Making sense of insurance amid uncertain times

Making sense of insurance amid uncertain times

With a wide range of insurance policies available, it is vital to understand the differences before you commit.

Insurance is crucial to better prepare for life’s uncertainties.

Paradoxically, the wide and complex range of insurance policies could add to anxiety — and uncertainty.

So what to buy and how to decide? But first, why bother? 

Get your priorities right

Experts reason that with the right policies, you can:

  • Get your money to work harder

  • Look after yourself and loved ones should you lose your income from illness, disability or accidents

  • Build a bigger nest egg for your retirement

Insurance also protects you against rising healthcare costs and inflation.

And with the uncertainties brought about by the pandemic, more Singaporeans are prioritising their financial well-being. 

From January to September, Singapore’s life insurance industry recorded $4.11 billion in new sales, up 38 per cent from the same period last year, according to the Life Insurance Association (LIA).

Insurance is a long-term commitment, so do your due diligence. Be certain that you know exactly what you’re getting, and getting into, with each policy. MS EVY WEE, head of financial planning, investment and insurance solutions, DBS Bank

Get your basics right

What should you consider when picking policies, and how can you make sure that a policy is right for you? 

Ms Evy Wee, DBS Bank’s head of financial planning, investment and insurance solutions, has a few tips. 

Before you venture into the insurance market, set aside an emergency fund of three to six months of your expenses, or up to 12 months if you are self-employed.

“You should also check whether you have existing policies under your parents, Central Provident Fund savings and deposit savings,” says Ms Wee.

Firstly, ask yourself if you have adequate hospitalisation coverage. Every Singaporean and permanent resident is covered under the basic hospital plan MediShield Life — but is it enough for your needs? 

She explains: “If you are hospitalised without sufficient coverage, it renders all other plans useless because your funds will all go towards paying your bills.”

From January to September, Integrated Shield Plans (IPs) and IP riders — which provide more coverage for hospital bills — made up 82 per cent of all new premiums for individual health insurance in Singapore. The remaining 18 per cent came from other medical plans and riders.

Once you have a hospitalisation plan, you can consider other protection-type policies, including disability insurance, critical illness coverage and life insurance.

The LIA recommends being insured for nine times your annual income in case of death, and five years of expenses when it comes to critical illness coverage, as that is the average amount of time that people need to recover from such illnesses.

“It is critical to identify protection gaps — the shortfall in the amount of cover needed to maintain living standards of dependants — and plug them,” says Ms Wee.

“At the same time, you don’t want to be over-insured and spend unnecessary money on higher premiums than you need. Where necessary, get professional help to advise you.” 

After you have taken care of your healthcare needs, there are endowment policies, which focus on savings, and investment-linked policies, which are customisable and enable you to grow your money, subject to market risks.

People should review their policies annually. Ms Wee explains: “Our needs and goals change as we grow older. Consider increasing your insurance coverage gradually to prepare for unexpected health problems that might come as you age.

“Building up your insurance bit by bit will give you more peace of mind. By starting with less coverage, you won’t have to fork out too much early on when you have just entered the working world.”

5 questions before getting started 

Ask yourself these questions to decide on the policy you need:

  • What are my financial objectives and needs?

  • What are my existing insurance plans (types of cover, sums assured and potential benefits) and investments?

  • Who are my dependents, and how long will they be dependent on me?

  • How much do I need to support them during this period of dependency?

  • How much can I set aside to pay my insurance premiums?

Get your checks right

As you explore your options, you will get documents detailing the policies to help you make informed choices. These contain product summaries, benefit illustrations and other information.

Read these carefully, cautions Ms Wee. What do these mean?

  • The product summary describes the policy’s features, benefits, fees and charges.

  • The benefit illustration shows the policy’s costs and charges, and the money you could receive if you make a claim, surrender (cancel the policy), or hold it until maturity.

  • The benefit illustration sets out both guaranteed and non-guaranteed benefits. One way to assess a policy is to look at the guaranteed benefits, since this is the amount that the insurer must pay. This figure should at least match the total premiums paid. 

