Umbrellas, a common object used to metaphorise the purpose of insurance – shielding yourself on a sunny/rainy day.
However, have you ever wondered:
“Since my insurance agent plan does not know that I am gay, is he/she able to advise me purposefully”
“Does he/she know that I am possibly never going to get legally married/have a child/no one to support me in my retirement and take that into account my retirement plans?”
Is your agent offering you an umbrella you really can use?
Perhaps we can give you a perspective to insurance that you may find relevance or more relevance to you.
What differences do we need as compared to a straight person/couple?
The generally recognised life cycle in Singapore is to study hard, get married, have a child(ren), raise them thru education and eventually rely on them for retirement.
Then there are the DINKs – Dual Income No Kids couples. They don’t spend money on raising a child, but also don’t get to rely on their offspring to take care of them in retirement. We will find some similarity between Pride and DINKs planning models.
Pride planning is a little more special (uh-huh… that’s why we have the colours of the unicorn).
We don’t necessarily get legally married and recognised in Singapore. But there are ways around these legal what-i-call easy-way-out for the straights. All we need is just a bit more paperwork. In terms of insurance strategies, we need to put a bit more focus in illness insurances and the definite and desired self-sustained retirement.
Death insurances will still be important to those who treasure their parents. What will happen to our parents should we pass on earlier and our earning capacity to look after them got … literally… burned. As mentioned earlier, the life cycle for them will be put into a whirlwind.
What everyone tells you, and should you take their word for it?
There are the hearsays: One classic one is
“Gays should just buy term insurance. Anyway we have no one to leave the money behind.”
My quick response to you is – avoid generalisation. No one likes to be called gay just because of the way we speak or walk, as much as we are gay right?
Similarly for insurance planning, avoid generalisation that term insurance is the only and right way about planning for the gay individual.
For the benefit of those who are new and to align those who are familiar with insurance, term insurance is a non cash value policy. You pay for the premium as long as you need the coverage. You can stop anytime and the coverage ends then. If you pay to the end of the term and you still do not have a claim, the insurance company will thank you for your faith in them and you do not get to withdraw or get refunded some part of the premiums. Thank you is pretty much all you get (if any).
Term plan is a type of policy, not about the coverage. There is also no policy which is an all-encompassing coverage insurance policy.
- Would you prefer a plan which you do not have to pay for as long as you need/want the coverage? Say cap at 10 years or 20 years?
- Would you like some money back at say your retirement at 55? Not 100%, but 50% would also be good?
- Would you want to have an insurance which, yes maybe you need to pay for life, as good as a term, but have the luxury to stop paying for it whilst you are in between jobs, or while finding what you love doing and not have to worry that the insurance coverage stop whilst you are doing so?
The point here is, there are other policy types. A life plan and an investment-linked policy (which is fundamentally for insurance, not for investment) for the purpose of life and health insurance. I personally advocate one to have all three. This is not so much of over-buying, but a strategy in “de-insuring” oneself as we grow older.
“De-insuring” is a way for one to maximise expenses in early years whilst capitalising on these expenses at an age where we are comfortable to retire. And because we need to retire on our own funds and planning, the strategy in de-insuring is very useful!
If you have a term plan, a life plan and an ILP, which would you let go (terminate) first in order to reduce cash outlay while having the option to keep the insurances as long as you need.
In the next article, you will find more information on the specific insurances to understand and look into building a plan for your strategy.
