What is insurance? I note that quite a fair number of people treat insurance as a saving plan. The true fact is that the insurance is a guard against unexpected event and a shield for huge amount of medical cost. There are many type of insurances such as life insurance, term insurance, investment-linked products etc. People tend to spend an average of 10% to 30% of their income. I also hear that some people spend about 50% of the income on insurance. My take is that one should allocate at most 1% of his or her income when he/she is single. The allocation will be at most 2% if one is married with kids. The allocation of fund is on the term insurance and shield plan against huge medical cost.
I currently spend 0.5% of my income on term insurance and shield plan.