A common yet important question is on the 1st insurance policy to get for yourself or your children. What do you really need in your 1st insurance policy? How much will it cost me? What if I am on a very tight budget for insurance?

Before even buying your 1st insurance policy, you would want to ensure that you have your emergency savings of at least 3 months expenses setup first. You also need to look your budget & cash flow whereby your total insurance costs should be not more then 10% of  your total income. Note: Not more means that it can be well below 10%. Get what you need not based on what you can buy.


Recommended 1st Insurance Policy

Obtaining a complete life insurance coverage with medical & critical illness would be best & is very affordable if purchased while young & healthy.

Life insurance coverage is stated in Basic Sum Assured (BSA) which covers death & total permanent disability (TPD). Coverage includes for whatever causes (unlike a Personal Accident coverage which only covers for causes due to accidents).

Medical coverage would provide for hospitalization & surgical costs. This is paid to the hospital & doctor directly. Most medical coverage is cashless & you only need to show your medical card to the panel hospital. There are often special rates as well for using a medical card from an insurance provider.

Critical Illness (CI) coverage would provide a sum payment on diagnosis of any 36 CI helping you to cover costs that are not provided in medical coverage & give you flexibility in terms of seeking additional/alternative medical treatment/other expenditure required. Do note that this moneys from CI is paid to you (and not to the hospital!)

If you are working
Use equivalent of 5 years your annual income for the amount of life coverage (BSA) that you require. Use half the amount for Critical Illness (CI) coverage required. For medical, the main difference would be determined from Room & Board (R&B) coverage. If you are not picky about your room & sharing with others, starting from R&B 150 coverage would suffice for a 1st policy. The other determining factor would be on co-insurance. Co-insurance would mean that you share in 10% of the total medical costs (usually max capped quite low i.e. 500) but your overall medical costs would be lower. You would also want to know the annual & lifetime claims limits as medical costs inflation is rising at 10% above per year. If your budget allows, a R&B 200 would be commended as a current good value point for medical hospitalisation coverage

If you are not working
Use equivalent of 10 years of your annual expenses to determine your life coverage (BSA), half the amount for Critical Illness (CI) & at least 150 for Medical R&B. If unsure of expenses/calculation, a good starting point would be to use 100,000 for life coverage (BSA), 50,000 for CI & 150 for Medical Room & Board.

Basically everything apart from the basic policy is considered a rider (or attachment). A good rider would be a premium waiver whereby you would not need to pay for insurance costs any more in the case of TPD and/or CI. This would reduce expenses if anything untoward happens. Most other riders are not strictly unnecessary unless it is something that you really need.

Costs Example

BSA 100,000, CI 50,000 & Medical R&B150 with co-insurance
Male, 20: 150 per month (1,800 per annum)
Female, 20: 125 per month (1,500 per annum)

BSA 100,000, CI 50,000 & Medical R&B150 without co-insurance
Male, 20: 150 per month (1,800 per annum)
Female, 20: 175 per month (2,100 per annum)


On a Limited Budget

If you are on a tight budget, the policies that provide the most bang for the buck would be a Personal Accident (PA) coverage & a term medical coverage.

Most life insurance coverage would provide a coverage of roughly 1,000x the monthly premium payment. Meanwhile, a PA would provide a coverage of approximately 10,000x the annual premium payment. However, a PA would only provide coverage in specific areas namely incidents involving an accident resulting in death or permanent disability. Most policies also provide double indemnity for public conveyancing. This basically means you get double your insurance coverage amount if you die or are permanently disabled in public transportation (e.g. bus, MRT).

PA Cost
Costs from 100 per year for 50,000 coverage (male/female class 1&2)
Costs from 160 per year for 50,000 coverage (male/female class 3)


The 2nd policy to get at reduced costs is to get a term medical coverage. A term medical coverage provides medical coverage for a period of time (usually one year).  A term medical coverage provides a low entry cost into medical coverage. However, a term medical coverage is not very customizable, has no value after the coverage term expires & costs go significantly up as one ages. Do ensure as well that the insurance provider’s coverage is guaranteed renewable every year.

Term Medical Coverage Cost
Male, 20: 526 per year (class 3: 658)
Female, 20: 460 per year (class 3: 575)

Male, 30: 521 per year (class 3: 651)
Female, 30: 539 per year (class 3: 674)


More Info


What concerns or questions do you have on your 1st life insurance policy?