Get adequate insurance at a low cost

Dear Mr. Tan,

You advised to buy personal accident insurance now, and life insurance later. What happens if at a later date, I am in poor health and not accepted for life insurance?

REPLY

The risk of uninsurability is quite low (less than 0.5% a year).

The bigger risks are:

1. People hesitate in buying expensive insurance, and are inadequately insured against accidents (more than 50%).

2. People buy an expensive life insurance and lapse the policy due to inability to continue paying the premium (5% a year).

It is better to have adequate personal accident insurance now, and upgrade to a more expensive insurance at a later date. For young people, the risk of meeting an accident is much higher than contracting a serious illness.