How to pick the right insurance for your age?

Financial security is a top priority for many people. Especially in our Asian Region, where, financial security, independence, planning and nurturing are scripted to the day-to-day in our social conversations. Having the right insurance plan in place can be that missing part of a money puzzle for someone.

Fundamentally, any insurance policy provides peace of mind and protects your loved ones or loved things, in the event of any unforeseen circumstances. However, navigating the world of insurance can be overwhelming for someone who is shopping for the best suitable policy.

As your Life Insurance Partner, I will explore the different insurance needs for various age groups focused on the Asian Region, hoping to empower you to make informed decisions about your financial future.

Not All Insurance is Created Equal: Understanding Your Coverage

Insurance is a personal and vital financial tool. It's also like your tailored garment. That can be made to order or in some instances, you can fetch it off the shelf. But, the best-suited option is to always tailor your policy. Even though the Sri Lankan and the Asian Insurance game has elevated over the last few years, there does exist a slight confusion surrounding different policies.

The key takeaway? There's no "one-size-fits-all" solution. It's mostly made-to-order.

So, why don't we look at what suits you the best?

Before suggesting, here are some common and popular Insurance Types available for you in the Life Insurance Marketplace in Sri Lanka.

• Hospitalisation & Surgical Insurance: Covers medical expenses incurred during hospitalization and surgery.
• Personal Accident Insurance: Provides financial protection in case of accidental injuries, disability, or death.
• Critical Illness Insurance: Offers a lump sum payout upon diagnosis of a critical illness like cancer or heart disease.
• Life Insurance: Provides a financial benefit to your beneficiaries upon your death.
• Endowment Plan: Combines life insurance with a savings component that matures after a specific period.
• Investment-Linked Insurance (ILP): Offers a mix of protection and investment potential, but carries inherent investment risks.

Are you Under-Insured

Being "Under-Insured" can leave you vulnerable financially, during certain emergencies. Conversely, being "Over-Insured" might mean, that you are paying an unnecessary premium. Evaluating your risk profile and liabilities is crucial for determining the right coverage amount. If you are interested in your Risk Evaluation Profile, please reserve your appointment here.

There is a common concern amongst Potential Insurees, which is "How much shoud my Sum Assured be?". The Sum Assured is simply the payout amount upon a covered for the designated event.

Let me give you a general guideline based on a Life Insurance Coverage, yet remember, individual needs vary:

• 20-30 years old: Coverage of LKR 5,000,000 - LKR 7,500,000 can be a sufficient cover.
• 30-50 years old: As responsibilities increase, consider coverage of LKR 10,000,000 - LKR 50,000,000.
• 50 years old and above: Coverage needs may decrease as debts are settled and the responsibilites are mostly done. However, when you factor in retirement planning and potential caregiving costs, having a calculated amount around the value of LKR 20,000,000 should be a decent amount.

When considering additional insurance policies, Ask yourself:

• Am I adequately covered with my existing plan?
• What purpose does this new policy serve?
• Can I afford the additional premium?
• Could these funds be better utilized elsewhere, like a low-risk investments?

Choosing the Right Insurance for Your Age Group

18-23 Years Old: Students & Young Adults

Some schools and universties in Asia offers Group Personal Accident (GPA) and Hospitalisation & Surgical insurance with coverage for specialist visits. These plans typically cover accidents, medical expenses, and even death in some instances.

For extra protection outside school or university, consider affordable personal accident plans. Hospitalisation & Surgical plans can be added for comprehensive coverage, depending on your risk profile.

24-35 Years Old: Young Working Adults

As you enter the workforce, your insurance needs evolve. Here's what to consider:

• Life Insurance: Starting a family? Consider life or term insurance tailored to your specific needs. Don't be swayed by solely high payouts or low premiums – research thoroughly.
• Hospitalisation & Surgical Insurance: This plan is a priority. While you may have your Workplace Health Coverage (WHC) it is always best to have your Personal Health Savings Account (HSA). I've experienced in many instances where, the WHC could not cover the entire amount of the medical bill, but thanks to the Personal HSA, the bill was fully settled.

36-60 Years Old: Middle-Aged to Older Adults

This age group often juggles peak earning years with caring for dependents. Here are key considerations:

• Critical Illness Insurance: This plan provides a lump sum payout upon diagnosis of a critical illness, helping manage treatment costs.
• Long-Term Care Insurance: As parents age, consider having a Long Term Care Policy, maybe in the form of a Medical Insurance or an HSA. A Popular example from Southeast Asia is the CareShield Life in Singapore, which is a supplementary plan that provides payouts for long-term care needs.
• Savings & Retirement Planning: Endowment plans can be a good option for saving towards your child's education, retirement, or other milestones. Consider shorter-term endowment plans for faster maturity periods.
• Investment-Linked Insurance (ILP): Proceed with caution. ILPs offer a mix of protection and investment potential but carry inherent risks. Understand the product thoroughly before investing.

Remember: Premiums generally increase with age, so purchasing insurance earlier is often more cost-effective.

Bottom Line is

Just like any other evolution, our Insurance Needs evolve too. Knowing what your cover is, and how much you need is very important. There are many Sri Lankans who are deeply underinsured or uninsured at all.

I would end this with a resonating quote I read, many years ago.

Insurance, is the last thing people want to buy, but the first thing they would turn to, in the hour of need.

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