What If I Cannot Work In Singapore?
There are a major setbacks when a person cannot work.
- diagnosed with major illnesses
When it happens, do you think you can work?
When you aren’t working, where do you get your finances?
When you don’t have finances, how you are going to pay for your liabilities e.g. housing loan, car loan, and take care of your family?
I have a simple solution for you.
How Much Is Enough?
The answer to how much is enough to make sure that you have the finances upon major illnesses or disabled lies in how much income you have and how long you want to protect it.
In short, we call it income protection.
Suppose you’re an average family.
You (husband) earns $10,000 per month and your wife is a homemaker. You have 2 growing up children, 5 and 7 years old.
In this case, you are the breadwinner of the family.
When you are diagnosed with cancer, you can’t work and how many years’ of your income do you think should you cover before returning to the work force?
When you are disabled and cannot work, will your family suffer financially because you can’t work and don’t continue to bring the $10,000 per month income to the dining table?
Rule of Thumb
As we spoke earlier, we are establishing how much income to protect in the event of major illnesses or disabled. When you can’t work and no more finances for your family, how much is enough?
The rule of thumb is to cover for 5 years.
Assuming the above case that you are the breadwinner of your family and earns $10,000 monthly income.
Annual income: $10,000 X 12months = $120,000.
5 years of annual income = 5 X $120,000 = $600,000.
The traditional way to make sure that your family has enough finances when a setback like major illnesses or disability happen is to save up for the $600,000.
The question is how long we need to work to save this amount of money?
And to think that these finances are prepared for rainy days when I’m not sure if a major illnesses or disabled will strike, sounds absurd to a lot of people. With that money, I can purchase another property.
The better alternative is to purchase a life insurance policy.
With a small amount of premium, you are insured for a high sum assured. E.g. you may be paying $500 per month for a $600,000 sum assured policy.
There are various type of life insurance policies: whole life insurance, term insurance, critical illness insurance and early stage critical illness insurance. They serve different purpose to different groups of people.
I highly encourage you to speak to our Financialogist to have a better understanding on financial planning and how to protect your income if you cannot work in Singapore.
Want To Know More About How To Protect Income When You Cannot Work?
If you would like to know more about how to protect your income when you cannot work, you may contact us at (+65) 9380 2839 or you can click on the button below to enquire about the different financial services that we provide.
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