Blog, Protection

4 Types of Insurance All Working Singaporean Should Consider

Written by Singlife | 21 Aug 2020 |

2017 Life Insurance Association (LIA) Singapore Protection Gap Study revealed these findings:

  • Singaporeans and permanent residents were covered only for 80% of their mortality protection needs, and 20% of their critical illness (CI) protection needs.
  • In total, the mortality and CI protection gap for working adults in Singapore added up to S$893 !
  • The rule of thumb is that working adults in Singapore should have mortality protection coverage of about 9 to 10 times their annual income, and CI protection coverage of about 3.9 times their annual income.

If you’re a working adult in Singapore reading this, are you sufficiently insured? The good news is that even if you aren’t, it’s never too late to get yourself covered with the right type and right amount of insurance suited for your needs.

In this handy article, we will share four types of insurance every working Singaporean should consider: Term Life Insurance, Whole Life Insurance, Critical Illness Insurance and Cancer Insurance.

1. Term Life Insurance

If you’ve just started your first job, it’s best to start getting protected early with life insurance. Facing budget constraints? A term life plan would be a relatively affordable option.

For instance, Rachel is a busy working mum of two. She doesn’t want to leave her loved ones in serious financial difficulty should she pass on early or be unable to work due to a permanent disability. Financial commitments like the home mortgage and medical bills need to be paid—with one less parent taking home a salary, Rachel’s family could potentially wind up in heavy debt. 

That is why early in her career, Rachel got herself covered with term life plan—a type of life insurance. Life as we know it, is full of unexpected circumstances. If Rachel passes on unexpectedly, life insurance payout will cover her family’s day-to-day living and her outstanding financial obligations.

A term life plan provides insurance coverage for a fixed period of time and it gives you flexibility to decide how long you wish to be covered. Some offer guaranteed renewability upon the end of the term, so you may not need to worry about your insurability even as you age. Since a term life plan provides purely insurance protection without a savings or investment component, premiums are usually more affordable.

Rachel finds a term life plan ideal, as she only intends to protect herself and her kids with life insurance until they graduate from university or are financially self-reliant.

How much should you be covered for?

The rule of thumb for working adults in Singapore is to have mortality protection coverage of about 9 to 10 times their annual income.

Here’s a table illustrating the coverage amounts you’ll need depending on how much you earn.

It is important to note that there is no ‘one-size-fits-all’ or fixed formula to meet different individuals’ protection needs.

This table is for your reference only as it reflects the average protection needs of working adults in Singapore, and does not take into consideration your specific financial needs and situation.

As such, you are encouraged to use the Insurance Estimator to help you decide on the amount of insurance coverage you need.

Singlife’s term life insurance provides coverage for up to S$2,000,000 and up to age 99 – it gives you the flexibility to customise your plan to your needs. Furthermore, you can also increase your protection on special life stage events without further underwriting.

2. Whole Life Insurance

An alternative to term life insurance is whole life insurance. As the name suggests, a whole life plan provides life insurance coverage that spans your entire lifetime.

On top of offering insurance protection, a whole life plan has a savings element in which your policy will build up a cash value over time. This means that the benefit associated with your policy could be higher than the sum assured, leaving even more behind for your loved ones after your death.

Let’s look at the key differences between a term life and a whole life insurance plan.

3. Critical Illness Insurance 

Being critically ill can be debilitating not just physically, but also financially. 

While health insurance can cover the costs associated with medical treatment and hospitalisation due to a critical illness, it may not be enough as it may subject to the specified limits or caps. And that’s where critical illness insurance can come in.

With a critical illness plan, you receive a lump sum payout if you suffer from one of the covered critical illnesses. The payout from a critical illness plan can be used to cover any financial gaps related to your treatment and other non-medical expenses. It can also be used to make up for any loss of income and provide you with funds for daily living during your recovery period.

