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What Types of Insurance You Must Have At Every Life Stage

Sihan Chia

Sihan Chia

Last updated 22 August, 2022

Ask around your peers and chances are, not many can recall what their first insurance policy was, or why they got it. If you need a refresher, here are four key types of insurance everyone should have to protect themselves financially against the unexpected.  

With more Singaporeans purchasing insurance online, getting coverage these days is simply a few clicks away. But do you know which are the essential plans you should be getting to cover your basic healthcare needs or protect your dependants in the event of sudden illness or death?

If you've yet to do your research or speak to an insurance advisor, read on to understand more. Then consider making an appointment with an independent advisor for more holistic financial planning.  

Start With The Basic Five 

1. Health insurance

What insurance should you get? As a rule, all Singapore citizens are covered by mandatory health insurance known as MediShield Life, which offers basic coverage to help offset medical costs for outpatient and hospitalisation. 

Upon admission at the hospital or for outpatient treatment, patients need to notify the hospital that they wish to claim from MediShield Life. Under MediShield Life, the maximum claim limit per policy year is set at $150,000 with no lifetime limit on claims. More details can be found here

In the event you wish to get more coverage, this is where Integrated Shield plans (IP) come in handy. For instance, MediShield Life covers only enough for B2/C wards at public hospitals. With an IP, you can get covered for a B1 or A ward, or even private hospitals.

While MediShield Life covers hospitalisation and surgeries, it lacks coverage for pre- and post-hospitalisation costs. IPs help to bridge that gap.

Another point to factor in is the claim limit of $100,000 per year, which may not be sufficient considering the cost of healthcare in Singapore. With an IP, the coverage could go up to $2 million.

2. Term life insurance

Term life insurance covers the insured person for death and permanent disability for a fixed period of time. It is comparatively cheaper than whole life insurance, with some differences outlined in the table below. 

Whole life vs term life insurance 

Considerations Term life insuranceWhole life insurance
Purpose Protection by way of financial security for beneficiariesProtection by way of financial security for beneficiaries & growing cash value
Coverage periodCoverage is available as long as the term is active. Terms are usually 10 to 30 years or till the age of 65.Lifetime coverage of up to 99 years
Premium over timePremium remains levelled during the initial term. However, it increases from subsequent terms for annually renewable policies unless otherwise stated.Premium is guaranteed to remain levelled throughout the coverage.
AffordabilityMore affordableConsiderably more expensive
Cash value No cash valueCash value is built over time at a fixed earnings rate
Guaranteed payout upon deathYesYes
Choice of policy durationFlexible with multiple term optionsUnavailable
Limited premium paymentUsually Payment Period is equal to Policy PeriodYes

In Singapore, the Dependants' Protection Scheme is a term insurance automatically extended to you upon your first CPF working contribution if you're a Singapore Citizen (SC) or Permanent Resident (PR) between age 21 and 65. The sum assured is S$70,000 up to age 59, after which it becomes S$55,000 till age 65. 

If you’re wondering whether a whole life policy is worth the investment, it would be beneficial if you’re looking for coverage with cash value up to 99 years. As always, consider your financial situation carefully before making a decision. 

3. Critical illness insurance

If you’re wondering what a critical illness plan covers, the Life Insurance Association of Singapore has a framework for determining the severe stage of 37 critical illnesses

Nobody expects to be struck by a critical illness (CI) but having a CI plan can be lifesaving–statistics from the Life Insurance Association Singapore show that 90% of severe stage claims received by life insurers are for the following five critical illnesses:

  • Major Cancer
  • Heart Attack of Specified Severity
  • Stroke with Permanent Neurological Deficit
  • Coronary Artery By-pass Surgery
  • End Stage Kidney Failure

There are different levels of coverage including CI riders that could be a source of relief not only to you but also your caregivers in times of need. CI plans not only offer coverage for diagnosis, treatment, and death, some insurers also extend the coverage to your dependants. 

The best way is to get more information for you to make a fair comparison before you decide which CI plan is right for you. 

4. Personal accident insurance

It is a common notion that only those who have fairly active lifestyles need personal accident insurance. The pandemic has certainly changed that, with most plans offering COVID-19 coverage. Did you also know that personal accident plans also offer coverage for dengue fever, certain infectious diseases, and treatment costs for TCM, physiotherapist or chiropractor? 

While the payout is not huge, you can consider topping up the coverage for disability or death benefit if you don’t have or are not planning to get a life insurance policy. . 

5. Disability insurance 

Taking care of a growing ageing population is no walk in the park, and the Singapore government created Careshield Life (formerly known as ElderShield)  to address this need. 

The scary fact is that along with the rising incidence of debilitating diseases such as stroke and heart attack, patients are getting younger too. Then there are those suffering from severe “long-COVID” symptoms, which could mean help with Activities of Daily Living (ADL) will be needed. 

For all Singaporeans, Careshield Life is a mandatory insurance whereby premiums can be paid through Medisave. To qualify for claims, the insured person must be severely disabled and unable to perform three out of the six ADLs: washing, dressing, feeding, toileting, walking or moving around, and transferring. 

For those 67 years or older when the scheme is available to you, the monthly payouts are fixed at S$617 per month. Needless to say, with long-term care costing up to an estimated S$2,324 per month, the basic coverage would not be enough. 

This makes CareShield Life supplements critical, as the additional coverage can go up to S$5,000 per month, on top of the lump sum benefit provided by the respective private insurers. This helps to take care of rehabilitation costs, lump sum benefit for permanent disability, and loss of income from unemployment.  

The million-dollar question - How much should you be spending on insurance? 

While some finance experts advocate spending not more than a certain percentage of your salary on insurance premiums, this is of course subjective and based on individual needs.

The fact is, insurance coverage protects you and your dependants financially in the event of illness and death. For those supporting their families, the coverage can also be helpful in tiding through difficult circumstances should you be unable to continue providing for them.  

To get some perspective, here’s what some Singaporeans are spending on their insurance portfolios. You can also use a protection gap calculator to determine what is considered adequate coverage based on your life stage.  

Protected up to specified limits by SDIC.

Note: This is only product information provided. You may wish to seek advice from a qualified adviser before buying the product. If you choose not to seek advice from a qualified adviser, you should consider whether the product is suitable for you. Buying an insurance product that are not suitable for you may impact your ability to finance your future healthcare needs.

If you decide that the policy is not suitable after purchasing the policy, you may terminate the policy in accordance with the free-look provision, if any, and the insurer may recover from you any expense incurred by the insurer in underwriting the policy.

Read these next:
Critical Illness vs Cancer Insurance Plans: A Critical Comparison
Critical Illness Plans vs Early Critical Illness Plans: Which Should You Get
Changes to Definition of ‘Critical Illness’ in Life Insurance Policies
5 Best Cancer Insurance Plans In Singapore
5 Critical Things You Need to Know About Cancer Insurance