How can I close my Protection gap

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Am I covered for life’s uncertainties?

Ever wondered, “Is my insurance enough?” Many people are unsure if their current coverage can truly support their families if life takes an unexpected turn. In Singapore, most people face two protection gaps: one in life coverage and another in critical illness protection. Conducting an insurance gap analysis can help you identify potential protection gaps in your own coverage.

Thinking about your coverage? Here’s where to start

What is a protection gap?

A protection gap is the difference between what financial resources you already have and what you might need if something unexpected happens, like a serious illness or injury.

Why gaps happen

Protection gaps often appear quietly over time. Significant life changes, such as getting married, buying a home, or raising children, can increase your financial needs. Rising medical costs and inflation can also limit the extent of your current coverage. It’s important to make sure your financial coverage keeps pace with these changes.

Review your health coverage

Before looking into the amount of critical illness coverage you need in Singapore, make sure you have health insurance to cover the costs of hospitalisation in the event something happens to you. Time spent in the hospital can be costly without coverage, and you want to avoid dipping into your savings to cover hospitalisation costs.

Work out how much life coverage you need

To estimate your protection gap, consider how much your family would need if your income stopped, whether temporarily due to a critical illness or permanently in the event of death. It is not only about covering immediate expenses but also helping them regain stability. As a general guide, coverage that is about 9 to 10 times your annual income for life protection and about 4 times your annual income for critical illness coverage may provide your loved ones with time and financial security while they adjust and recover.

Evaluate what coverage your existing policies provide

Review your current insurance policies. Add up the sum assured each will provide in the event of death, total and permanent disability (TPD) or critical illness. Identify areas that may require a bit more coverage.

Planning ahead for big goals

Apart from your family’s current needs, think about whether you want to cover any future milestones or needs, such as leaving a small fund for your kids’ future education needs.

Review your protection gap periodically

Coverage needs change as life evolves. Revisiting your plans when you take on new responsibilities, such as a mortgage, caring for parents, or supporting children, can help ensure your protection stays relevant. A protection gap calculator can also offer a clearer sense of how your current coverage aligns with your family’s needs.

Seek guidance when unsure

If you would like a clearer picture of your protection gap, you can connect with an Income advisor. They can help you review your options and walk you through the next steps at your own pace.