Fresh out of school? Armed with your degree or diploma and ready to take on the working world? At this stage of life, however, you'll usually have relatively fewer commitments, especially if you're still single. So this is a great time for you to start planning for the types of insurance coverage you'll need, by laying out your life goals and aspirations, and figuring out how to get there while staying protected.
But have you ever wondered what types of insurance you should get and when you should get it? Let's explore the different insurance instruments you should consider as you start your career.
Life insurance policy
I'm still young, so do I actually need life insurance now?
Did your parents buy a life insurance policy for you as a kid? If they did, it's great foresight on their part and good news for you too. Chances are the policy's premiums would be significantly lower than if you had to purchase one as an adult, so you can just take it over once you start work. But if you don't have life insurance, getting it now is a good place to begin - after all, because your life forms the scope of its coverage, it's the cornerstone of all insurance coverage.
My company already provides me with corporate health insurance, so do I still need to buy my own?
You may think the corporate health insurance provided by your company is enough, but there are often limits to how much you can claim and the overall scope of coverage. Be sure to do a deep dive to see what your company's policy will cover and what the limits are for different types of medical situations. Then you can decide on the type of personal medical insurance you need to take on, just to ensure you're completely covered for any unexpected health issues.
The government-certified Voluntary Health Insurance Scheme (VHIS) is an example of additional personal health coverage you can consider. Hong Kong's public clinics and hospitals are usually overloaded with patients, so getting a VHIS medical policy could give you the timely care you may need at private healthcare facilities, without you worrying about breaking the bank for the bills. An added perk is that VHIS medical plans are tax deductible, so that means more savings for you too.
At your age, insurers usually don't require extensive medical screening for applicants if you've declared a clean health status. Check out flexible coverage plans that you can switch up later or add on riders to.
Personal accident insurance and disability coverage
I'm in the pink of health, so is accident and disability coverage even something I need to consider?
Love hiking every weekend or trying out new sports? If you're active and on a constant lookout for the next big adventure, you'll want to make sure you're covered by insurance in the event of any medical intervention that might result from your thrill-seeking lifestyle.
Critical illness policy
Isn't medical insurance enough? Why do I still need a critical illness policy?
Critical illness vs health insurance - do you need to get both? Here's the thing - health insurance and critical illness coverage are not the same thing. One will pay for your medical expenses; the other will cover you for that particular policy's definition of critical illnesses, such as cancer, a stroke or a heart attack.
Critical illness insurance will pay out a lump sum, and this can be used for anything, not just your medical bills.
You may not think a critical illness plan is necessary as you'd still be relatively young as this stage, but keep in mind that premiums for these policies get more expensive as you grow older.
Savings or insurance policy add-ons
Are there other add-ons I can consider on top of my usual policies?
Hitting your career milestones and seeing great progression or promotions coming your way? Good for you! As your take-home salary increases, you may want to consider padding up your insurance coverage if you can afford it.
You could look at getting a longer-term life insurance plan, incorporating insurance policies that are linked to other investment products, or adding a savings or investment component to your life insurance policy. You could even look at options that would give you an eventual pay-out if it's within your budget to hold on to that policy for a set period of time.
You could also consider adding on endowment plans with guaranteed returns, which are essentially life insurance policies with varying maturities.
Retirement planning policies and annuity
Retirement? I won't be retiring for ages! Do I need to plan for it now?
The biggest misconception about planning for retirement is that you should only think about it when it comes. Retirement planning should take place as soon as possible, even if you're just starting out. Think about when you want to retire, the kind of lifestyle you'd like to lead and the goals you want to shoot for when you stop working, and then you can plan backwards.
Including insurance plans into your investment portfolio for your advancing years is a good way to not only ensure you stay protected, but to also provide a steady, stable source of income for when you stop getting a pay cheque.
On the income side, annuity retirement solutions can provide a guaranteed monthly income stream that can help with your retirement expenses. Go for a capital guaranteed plan, so you won't have to worry about losing your initial investment. Certain annuity plans are tax deductible, and some might even provide lump sum payouts at the end of the policy term, on top of regular monthly payouts. It's secure and won't leave you exposed to the volatility of ever-changing market conditions, which you shouldn't have to worry about during your future golden years.
So, why is insurance so important?
At the heart of it, insurance is a promise - that's a statement you'll hear pretty often, and for good reason too. As you enter the working world, you'll likely experience a fair degree of major changes, milestones and unforeseen events. And the promise that insurance can deliver is the assurance you'll be able to weather the unexpected, so there's no better time than the present to start mapping out the types of insurance coverage you'll need.
Planning for the types of insurance coverage you'll need as you enter exciting new chapters of your life doesn't have to be stressful. Take a look at the coverage options that are suitable for the life stage you're at and take it from there.