Do you really need $1 million in coverage? With no one size fit all solution for insurance; individuals, whose needs vary, would then require different levels of coverage. Therefore, while $1 million in coverage may suffice for some, others may require different coverage amounts. Moreover, LIA (Life Insurance Association Singapore) has estimated a mortality protection gap of S$355 billion, or 2.1 times of your annual income, thus showing that the majority of Singaporeans are unknowingly underinsured.1 Are you perhaps guilty of having a protection gap? In this article, we explain the fundamentals of protection planning and the type of coverage that you should have at each stage in life.
(See "Is Insurance Really A Waste Of Money?")
The essentials: Hospitalisation and Life Insurance
With medical inflation in Singapore being the fourth highest in the region2, Singapore is likely to continue facing rising healthcare costs. Therefore, having hospitalisation insurance then ensures that we would be able to afford medical treatment should the need arise. However, as explained in our previous article "3 Things You Must Know About Integrated Shield Plans", Medishield Life only covers for treatment in Class B2/C wards in public hospitals. Hence, should you wish to receive comprehensive coverage and seek treatment in Class A/B1 wards in public hospitals, consider opting for an integrated shield plan.3 Additionally, integrated shield plans also covers for a larger portion of the co-payment thus allowing you to pay less for medical bills.
Those with dependents may also wish to consider using life insurance. Generally classified into term or whole life insurance, the former provides temporary coverage while the latter provides coverage for life. By using life insurance to cover your protection gaps, this protects your family and ensures that they would be financially able should anything untoward happen to you.
(See "Term or Whole Life - Which Should You Choose?")
Find Out If You Have Sufficient Coverage
For those worried about being unable to work: Income replacement policies
Apart from the essentials, your next consideration should be to protect yourself in the event that you are unable to work. This would require income replacement policies such as critical illness, cancer plans and/or disability insurance.
Both critical illness and cancer plans provide a lump sum pay-out upon diagnosis. This amount can then be used to offset any outpatient and/or follow up treatment costs or serve as an income replacement during your recovery period.
Disability insurance on the other hand, provides monthly pay-outs for as long as specified in your policy. These pay-outs will commence upon the inability to perform activities of daily living (ADL) thus providing income protection in the event that you are unable to work. However, do note that the number of ADLs required for pay-outs to commence differs between policies with the minimum being 1 ADL.
(See "Can You Really Afford To Not Have Critical Illness Coverage?")
For those planning for retirement: Annuities
Lastly, when planning for your retirement, your finances are likely to be one of your biggest concerns. This is because while CPF Life offers monthly pay-outs, they range from just $720 to $770 a month and are likely to be insufficient for your retirement expenses.4 Therefore, if you are worried about outliving your savings in retirement, perhaps consider annuities.
Providing monthly pay-outs for as long as you live, annuities ensure that you would be able to retire with a peace of mind. This stable inflow of income also provides financial security thus allowing you to retire worry-free and indulge in your desired retirement lifestyle.
(See "3 Reasons To Avoid An Early Retirement")
To find out which types of coverage you should have, click on the "Get Started" button below.
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Available Products on FSMOne Insurance |
Term Life, Whole Life, Critical Illness, Annuity, Health, Endowment from Etiqa Insurance, Manulife, NTUC Income and Tokio Marine Life Insurance *Please check with our advisory team if the product you want is available on FSMOne Insurance |
1Source: http://www.lia.org.sg/system/files/news/2018/04/2017_Protection_Gap_Report_v20180426.pdf
3Source: https://www.moh.gov.sg/content/moh_web/medishield-life/resources---faqs/faqs.html#anchorName
4Source: https://www.cpf.gov.sg/members/schemes/schemes/retirement/cpf-life#
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