Income Protection for Foreigners in Singapore

Health insurance is the first layer of financial security in the event of illness, as these plans can reimburse you for your hospitalisation expenses . But what about your living expenses, or any treatments not covered under your medical insurance? Read more on Not all cancer treatments will be covered

Here’s why you should get a 2nd layer of security using life / term plans:

  • Financial leverage: Every $1 gets you 500- 1000x coverage to protect your loved ones
  • Lumpsum payout: This allows you to choose how you’d like to allocate the funds, such as funding living expenses, or getting a second medical opinion. In addition, the payout also buys time for you to sort out matters in Singapore, before returning to your home country.
  • You may choose to continue coverage even when you return to your home country

Choosing Life or Term plans for Foreigners

I like to use the analogy of “Buying a property” vs “Renting a property” Life plans are like “Buying a property”, they usually cost 3-4x more than life plans, but they accumulate cash value and belong to you at the end of premium term (lifetime coverage). Term plans are like “Renting a property”, they are much cheaper, but have no cash value and they terminate at the end of the cover term. Tips for Foreigners!

  1. If you are unsure whether you have short or long-term plans in Singapore, you may take up a term plan for temporary low-cost coverage.
  2. Always choose a term plan with guaranteed “renewability” and “convertibility” features as these give you the flexibility to extend the coverage term, or convert to a life plan in future without medical declaration.
  3. If you have long term plans (5-10yrs or more) in Singapore, you may wish to implement a limited-payment life plan with premium term of say 10yrs, with lifetime cover.
  4. Premiums are flat based on entry age. But if you delay by a year, premiums increase 5% annually based on your attained age.

Special opportunity during market downturn A third option available is “Indexed Universal Life”, a unique income protection plan which provides lifetime insurance protection with investment growth potential. This helps you take advantage of the current equity market correction. Other benefits include:

  • Protection against further market downturn, with minimum floor rate
  • Accessibility to cash value without reducing sum assured
  • Flexible premiums

I will be doing a separate article on this, so do check back here for more updates.

How much income protection do you need?

Did you know that your good health can be measured in money terms?

It’s called your Economic Value, which is your Annual income multiplied by no. of years to age 65. For example, if you are 40yrs old earning $100,000, then your economic value would be $2,500,000 ($100k x 25yrs)! Because if something happened to you yesterday, you would have lost this future earning capacity.

What happens when you leave Singapore?

Worldwide coverage

In general, most life and term plans in Singapore provide worldwide coverage so you can choose to continue with these policies even if you leave Singapore or re-locate elsewhere. As long you keep a Singapore bank account open to service premiums and receive payouts, these plans can continue. Do remember to update your insurer for correspondence and tax residency matters.

Residency loading

Some plans impose “Residency loading”, which means you may have to pay higher premiums depending on your residency. For example, if you are moving to developed countries like Australia, likely there is no increase in premium. However, if you moving to developing counties like Vietnam, you may have to pay 50-100% more on your premiums.

Tax residency

If you are moving to countries with double taxation, please check that these life / term plans meet local requirements and taxation rules.

What’s Next?

Related articles: Financial Planning for Foreigners in Singapore 4 ways to Grow your Wealth for foreigners in Singapore SRS – Save Tax & Invest the Smart way Subscribe to my Content for more useful info!

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.

Published By:

Chan Wen Li Winnie

Winnie is a Certified Financial Planner with more than 10 years experience in financial advisory services, helping many of her clients to achieve their financial dreams, while protecting their families.

With more than a decade of insurance claims experience, she has tangibly helped many clients receive their claims pay-outs successfully, relieving their financial burden.

As part of her community outreach program, she finds it very meaningful to conduct financial talks for companies where the staff can benefit from the talks. Some of the companies who have benefitted include National Kidney Foundation, Singapore National Eye Centre and Singtel.

Despite her busy schedule, she enjoys working out at the gym and playing the piano (currently pursuing Grade 6 ABRSM).


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