide critical “non-cash” services, such as the many chores involved in maintaining a home. If your family’s income suddenly stopped or was reduced, the impact on your way of life could be devastating.

Having life insurance coverage on your spouse can play a valuable role in helping to protect your lifestyle. The proper coverage can help replace your spouse’s income or provide supplemental income so your home can continue to be cared for and your household can continue to function as normally as possible. If both you and your spouse work, consider how much your spouse’s lost income would ultimately cost. Or, if your spouse is a non-cash earner, ask yourself how much it would cost to replace all the services he or she provides at no charge.

Be Prepared. . .

The tragic and unexpected death of your spouse could easily unravel the comfortable lifestyle you shared together. Funds that may have been set aside for a child’s wedding—or your retirement—may need to be reallocated to cover basic expenses. However, all these situations may be addressed ahead of time with the appropriate insurance coverage.

While it may be natural to take things for granted, life can sometimes deal you an unexpected blow. Life insurance coverage on your spouse can help provide you with the comfort of knowing that, even if the untimely death of your spouse were to occur, you would be better able to maintain your present and future well being.

Copyright © 2006 Liberty Publishing, Inc. All Rights Reserved.

(Overseas Article) Health, Health Care Insurance and Bankruptcy

2007-03-15T06:08:00.000-07:00

Health, Health Care Insurance and Bankruptcy
07th September 2006
Author: Shobhana R. Kasturi Views: 27

Imagine for a moment that your health has taken a turn for the worse. You need extensive medical attention and expensive treatments. Would you be prepared to account for these medical costs? Or would you or a family member ultimately have to deal with this financial burden? Surely, you would not want to suffer the consequences of paying big medical bills on your own. This is why health insurance is so important.

A Harvard study conducted in 2001 found that medical bills caused half of all bankruptcies. Therefore, you should make sure that you have some form of medical insurance. You should also make sure that your money is well-spent on insurance that meets your needs.

Insurance Provided by Employer You should feel lucky if you are in the minority of people who receive health insurance through your employer. According to bankrate.com, company health insurance is actually part of a group insurance plan. Your employer pays for most of your insurance and also pays for your insurance with portions of your paychecks.

Everyone in your group plan pays the same rate. The premiums paid by healthy members go towards paying the bills of sick members. Bankrate.com recommends that you study up on your employee benefits package to make sure that the insurance plan you choose provides you with the services and options you will need.

If you are young and/or relatively healthy, you may want to consider choosing to pay for your company's cheapest health plan. Bankrate.com also recommends that you review your insurance plan periodically. You may be paying more money for services you no longer need. For example, if you have children that have graduated from college or are no longer on your insurance plan, you should change your insurance plan accordingly.

Additionally, if you have lost weight or quit smoking, you could qualify for a cheaper insurance plan. Have You Been Laid Off? If you have recently lost your job, you may want to consider the Consolidated Omnibus Budget Reconciliation Act (or COBRA) plan. With a COBRA plan, you pay for the medical benefits your former employer paid for on your own. The plan lasts up to 18 months. Keep in mind that the COBRA plan is a bit expensive. In addition to paying the premiums your company used to pay, you would also have to pay a 2% service fee.

Are You Uninsured? Unfortunately, according to bankrate.com you may face discrimination from insurance companies if you try to insure yourself on your own. You may have difficulty buying insurance if you have any medical problems whatsoever. Remember, with a company group insurance plan, your insurance provider only has to pay the medical bills of the sick members in the group. Look for health plans that have higher premiums.

You may pay more upfront for medical coverage, but you will ultimately spend less on deductibles. At the very least, financial analyst Suz Orman recommends paying for worst-case-scenario insurance for medical bills that top $5,000. This way you can at least be sure that you will not have to foot the entire bill for high costs.

Conclusion No one wants to live their life fearing the worst. By insuring yourself, you can at least rest assured knowing that you are prepared if your health takes a turn for the worse. As a result you or your family would not have to suffer the additional hardship of having to pay for your medical costs yourself. The good news is that if you can not afford insurance coverage, filing bankruptcy could eliminate your medical bills if necessary.

(Oversea Article) Cost: A Deadly Barrier to Health Care

2007-03-15T06:04:00.000-07:00

Heart Attacks Worse for People Who Can't Pay

By Daniel J. DeNoonWebMD Medical News
Reviewed By Louise Chang, MD
March 13, 2007 -- Short on cash? Don't have a heart attack.

That is very cold advice. Nobody wants to have a heart attack. But if you do have one -- and if your financial situation means you sometimes have to cut back on health care -- you're less likely to recover as fully as more fortunate Americans.

The finding comes from a study of 2,498 heart attack patients treated in medical centers across the U.S. Nearly one in five patients said they sometimes avoided getting health care because of cost. And nearly 13% said that cost kept them from taking the drugs they needed.

"Financial barriers are potent risk factors for adverse outcomes after heart attacks," study leader Harlan M. Krumholz, MD, Yale University professor of medicine, said at a news conference. "Financial barriers are associated with greater symptoms, worse quality of life, and a higher risk of being readmitted to hospital after a heart attack."

It's not simply a matter of health insurance. More than two-thirds of heart attack patients who can't afford proper health care have health insurance, the study showed.

Can't Pay? Back to the Hospital
Even when they got exactly the same hospital care immediately after their heart attack, patients who later encountered financial barriers did worse.

