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The Most Common Insurance Policies Purchased in Singapore

On average, Singaporean households allocate approximately 5.5% of their monthly expenditures to healthcare. With the continually increasing healthcare expenses in Singapore, obtaining insurance coverage has become an essential aspect of responsible financial planning. But the question remains: how much insurance is adequate?  The insurance sector offers a broad spectrum of frequently sought-after insurance policies, tailored to meet a wide array of individual needs and preferences. As per the data provided by the Monetary Authority of Singapore (MAS), Singaporeans exhibit a discernible pattern in their preferences when it comes to insurance policies. To answer this, let’s take a step back and revisit the fundamentals. Here are five essential types of insurance policies to consider including in your portfolio.

Types of Insurance Policies Commonly Purchased

These choices are driven by various factors, including individual needs, financial security concerns, and regulatory requirements. Let’s delve into the specifics of the most popular insurance policies in Singapore:

Health Insurance

Health insurance is a paramount consideration for many Singaporeans. This type of insurance offers coverage for medical expenses incurred due to illness or injury. It’s the most sought-after insurance policy in the country, with approximately 63% of the population having some form of health insurance. Given the high cost of healthcare services in Singapore, health insurance provides a crucial safety net for individuals and families. As Singaporean citizens, you and your family are automatically enrolled in MediShield Life, ensuring essential healthcare coverage. This coverage extends even if you are a Permanent Resident. However, it’s essential to be aware that while MediShield Life provides valuable coverage, it does have limitations.

If you aspire to enjoy a higher standard of hospital accommodation or access to an increased policy coverage limit, considering an Integrated Shield Plan is a prudent choice.

Some of the premier Integrated Shield Plan options offer an extensive coverage ceiling, reaching as high as SGD1.2 million per annum. This elevated policy coverage limit proves invaluable in light of Singapore’s escalating healthcare costs. Having access to a more substantial coverage amount provides peace of mind, ensuring that you are well-prepared for any unforeseen medical expenses.

Apart from the augmented coverage limit, Integrated Shield Plans offer a multitude of additional benefits:

  • Pre-hospitalisation and Post-hospitalisation Expenses: Typically covering up to 180 days before and 365 days after hospitalization, these plans provide comprehensive support throughout your healthcare journey.
  • Coverage for Planned and Emergency Overseas Treatment: Integrated Shield Plans extend their reach beyond Singapore’s borders, offering coverage for both scheduled and unforeseen medical treatments abroad.
  • Access to a Wide Range of Private and Restructured Hospitals: These plans grant you the flexibility to choose from a vast network of private and restructured hospitals, ensuring that you receive quality care tailored to your needs.

Considering the many advantages offered by Integrated Shield Plans, it is highly recommended to explore this option for all members of your family. By doing so, you can ensure that you and your loved ones have access to the highest standard of healthcare without any lingering concerns.

Life Insurance

Life insurance is the second most popular insurance policy in Singapore, with around 56% of the population holding some form of coverage. This type of insurance serves as a financial safeguard for the dependents of the policyholder in the unfortunate event of their demise. Life insurance helps ensure that loved ones are financially supported, and it is often considered a vital component of comprehensive financial planning.

Motor Insurance

Motor insurance is mandatory for all motorists in Singapore. It provides coverage for damages to one’s own vehicle and the property of others in the event of an accident. Given the dense traffic and stringent regulations, motor insurance plays a crucial role in safeguarding both drivers and their vehicles.

Home Insurance

While not compulsory, home insurance is a valuable option for homeowners and tenants alike. This insurance policy covers damages to the home and its contents resulting from various disasters such as fires or floods. It provides peace of mind by protecting valuable assets and belongings from unexpected events.

Travel Insurance

For those planning overseas travel, travel insurance is highly recommended. It offers coverage for medical expenses, trip cancellations, and lost luggage during international trips. Considering the uncertainties associated with travel, having travel insurance can be a smart decision to mitigate potential financial risks.

In addition to these popular insurance types, there are several other insurance options available in Singapore, including disability insurance, critical illness insurance, and long-term care insurance. The suitability of a particular insurance policy depends on individual needs and circumstances, making it essential to assess one’s unique requirements before making a choice.

Types of Insurance Policies Often Overlooked

However, there are several insurance policies that are often overlooked by Singaporeans, despite their affordability and potential significance. These include:

Long-Term Care Insurance

This policy assists in covering the expenses associated with extended care, such as nursing home or in-home care. Unfortunately, many Singaporeans tend to disregard long-term care insurance until it becomes an urgent necessity.

Income Protection Insurance

This insurance provides a monthly income when you are unable to work due to illness or injury. Though it can be a financial lifeline during a job loss or extended absences from work, some individuals in Singapore perceive it as cost-prohibitive and thus overlook its benefits.

Critical Illness Insurance

This policy offers a lump-sum payout upon diagnosis of critical illnesses like cancer or heart disease, helping to manage medical bills, lost income, and other financial burdens. Despite its valuable coverage, many Singaporeans believe they are in good health and do not see the need for critical illness insurance. The Life Insurance Association (LIA) of Singapore has identified a list of 37 critical illnesses that must be included in critical illness insurance plans within the country. A selection of these critical illnesses comprises:

  • Major cancer
  • Major burns
  • End-stage lung disease
  • Multiple sclerosis
  • Progressive Scleroderma
  • Primary Pulmonary Hypertension
  • Muscular Dystrophy

Personal Accident Insurance

Providing a lump-sum payment for accident-related injuries, regardless of fault, this insurance can assist in covering medical treatment, lost income, and other associated expenses. However, many Singaporeans underestimate their susceptibility to accidents and thus opt out of personal accident insurance.

Choosing the right insurance policies should be based on your individual circumstances and needs. If you’re uncertain about which insurance suits you best, it’s advisable to consult a financial advisor who can offer tailored guidance. Before purchasing any insurance policy, it is imperative to conduct thorough research and compare different options.

Understanding the terms and conditions of the policy is equally important to ensure that it aligns with your specific needs and provides the level of coverage you require. By making informed decisions about insurance, Singaporeans can better protect themselves, their families, and their assets in an ever-changing world.

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