How much insurance is enough

When it comes to insurance, the big question is always: ‘How much do I actually need?’ Too little and you’re under-protected. Too much and you’re burning cash. So how do you strike the right balance?

It’s not just about what you can afford. It’s about whether your coverage truly fits your life. That means looking at your income, dependants, lifestyle, and future plans. All these factors help you find your coverage sweet spot (basically, the amount that protects you without overpaying).

Insurance coverage you need for Critical Illness and Death & Total and Permanent Disability (TPD)

Step-by-step calculation:

Let’s say you make $3,500 a month - that’s $42,000 a year.

1. Critical Illness (CI) Coverage:
   $42,000 × 4 = $168,000
2. Death & TPD Coverage:
   $42,000 × 9 = $378,000

That means, ideally, you’d want:

• At least $168,000 for critical illness (lump sum to cover time off work while in recovery)
• Around $378,000 for Death/TPD (to help your family cope long-term)

Insurance coverage you need for Life Insurance

Life insurance isn’t a must-have for everyone. It’s more of a 'nice to have' if you have family relying on your income. If you decide to get life insurance, here’s a simple way to estimate your life insurance coverage:

This gives your dependants about 10 years of your income and clears major debts. You may adjust based on your answers to the following questions.

1. How many people rely on your income?
   Are you supporting yourself? Or are you supporting parents, siblings, or a partner?
2. Do you have big financial commitments?
   A BTO loan, car installments, or even student loan debt?
3. What lifestyle do you want your loved ones to maintain if you’re not around?
   Can they manage basic expenses, or would they need extra for caregiving, education, or medical needs?

Insurance is a long-term commitment and affordability is a key consideration. You should spend at most 15% of your take-home pay on insurance protection.