The Power of Protection

Since my last post regarding MediShield, I'd received great comments and sharing from my buddies. Thanks! :-)

One such sharing I'd received is about AIA's Pink of Health, a rider that you can add on to your policy. I am not sure if this product is stil being offered as of now (as i can't find it on the AIA Singapore website).

Another sharing that caught my attention is there are alot of Singaporeans who cannot even afford the basic MediShield Plan. I really cannot visualise what will happen to this group of our fellow citizens should misfortune really falls onto them. Most likely this group of citizens may not even have the basic financial knowledge to start with. While our Govt may be thinking of how to help those in the lower income group, I wonder what can we do for them. Maybe you will like to share your views regarding this point in the comments to this blog entry. (See Power of Sharing, www.leroyang.blogspot.com/2007/02/power-of-sharing.html)

This leads me to the realisation of the Power of Protection.

Some financial planners calls it Assets Protection, while some calls it Wealth Protection. Whatever it is, what are the means of protection you can have to protect yourself in the events some unfortunate events happen on you?

While health, life or term insurances covers the unforeseen circumstances, in events that you may just suddenly leave this world, or suffer from critical illness, or total permanent disability, income lost or whatever, insurance do cover the basic to tide you or your family through for a while. This can help buy time for them to source for alternative income streams if you are the main bread winner. Some of our fellow Singaporeans cannot even afford to pay for the basic coverage!

On the other hand, I wonder how many know about Estate Duty. No, not the kind of guard duty you do for your real estate. It's actually a "death tax" that our Govt will tax on our family when we die (actually the tax is on your remaining assets that you left behind, but i used "our family" here b'coz if we die, we will not be around to pay the tax, ya). To know more about Estate Duty Act, see Chapter 96 from Singapore Statutes Board (www.statutes.agc.gov.sg)

Yes, you see me correctly. Tax on our death. Sound strange? The intent for this tax is actually wealth distribution to the rest of our fellow citizens through our Govt. What we may not even realise is our family may not even be able to afford to pay this tax should we suddenly leave this world. Then our hard earned assets ganna witheld by Govt. Our death may leave a pile of "Suete" (pronounce it in Mandrain) for our family to clear. What to do? Times are hard. Your insurance claim by your family members may also be withheld if the coverage crosses certain amount, which may be deemed as assets. So you think you have left behind a huge pile of gold for your family should you die, think again.

Luckily Govt has in place some "offset" to help those poor family "escape" from paying this tax. Those who do not have much assets left behind need not pay estate duty, but up to a certain amount only. Those very rich but did not plan for his death may have their family going through a rough ride in order to get his left behind assets release to them.

Of course, every problem has its solution. There are several ways to overcome this unnecessary difficulties. One of the tool the Rich uses is setting up a Trust. There are many other tools which the middle class or the poor may find useful too.

The point here is, Plan Early to achieve maximum protection. Speak to a financial planner near you as soon as possible. (Maybe I can study, take the test and become a qualified financial planner, ya. Any supporter?! ;-O)

Of course this aspect is just a small part of assets protection. There are still a lot of protection we will need to put in place in order to have a good night sleep. As to what protection we need or can afford to have very much depend on the level of Financial Education we are at. If we can learn early, plan early and start early, Why Wait until the cow come home?

Take Ownership, Take Action NOW!


Sweet dreams,

Leroy
"When I Stop Learning, I Stop Living"