A year after their heart attacks:
Patients with financial barriers to health care services were 30% more likely to need a second hospital visit for heart symptoms than were patients without financial barriers.
Patients with financial barriers to prescription drugs were 70% more likely to need a second hospital visit for heart symptoms.

Patients with financial barriers to prescription drugs were 55% more likely to suffer angina -- chest pain due to reduced blood flow to the heart muscle.
Quality of life was significantly worse for patients with financial barriers to health care and medication.

"Is it OK for us to live in a country where, when you leave the hospital, your financial circumstances dictate your quality of life?" Krumholz said. "Are we, as a country, going to find that repugnant?"

The findings appear in the March 14 issue of TheJournal of the American Medical Association. The issue is dedicated to articles addressing U.S. access to health care. The news conference at which Krumholz spoke was organized by the journal's editors.
Ill Uninsured in 'Death Spiral'

The Krumholz study showed that health insurance doesn't guarantee proper health care. But when you suffer a health shock, it's a lot better than no health insurance, finds Jack Hadley, PhD, an economist at the nonprofit Urban Institute in Washington, D.C.

Hadley analyzed data from the Medical Expenditure Panel Surveys. The surveys consist of in-person interviews with a national sample of nonelderly Americans, spaced four or five months apart. Nearly 16,000 U.S. residents answered questions about unintentional injuries and nearly 8,000 provided information on the onset of chronic illnesses.

Injuries included any kind of athletic or nonathletic accident -- a sprained ankle, for example, or injuries from a car crash. Chronic illnesses were new diagnoses of chronic conditions -- heart attacks, cancer, diabetes, and so on.

After one of these "health shocks," compared with people with health insurance, people without health insurance were:

53% less likely to get medical care after an accident and 55% less likely to get medical care after a newly diagnosed chronic condition.

2.6 times less likely to get recommended follow-up care after an accident and 65% less likely to get recommended follow-up care after diagnosis of a new chronic condition.
29% less likely to get prescription medicines.

An average 3.5 months after a health shock, those without insurance were 14% more likely to say they were much worse off after an injury and 26% more likely to say they were much worse off after diagnosis of a chronic illness.

Seven months after a health shock, uninsured people were still more likely to report much
worse health.

"The uninsured are significantly less likely to say they are not fully recovered -- and not because they are still in treatment," Hadley said at the news conference. "They have ended their treatment process and still are not recovered."

For those with a chronic illness, this lack of treatment may be the beginning of the end.
"This can lead to a death spiral -- a literal death spiral," Hadley said. "If you are not treated for a chronic illness, your risk of death increases over time."
Cost of Insurance vs. Cost of Uninsurance

Hadley said his study dispels the myth that people without health insurance somehow find a way to get medical care.

The Journal of the American Medical Association Editor-in-Chief Catherine D. DeAngelis, MD, MPH, told the news conference that the U.S. spends 2 trillion dollars -- that's $2,000,000,000,000 -- on health care.

Yet 47 million Americans -- including 9 million children -- lack health insurance. And an estimated 16 million more Americans are underinsured.

"And how many millions with insurance still don't have access to health care?" she asked.
Hadley said the cost of providing health insurance to uninsured Americans is far less than the cost of having so many Americans uninsured.

"There are substantial costs to not covering the uninsured," he said. "One is the loss of health to the uninsured people. Second is their lost productivity -- that, in turn, has spillover to the rest of society. And if we don't pay for their insurance, we pay for the increased costs [to the health care system]."

SOURCES: Rahimi, A.R. TheJournal of the American Medical Association, March 14, 2007; vol 297: pp 1063-1072. Hadley, J. TheJournal of the American Medical Association, March 14, 2007; vol 297: pp 1073-1084. The Journal of the American Medical Association news conference with: Harlan M. Krumholz, MD, professor of medicine, epidemiology, and public health, Yale University School of Medicine, New Haven, Conn.; Jack Hadley, PhD, The Urban Institute, Washington, D.C.; Catherine D. DeAngelis, MD, MPH, editor-in-chief, The Journal of the American Medical Association.

What's Singaporean's aptitude toward Financial Planning?

2007-03-13T07:54:00.000-07:00

Financial Planning in Singapore is gaining momentum. However Singaporeans tend to have the wrong percption towards the word, "Financial".

Most would relate it directly to the frightening word of insurance. Howecver its only a 10% of the entire picture.

As more Singaporean are getting affluent, with most advanced educational grooming and support, the expectation in the coming years is going to be raised higher than ever.

Insurance will only become a "supplement" product to the vast and ever-increasing products and services that is inoovating each day, each month, every year in order to compete within this small, well-developed financial market in Singapore.

Not to mention competing with products online isntead of going through an intermediaries, and incurring extra cost, sales charges or transaction fees.

what is really the hindsight behind financial planning? most people can only relate to the topic of Death, Disability, Critical Illnesses.

On the note of "growing cash", most people can only see getting cash for marriage, car, homes, child's education and eventually retirement!

Is that really the gest of it all? I would still see that the Financial Planning landscape in Singapore still have a long way to go even though I mentioned people now are well-educated.

The professionlism of Financial Planners, and I mean People who really do planning, as compared to the US, would still need a lot of boosting power from the government in driving across such professionalism in local context.

What do you think of the industry? or rather view towards financial planning or insurance planning especially in Singapore? are singpaorean thoughts towards financial planning only limited to "insurance" ?