Types of critical illness insurance

The Life Insurance Association (LIA) Singapore has standard definitions for 37 severe-stage critical Illnesses, such as cancer, heart attack, stroke, kidney failure etc. However, critical illness plans offered by the various insurers may vary in the number and type of critical illnesses covered. 

For a standalone critical illness plan, there are several types on the market and the basic type usually provides coverage for late-stage critical illnesses.

Other variations in the market include:

  • Coverage for early and/or intermediate stages of critical illnesses (ideal for situations when you detect the critical illness early).
  • Multiple claim options wherein your policy remains in-forced even after you’ve made a claim on it. They provide coverage for recurring critical illnesses or future incidences of another critical illness.

How much should you be covered for?

If you’re a working adult in Singapore, the rule of thumb is to have CI protection coverage of about 3.9 times your annual income.

Here are the coverage amounts you’ll need depending on how much you earn.

It is important to note that there is no ‘one-size-fits-all’ or fixed formula to meet different individuals’ protection needs.

This table is for your reference only as it reflects the average protection needs of working adults in Singapore, and does not take into consideration your specific financial needs and situation.

As such, you are encouraged to use the Insurance Estimator to help you decide on the amount of insurance coverage you need.

 

Singlife critical illness insurance provides coverage for late-stage critical illnesses. There are two base plans for different needs, and each plan can be further enhanced with a rider for early and intermediate stages critical illnesses protection.

Singlife’s Multi-Claim Critical Illness Plan multiple claims up to a total of 300% of the sum assured during the policy period. For each claim, the sum assured will be paid out and reduced to zero. After the “reset period” (consecutive 12 claim-free months) from the diagnosis date of the previous claim, the sum assured will revert to 100% of the original amount and claims can be again.

Singlife’s Critical Illness Plan offers standard coverage and once there is a payout, the policy will cease.

 

Want to enhance your coverage? You also get to add optional early care riders for the two base plans. In addition, Singlife is the first insurer that lets you to purchase a CI plan directly online.

4.  Cancer Insurance

If you want to protect yourself and your loved ones from the high financial costs of cancer, you can consider cancer insurance

Here at Singlife, we offer two cancer plans: Cancer Plus Plan and Cancer Plan.

The Cancer Plan provides basic coverage for late-stage cancer, and you can start as low as S$7.10 a month for a S$60,000 cover1. If you want more protection, the Cancer Plus Plan provides comprehensive coverage for all stages of cancer, and you can be covered for S$60,000 from only S$8.24 a month2. What’s more, the recurrence benefit of Cancer Plus Plan allows multiple claims.

1 based on a 30 year old male, non-smoker, buying Singlife’s Cancer Plan with 10 year policy term 

2 based on a 30 year old male, non-smoker, buying Singlife’s Cancer Plus Plan with 10 year policy term 

 

Protect yourself and loved ones from the heavy financial costs of cancer today.

 

Did you know that all Singaporeans are covered under a compulsory government health insurance scheme?

If you or a loved one had been ill and needed to be hospitalised, you might already know that medical costs can pile up very quickly. Thanks to MediShield Life, this compulsory government health insurance scheme pays for basic public hospital treatments.

If you want a better type ward or private hospital, you may want to consider an Integrated Shield Plan from a private insurer. This ensures that some extra costs will be covered by your insurance, and you have the flexibility of choosing from more hospital or ward types.

Buy what you need

While these four types of insurance are crucial for working adults, there is no one correct formula for the kind of coverage that you should have. 

The type and amount of coverage you need will be different from what other people need. Before you commit to any insurance plan, do your research, seek professional help, and assess if the plan you’re considering will be beneficial to your financial security in the long run.
 

The information is meant for your general knowledge and does not regard any specific investment objectives, financial situations or particular needs any person might have and should not be relied upon as the provision of financial advice. Singlife’s insurance plans are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Singlife or visit the LIA or SDIC web-sites (www.lia.org.sg or www.sdic.org.sg). This advertisement has not been reviewed by the Monetary Authority of Singapore. Information is correct as of 21 August 2020.