Financial Planning

5 Types of Insurance Singaporeans Need and Why You Need Them

byJoanne Poh
  • Dec 16, 2019
  • 7 mins
  • 2.8K views

One of the first things you’ll face as an adult is getting insurance. That sounds straightforward enough until you do a quick search and realise there are many types of insurance in Singapore. That’s when you might ask, what insurance do I need in Singapore? Buy too much and you may end up wasting your money, while buying too little means potentially being underinsured. 

Find out in this quick guide as we share the five types of insurance in Singapore that you might need. In order of importance, this includes:

  1. Health insurance: Supports your health care expenses such as medical and surgery costs in the event of an injury, illness or disability
  2. Life insurance: Provides a lump sum pay out upon your death or terminal illness or total and permanent disability
  3. Personal accident insurance: Covers your medical costs if you get into an accident
  4. Critical illness insurance: Gives you a lump sum pay out when you get diagnosed with a critical illness

Let’s take a look at each type of insurance in detail.

This is the first type of insurance in Singapore that you should get above anything else. Why? Medical costs can be hefty and health insurance ensures that you can get the medical help you need without having to worry about cost.

 The best time to get health insurance is when you are still young and healthy. If you procrastinate and end up getting it only when you develop a health condition, you’ll realise that you may have to pay higher premiums to get them covered or risk getting your medical condition excluded altogether.

MediShield Life, Integrated Shield Plan, or riders: Which should I get?

Even among health insurance, there are different types.  

 The most basic version of this is MediShield Life, the national health insurance plan for all Singaporeans and PRs which subsidises:

  •  Large hospital bills and selected costly outpatient treatments, such as dialysis and chemotherapy
  •  Hospital stays at Class B2/C wards in public hospitals

 However, the maximum claim limit you can make in a year is S$150,000. There are also limits on specific treatments like chemotherapy, radiotherapy and dialysis.

If you want the option of staying in a private hospital, upgrading your stay to a Class A or B1 ward, or simply prefer more coverage, you can consider getting an Integrated Shield Plan (IP) like Enhanced IncomeShield. With it, you can increase your policy’s yearly claim limit to up to S$1,500,000 and can have peace of mind knowing your insurance can help you pay for the treatments you need, no matter how costly they are. You can also use your MediSave to pay for a portion of the premiums.

With an IP, you can further enhance your medical coverage by purchasing supplementary medical expense insurance, also known as riders. For instance, you can get a rider that reduces your co-payment from 20% to 5%, which means lesser out-of-pocket expenses for you. Some may also provide you with cash bonuses such as incentives when you choose to stay at a lower-grade ward.

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Do you have young kids or elderly parents to take care of? Life insurance, like Income’s Star Secure, is the second most important type of insurance after health insurance, especially if you have dependents. It essentially protects you from income loss due to death, total and permanent disability (TPD) or terminal illness, by providing a payout should these occur. This amount of money can be used to tide the family over as they adjust to the situation and seek new income avenues. 

The amount of premiums you’ll have to pay depends on the desired sum assured, the age at which you first purchase the policy, as well as how long you want to pay premiums for. What this also means is that the earlier you purchase life insurance, the cheaper the premiums will be.

A good rule of thumb is to plan for a sum assured that’s equivalent to 9-10 times your annual income, though this will differ from person to person. This ensures you have sufficient time to find alternative income and gives you or your family time to recover from the income loss. Seek advice from an Income advisor if you’re not sure how much you’ll need.

Are you an adventurous person who enjoys spending your time outdoors engaging in rugged activities like trekking, night cycling or skating? If your answer is yes, consider getting a personal accident plan.

Personal accident insurance is good to have, especially if you lead your lifestyle puts you at greater odds of getting into an accident. Even if you are fairly confident in your abilities, the coverage will come in handy in case, for instance, another cyclist or motorist should hit you by accident. Although you might worry that there will be overlaps in coverage between your personal accident and health insurance, the two types of insurance actually cover different things and work together to give you comprehensive coverage in case of accidents. Premiums are usually very affordable too.  

Plans like Income’s PA Secure provide personal accident benefits that include accidental death, permanent disability, daily hospital income and medical expenses in the event of an accident or contracting an infectious disease. This includes coverage against common infectious diseases like hand, foot and mouth disease, chicken pox, dengue fever and mumps amongst others.

You can also get more coverage with optional benefits that cover disruptions to your planned staycations or ticketed events due to hospitalisation, as well as reimbursements to child care fees if your child is hospitalised due to injury or an infectious disease.

However, the biggest moot point of personal accident insurance is the fact that premiums are usually very affordable. For example, premiums for PA Secure start from just $68/year for an individual plan. Add an additional $18/year for lifestyle optional benefits. With the comprehensive benefits it offers at an affordable price point, personal accident insurance is good to have if you can afford it. 

Did you know that cancer, ischaemic heart disease and conditions like strokes are some of the top causes of death in Singapore? With those statistics in mind, it’s worth considering getting critical illness insurance (CI).

What a CI plan does is provide a lump sum pay out if you’re diagnosed with a critical illness like major cancer, stroke with permanent neurological deficit or heart attack of specified severity. Depending on your policy, this could be at the point of diagnosis, or when you reach a certain stage of the illness. A CI plan is complementary to your health insurance, and lets you focus on getting the treatment and care you need without worrying about finances. 

While your health insurance can only be used for hospitalisation, and selected outpatient treatments like chemotherapy up to specific limits, the one-time pay out from your CI insurance can be used for anything. It could be for treatment costs not covered by your health insurance, caregiving costs, transportation for hospital visits, or to simply cover the cost of your daily expenses while you take some time off work.

When you choose to get a CI plan, think about how much of a pay-out you want. Generally, aim to cover for at least five years of your income so you can focus wholly on recovery instead of having to juggle treatment with work.

1 in 2 healthy Singaporeans aged 65 years old are at risk of becoming severely disabled in their lifetime and may require long-term care, whether due to the onset of age-related illnesses, worsening of existing chronic illnesses or sudden disabling events like strokes. 

Also known as long-term care insurance, this is meant to help you cope with income loss and pay for caregiving needs by providing monthly pay-outs that are meant to replace a portion of your lost income.  

The good news is that most Singaporeans would have some form of disability insurance through CareShield Life. It’s a long-term care insurance scheme that provides you with basic financial support for as long as you are severely disabled or unable to perform three or more Activities of Daily Living (ADLs) like washing, dressing or feeding yourself. 

CareShield Life payouts start from S$600 per month in 2020 and increase over time. If that is insufficient for your needs, you can supplement it with plans from a private insurer. For example, Income’s Care Secure lets you enhance your monthly disability benefit and offers monthly payouts when you are unable to perform two ADLs, as compared to CareShield Life’s three ADLs. You will also enjoy support benefit, dependant benefit and a death benefit. 

When it comes to insurance, the question isn’t “should I get it”, but “what insurance do I need in Singapore?” Insurance is your backup plan when things go awry, so make sure you’re well covered. Start with health insurance, then move on to other types if you can afford it, and choose the right types of insurance that matches your lifestyle and protection needs.

Not sure if you have sufficient coverage? Speak to our friendly advisors or find out how you can enhance your protection with our health and personal accident insurance or life insurance plans.

Author(s):
With over a decade of experience writing, Joanne Poh specialises in insurance, finance, real estate, fintech, and travel. Her work has been featured on Yahoo!, MSN, AsiaOne, and herworldPLUS.

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