Life is an adventure because no matter how much you try, things will not always go according to plan. You can get sick, lose your job, or get into an accident without a moment’s notice. Although you do not have complete control over what happens in the future, you can always lessen the financial burden that you may have to bear in the wake of these unfortunate events by getting the right insurance coverage.
Getting insurance is an effective way to protect you and your family from financial loss should something unfortunate happen. In Singapore, many insurance plans are compulsory, including the likes of car insurance when you buy a car, or fire insurance when you secure an HDB loan. If you want additional protection, you have to purchase separate insurance products to cover your various needs.
Several types of insurance can benefit working adults like you. Think about your needs and budget when looking for the right ones. If you are looking for advice as to what type of insurance Singaporeans should invest in, here are the ones that you may want to purchase first.
Although you’re likely to have MediShield Life that can cover your hospitalisation expenses in public hospitals if you stay in C to B2 class wards, this health plan is quite limited. If you get sick and choose a bed in an A/B1 type ward or prefer a private hospital, your MediShield payout will barely cover your bill.
Besides reducing your ward and hospital options, MediShield’s health insurance claims are capped at SGD 100,000 a year. The plan also provides claims limits for particular medical treatments, such as chemotherapy and kidney dialysis.
Because of these limits, it is best to complement your MediShield with an Integrated Shield Plan (IP) that you buy from a private insurance provider. An IP will cover the cost of private hospitals, better wards, and expensive medical procedures as it extends your claims limits to as much as SGD 1 million a year. Isn’t it reassuring to know that you do not have to worry about hospitalisation and treatment costs when you get sick suddenly?
Leaving your family behind with practically no means to support themselves when you pass away is a valid concern, especially if you are the sole breadwinner. Alleviate this fear by buying a life insurance plan. This type of insurance is designed to ensure that your dependants are financially protected when you die or become permanently disabled.
There are two kinds of life insurance, whole life and term insurance. While both assure payout for your beneficiaries in case of total permanent disability or death, they differ in terms of length of coverage and the amount of money you get back if nothing happens to you.
Term insurance provides coverage for a fixed number of years, like 20 to 30 years. After this fixed period, your plan expires, and you will receive nothing back if no untoward incident happens during the covered timeframe. This kind of life insurance policy is sensible if you are after affordability and limited protection for your loved ones, say until your youngest child completes tertiary education.
On the other hand, whole life insurance provides coverage until the end of your life. Although it is much more expensive than term insurance, whole life policies have a savings component that allows your plan to earn cash value over time. As such, there is a chance that you;ll get to leave more money behind for your family than the sum assured.
When deciding which kind of life insurance to buy, be sure to weigh the pros and cons of each product based on your situation. More importantly, make sure that you can afford to pay the premiums. Remember that your policy can lapse or can be terminated if you fail to continue paying your dues. Make sure to check out CompareFirst, an information portal for life insurance products, to compare features and premiums offered by various insurance providers in Singapore.
Disability Income Insurance
If protecting your dependants is on top of your priority list, you should consider getting disability insurance. This policy assures you of receiving a fixed monthly income during the period that you are unable to work because of an accident or illness. You can also receive additional benefits depending on the insurer. For example, some insurance companies provide rehabilitation or dependent care benefits on top of payout.
Note that premiums for this type of insurance vary depending on the amount of income you want to replace. As a rule of thumb, it is best to purchase enough coverage to receive a payout equivalent to at least 70 percent of your monthly salary. Say you earn SGD 5,000 monthly. You need to buy enough insurance to receive SGD 3,500 every month.
Critical Illness Insurance
Even if you MediShield Life with an Integrated Shield Plan, it is still wise to purchase a critical illness insurance policy. This type of coverage offers a financial buffer should you suffer from a severe medical condition. Keep in mind that your expenses will go beyond hospital and treatment costs when you get diagnosed with heart disease, cancer, or other types of grave illness. Unless you have sizable savings, how are you going to pay for them?
With critical illness insurance, you will have money to pay for childcare, transportation, household expenses, and other things that you need that are not covered by your MediShield and IP policies. Note that this plan is not meant to replace your health insurance but to provide additional financial means to ensure that you can recover without worrying about money.
Before you dismiss the idea of getting critical illness insurance coverage because it is “unnecessary,” remember that suffering from a life-threatening disease is not far-fetched. In Singapore, around 39 individuals are diagnosed with cancer every day, and 1 in 4 people may develop cancer in their lifetime, according to the Singapore Cancer Society.
The insurance types mentioned above are just some of the policies that are most beneficial for working adults in the country. If you’re thinking whether or not to purchase any or all of these types of insurance, it is best to first assess your needs and goals, to do your research, and to consider your current finances before committing to an insurance plan. Ultimately, you should only buy the insurance products that you need—those that protect what you care about and contribute to your financial security in the long run.