We have already written about "your first policy" in general terms. This article narrows the focus to salaried workers taking out their first life insurance policy specifically, because people on a salary have a context of their own: group insurance already in place, a clear tax bracket, and an income that is steady but comes from a single source.
Start with: who is in trouble if your salary disappears?
Life insurance exists to replace income, so the first question is not "which plan is good" but "who depends on my income?" For a single salaried worker with nobody depending on them, the urgent need is health cover rather than a large sum insured on their life. For anyone sending money to their parents each month, with a partner, with children, or about to take out a mortgage, that is the signal that the time for life insurance has genuinely arrived.
Know what you already have: group insurance is a starting point, not the answer
Check first how much life cover your employer's group scheme provides. It is usually a few times your monthly salary — which sounds like a lot, but measured against real obligations such as a twenty-year mortgage plus raising a child, it is usually far from enough. More importantly, it disappears the day you leave the job. So your first personal policy serves as the foundation that stays with you, with group insurance as a temporary supplement — not the other way around.
Which type suits a first policy: term or whole life?
The two main options are:
- Term — a very low premium relative to the cover, well suited to closing an obligation over a defined period, such as the twenty years while the mortgage is being paid and the children are in school. The thing to know is that it has no cash value; when the term ends, it ends.
- Whole life — a higher premium but cover that runs long and value that accumulates within the policy. Suited to people who want permanent security and prefer certainty.
For a salaried worker on a limited budget with heavy obligations, a common approach is to use term to build a high enough sum insured for the obligations first, then add a long-term savings-type plan as income grows. Some people mix the two from the start in whatever proportion the budget allows. There is no single right answer for everyone — only the answer that fits your obligations and your budget.
How much cover for a first policy?
A quick formula: total debts + annual family expenses × 3–5 years − existing group cover and savings. The result is the starting sum insured for your first policy. For example: a 2-million-baht mortgage, household expenses of 300,000 a year × 4 years = 1.2 million, total 3.2 million; less 1 million of group cover and 200,000 in savings, leaving a sum insured of about 2 million baht (illustrative figures, to show the method). For a more detailed calculation, read our article on how much life cover you need.
The traps beginners fall into
- Buying a savings-type plan as the first policy because "you get money back" — and ending up with very little cover for the premium, when the whole reason for a first policy is protection.
- Setting the premium in a bonus-month mood — and feeling the squeeze once ordinary months return. Use total premiums of around a tenth of income as a guide.
- Forgetting the tax deduction — life insurance premiums are deductible within the applicable limits and conditions [check the latest information]. For someone in a high tax bracket this is a discount not worth leaving behind.
- Filling in the application carelessly — the health declaration is the foundation of the contract. Always answer truthfully so there is no problem at claim time.
In short
A good first life policy for a salaried worker is one whose sum insured matches the obligations, whose premium does not crowd out life, and which stays with you however many times the job changes. Start by checking your group cover, calculate the shortfall, choose the instrument that fits the budget, and lock it in while your health is still good. If you would like help running your own numbers, message us on LINE — no charge.
This article was inspired by material from the Thai Financial Planners Association (TFPA) and has been entirely rewritten.