Singapore attracts numerous talented young individuals from Asian countries who come here to study and work. The benefits of living in Singapore are clear:
However, Singapore is often ranked as one of the most expensive cities in the world, and medical expenses here can be beyond the reach of an average family. Therefore, the first step to settling down and thriving in Singapore is to transfer potential financial risks to insurance companies, ensuring that your hard-earned money isn’t all spent on hospital bills due to illness.
With 22 insurance companies in Singapore, each offering 20-30 different products, the market can be quite overwhelming. As a new immigrant, it’s important to cut through the complexity and ensure that every dollar spent on insurance is worthwhile. This article highlights the three most essential types of insurance you need in Singapore.
Every Singapore citizen or permanent resident is covered under the basic healthcare system, MediShield Life. This lifelong health insurance covers a large portion of medical expenses in public hospitals, specifically in B2 and C class wards.
However, if you prefer better hospital conditions, such as B1 or A class wards in public hospitals or private hospitals, MediShield Life alone won’t be sufficient. This is where Integrated Shield Plans (IP) come in. IPs are commercial insurance plans that build on the basic national healthcare coverage, providing enhanced benefits. It’s important to note that the coverage from MediShield Life and IP are not overlapping; IPs supplement the MediShield Life plan.
Benefits of IP:
Medical insurance is the most crucial insurance in Singapore. MediShield Life premiums can be paid using CPF (Central Provident Fund), and the main premium of IP can also be paid using CPF. For those without CPF, local medical insurance can be paid fully in cash. Once Singapore Permanent Residency status is obtained, the insurance company can be informed to update the information so that the main premium can be paid using CPF.
Life insurance is particularly important for individuals with families and children. Unlike critical illness insurance, life insurance is relatively straightforward as it primarily covers death, with most policies also including an additional rider for total permanent disability. The recommended coverage amount is typically 10 times the annual household income. For example, with an annual income of SGD 100,000, a life insurance policy with a coverage amount of SGD 1 million is advisable.
Term life insurance premiums in Singapore are very competitive compared to other countries and regions, and as long as the insured person is not too old, the premiums are quite affordable.
Critical illness insurance differs from medical insurance in that it provides a lump sum payment upon diagnosis of a critical illness (such as stroke, heart disease, cancer, etc.), rather than covering hospital and surgical expenses on a reimbursement basis. The premium for critical illness insurance increases with age, so it is advisable to obtain coverage as early as possible.
Recommended Coverage Amount for Critical Illness Insurance:
The suggested coverage amount is typically 5 years of annual income. For example, with an annual income of SGD 80,000, it is recommended to have critical illness insurance with a coverage amount of at least SGD 400,000. This is because the recovery period for major illnesses is generally around 5 years. The lump sum payment from the insurance can alleviate income concerns, reduce work pressure, enable lifestyle changes, and allow for a stress-free recovery.
Critical illness insurance comes in various forms, including lifelong and term policies, with options for cash value and non-cash value (pure consumption type). This can be complex, and if you are interested, we can discuss it further in person.
While there are many insurance products available, focusing on these three essential types — medical insurance, life insurance, and critical illness insurance — will help ensure financial stability and peace of mind while living in Singapore. It’s crucial to make informed decisions to protect yourself and your family from unforeseen financial burdens due to medical emergencies.
Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
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