Should Millennials Insure or Invest First?

The final part of Winston Koo’s 3-part series on Insurance for Millennials focuses on why young adults are better off insuring themselves first before investing. The Group Director of Trinity Advisory Organization (TAO) shares a real-life story of how a sound insurance plan empowered a young life when life took an unexpected turn.

“Protect the goose that lays the golden egg.”

Insure or invest? Young adults making this decision are already on the right track of planning for their long-term financial wellbeing.

I remember vividly when I got my first job; money was tight. On hindsight, I wish I had someone advising me what I am sharing with you now. Prioritise securing the right type and level of insurance coverage. Make sure you secure your vault first before you continue to save and grow your wealth.

Most of us earn a living by going to work. When an unforeseen mishap or critical illness prevents us from working, our earning capacity will be affected or completely stopped. Getting the right insurance safeguards our current wealth, standard of living and potential earnings.

Unless you have an emergency fund to dip into, insurance minimises financial havoc. If you’re the lucky few with enough investments to fall back on, you may still suffer severe losses when forced to liquidate your assets in a hurry. You might also take a big hit when you terminate your investment plans prematurely to pay for medical expenses or other urgent needs.

Unlike insurance, investments play a different role by funding your future financial needs. They include long-term objectives such as retirement planning or saving for children’s education. However, always protect the goose that lays the golden egg first. Get your insurance portfolio done up well first. I have seen so many people go through so much pain, so I want to help you, and as many people as I can, avoid unnecessary hardship.

A true story: insurance coverage that helped when it really mattered

Here’s a story based on one of my client’s life experience:

Several years ago, a client of mine introduced her future son-in-law, FM, to me. She thought it would be good for FM to take up a savings plan since he had just started work. After a heart-to-heart discussion and analysis of his financial circumstances, I recommended for FM to get a protection plan as he had no insurance at all. He thought it over and took up a whole life plan with Death, Disability and Critical Illness (CI) coverage with a sum assured of $160,000. On top of that, he took up a private integrated shield plan (IP) with a rider as I advised.

Three years later, FM was unfortunately diagnosed with acute leukaemia. I will never forget the moment he asked me from his hospital bed if his treatment would be covered by insurance because he was told it would be very costly. Coming from a family that was not well-to-do, he would rather discontinue treatment than be a financial burden to them. Hearing this from a 21-year-old man who was around the same age as my own children broke my heart.

Fortunately, I had two pieces of good news for him:
• His IP policy would cover his entire hospitalisation and treatment.
• His whole life insurance plan with CI cover would give him a lump sum payout as his condition fit the CI payout definition.

Hope and the right kind of help

I saw the glimmer of hope in his eyes which will forever be the highlight of my career. It gives me indescribable joy knowing that our profession gives hope as well as the practical (monetary) support that helps people rebuild their lives.

Relieved of all financial stress, FM focused on healing and made a good recovery. He also got married and used the $160,000 insurance payout towards his matrimonial home. He confessed that he never thought of saving so much money from working and was very grateful that his life plans could be fulfilled much earlier than he could imagine.

Regrettably, he had a relapse three years later and passed away. At the wake, my client thanked me again for giving her son-in-law three years of bliss which would not have been possible had he not bought the right insurance, or been adequately covered. I was overwhelmed by emotion and humbled that I was able to make a difference to his life.

Insurance is the foundation of every sound financial plan and its so important to start early. Call us when you’re keen to share your stories or tap our brains on financial planning. Whatever you do, make sure you do something to get yourself covered.

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