In my opinion, these are the 3 important planning priorities for women who are single.
Priority 1: Insure Health First, Life Second
Not having dependents does not mean that there is no need for insurance, it just means that what we insure changes. Generally speaking, insuring against the loss of health is more essential than insuring against the loss of life. The goal of insuring is not to benefit and provide for someone else, it is to ensure you won’t be a burden and become someone other people have to provide for.
In my opinion, a comprehensive planning should have these 3 components:
a. Hospitalisation Insurance
We don’t know what we don’t know. It’s not just a way to describe the state of “unconscious incompetence”, it is also a very appropriate way to describe health problems. When it comes to health problems, we don’t know what we might have, we don’t know when it might happen and we don’t even know if we will have any health problems. Yet, not knowing does not mean that we can or should ignore the risk.
You must not allow yourself be caught in a financial jam due to medical bills. Having hospitalisation insurance will remove this unknown financial risk and free up your savings for other goals (see priority 2).
These type of insurance plans are designed specially for women to encourage proactive health management. A key feature is that it usually comes with a complimentary comprehensive medical checkup (once every 2 years) that ‘forces’ you to take care of yourself and get your health checked despite the busyness of life. Early detection of any illness is important and what is even more valuable is having the money to pay for early medical intervention. Women illnesses such as early stage breast cancer are also covered under this type of plans to ensure funding support. Click here to download list of women’s insurance with complimentary health screening.
c. Critical Illness Insurance
Being single also means that there is only one source of work income – yours. This can potentially create a big financial problem when you are unable to work for a period of time due to a critical illness. There are basic everyday cash needs, additional medical expenses not covered by hospitalization insurance and possibly even loan repayments that still have to be met every month.
An illustration is where you are the sole owner of a mortgage loan and there is no one to share in the loan repayment. The worst possible thing that can happen is to lose both your health and house at the same time. Hence, at the very least, ensure that there is sufficient critical illness insurance to provide for such essential expenses for a period of time.
Priority 2: Make having guaranteed lifetime income a priority (after you have your property)
My female clients often feel a sense of “financial vacuum” after they purchased a property, usually around the age of 36 to 40. Before buying the house, there is a goal to save for. After buying the house, the question is “what’s next” and there don’t seem to be anything tangible to aim for.
Planning for retirement is usually not appealing because work allows for engagement and networking so there is actually more motivation to keep working than to stop working. However, what often appeals to women who are single is the option to reduce or “dial down” the work load and have free time to do what they want, when they want to do it.
In fact, some of my female clients think of their future in blocks of 2 or 3 years. If something appeals, most will work and when their energy are exhausted, most wants to take weeks or even months off before moving on to the next project or opportunity.
This is where having a guaranteed income that pays for life is so important. Ideally, the income should be enough to provide financially for all the basic needs so that you can have the freedom to take a break at any time. And if you choose to work, the salary can serve as an extra cash flow for personal well-being and enjoyment.
One of the most effective ways to have a guaranteed income for life is through a guaranteed life annuity plan. You can use this Comparison of Life Annuity for Woman which I’ve created to help you understand how a life annuity can help you generate a guaranteed income for life.
(NOTE: Get our Comparison of Life Annuity for Woman to help you understand how a life annuity can help you generate a guaranteed income for life. Get your copy here)
This is the most difficult to discuss and plan because we are talking about a period where we are no longer physically independent. This is especially difficult for a women who is single to think about because all the planning thus far has been about keeping the sense of independence.
In terms of financial planning, having a Lasting Power of Attorney done up as well as sufficient long-term care insurance to provide the necessary financing is essential. While it may not be possible to always be physically independent, being financially independent can still be maintained with sensible planning.