Like many among the young, Ms Chern Hui Ying, 23, fears she has little control over her future. Not in these times of uncertainty and in an economy crippled by the Covid-19 pandemic.
But she aims to calm her fears and hedge against potential health scares with a plan that gives her the financial flexibility to manage her current life stage needs.
As a fresh graduate entering a weakening jobs market, she decided to buy an investment-linked plan (ILP) because it offers her life insurance at affordable premiums with the option to grow her savings through investments.
"Purchasing an ILP was for the main purpose of being covered, but knowing that I have the option to adjust the coverage or convert it to investment after age 55 is assuring."
Ms Chern graduated with a degree in psychology and media analytics from Nanyang Technological University in August.
In May, she secured a one-year traineeship with Singapore Sport Institute as part of the SGUnited Traineeship Programme, which offers fresh graduates training opportunities to build their network, skills and resumes, while they look for a permanent position at the end of the traineeship.
She pays for the plan with her monthly training allowance, which she declined to disclose.
Why ILPs?
ILPs are essentially comprehensive whole life insurance plans that give policyholders the flexibility of investment returns.
Customers can adjust their coverage when their needs change at different life stages. Those just starting out can opt for basic protection coverage first and gradually increase their coverage based on their protection needs.
ILP policyholders can also opt to allocate more premiums to investments if they want to grow their wealth.
Take, for instance, Great Eastern's GREAT Life Advantage II. The regular premium ILP lets policyholders increase their coverage with no medical assessment at any of eight milestones, including their third policy anniversary, marriage and birth of their first child.
"The plan is most appropriate for my life stage because I'm just starting out in my career and want to be covered for the future, come what may," says Ms Chern.
By adding a critical illness rider to the ILP, she gets additional coverage against 120 critical illness conditions across different stages.
"I believe that I will reap the benefits in the long term. Having this plan makes me feel more secure about the future as I know that my family is protected from large medical bills if I develop a critical illness or suffer a permanent disability."
Ms Chern lives with her parents - a lecturer and personal assistant - and younger brother in a three-room apartment in Pasir Ris.
She says that the plan's benefits and affordable premiums, starting from as low as $100 a month, helps.
Aside from paying for insurance, her training allowance also goes towards funding her further studies. In September, she enrolled in a master's programme in counselling.
What sets ILPs apart from other insurance policies?
To spread out the cost of paying for insurance, Ms Chern is looking to switch to monthly premium payments. She is now paying for her premiums yearly.
Like Ms Chern, Great Eastern ILP policyholders have the option of paying their premiums on a monthly, quarterly, biannual or annual basis.
If they are unable to pay the premium, the policy remains in force as long as they have enough funds in their plan to cover the policy charges and cost of insurance.
Policyholders can also choose to invest in a range of ILP sub-funds offered.
Other types of insurance plans such as a term life plan, which provides coverage for a certain period with no cash value, or a participating policy such as a whole life plan, which lets you share the profits of the insurance company, do not offer the same option.
Ms Chern adds: "Having this option allows me to be in control of the decisions I make. It helps me to feel more secure amid an economic recession and pandemic."
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