Insurance or Investment – Which Should You Get First?

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Insurance and investment are important parts of your personal finances. But if money is an issue, should you choose insurance or investment first?

Insurance or Investment? Insurance protects your wealth. Investment grows it.

Your priority should be to always protect your savings. The more money you lose, the harder it is to make it back. Here’s an example. Imagine you had $50,000 savings and an unexpected surgery set you back by $10,000. You lost 20% of your savings. In order to make back your money, you will need to grow your savings by 25%!

As you can see, it’s far more important to protect what you already have than to make more of it. That’s why you should always aim to get properly covered.

What insurance would you need?

Integrated Shield Plan – an additional private insurance coverage typically to cover Class A/B1 wards in public hospitals or private hospitals and waive coinsurance and/or deductible

Personal accident plan – to cover medical bills and protect income in the event of an accident, such as treatment for a broken arm caused by falling

Term or life insurance – protects your loved ones in the event of death or permanent disability

Critical illness plan – pays out a lump sum if you are diagnosed with a critical illness

Home insurance – to cover your home and its contents in case of a fire or other accidents

Work with an insurance agent you trust to recommend you insurance policies with your lifestyle, commitments, and budget in mind. It’s also important to do your own research as, after all, agents have their own vested interest – they would only push for their company’s policies, or for independent agents, those that give them more commission.

Related: 10 Questions to Ask Your Financial Consultant When Getting Insurance

Work towards having both insurance and investments

Of course, it’s not really about insurance or investment, is it? It is about working towards having both.

While getting your insurance sorted, work on building your emergency fund. It is important to have it even when you have good insurance coverage. It can tide you over in between jobs, during unexpected financial troubles, and more. Six months of expenses is a general guide but aim for much more if possible.

Only after you have strived to protect your savings and prepare for emergencies should you start investing.

You can invest in individual stocks, index funds, dividend-paying stocks, REITs, bonds, etc.. Here are some articles to read to get you started:


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