 “You can compare the potential returns of policies with other types of investment products, remembering that every product comes with different risks,” says Ms Wee.

“If you do not find the returns attractive, you may want to buy a term plan for protection, and invest your money in other products.” A traditional term plan provides life insurance for a specified number of years with no cash value.

Note also that while insurers usually assume two investment returns rates (set by LIA) — currently 3 per cent and 4.25 per cent for endowment policies, and 4 per cent and 8 per cent for investment-linked policies — these are meant as guides. 

You may get higher or lower returns depending on the investments’ actual performance in future economic conditions.

Given that these are sizeable financial commitments, Singaporeans do have some protections when choosing the right policy for their needs.

When you receive your policy document, you have 14 days to review it, and can get a refund if you decide to cancel it during this “free-look” period. 

The Policy Owners’ Protection Scheme, administered by the Singapore Deposit Insurance Corporation, also covers some insurance policies if the insurer fails, subject to caps where applicable.

But you should do your sums, and make sure that you can afford the premiums for the duration of the policy. “People who surrender their plans prematurely are likely to suffer losses. In some cases, they may get nothing back,” says Ms Wee.

“Insurance is a long-term commitment, so do your due diligence. Be certain that you know exactly what you’re getting, and getting into, with each policy.”

Understanding the jargon

Premium: The amount of money you pay for your policy. It can be a one-time payment, or on a monthly or yearly basis. It may be level or increases with age

Sum assured: The amount of money the insurer pays to you when the insured event happens

Pre-existing conditions: Medical illnesses or injuries that you have before starting your policy

Exclusions: Conditions or circumstances where the insurer will not pay you. Pre-existing conditions are usually excluded in policies’ coverage

Rider: Extra benefits you can buy to add to your policy

Loading fee: An extra premium charged for specific reasons, such as a family history of cancer or diabetes

This is the first of a five-part series on insurance in partnership with DBS

News Related


Inflation and omicron are weighing on markets. Here's what to keep in mind

The “Charging Bull” statue at Bowling Green in New York's Financial District.Drew Angerer | Getty Images As the U.S. stock market is whipped by rising inflation and the new omicron ... Read more »

Student-loan forgiveness would mean everything to Latinx students stuck in a debt cycle

The amount of student loan debt in the United States is $1.8 trillion dollars — and counting. The price to get an education has never been more expensive. The student ... Read more »

Three ways to invest in your employees in 2022

Customer second, employees first. That is the adage of Sir Richard Branson, founder and chairman of the Virgin Group. A Gallup report says employees who are engaged are more likely ... Read more »

Never mind how Omicron blows, no shortage of economic forecasts

(NYTIMES) – The Omicron variant of the coronavirus could be dangerous enough to disrupt the lives of virtually everyone on the planet. Or it could represent a blip in a ... Read more »

Transforming Asia's food system to tackle our food and climate crises

Technology could help the agri-food sector transform by bolstering climate resiliency and sustainable food production. If you want more of what you like to eat, it’s time to think and ... Read more »

Here's what a lot of college grads don't know about their first job offer

Throughout our lives as students, we work hard to get a good education that will lead us to a solid job and fruitful career. But we aren't prepared for what ... Read more »

You need at least $1 million saved to retire in these cities

Sporrer/Rupp | Image Source | Getty Images How much do you think you'll need to save for retirement? If you're in one of these major cities, the answer will be ... Read more »

These are the five best states for drivers in 2021

Commuting doesn't have to be a bad thing. Ohio ranked as the best state for drivers in 2021, according to a study by Bankrate. The best states for drivers include ... Read more »

Smart moves to make with your retirement portfolio before the end of the year

Cravetiger | Moment | Getty Images As you make your to-do list to wrap up the year, don't forget to include checking on your retirement portfolio. There are several moves ... Read more »

Making New Year's resolutions during Covid has paid off: Fidelity survey

Uwe Krejci | Stone | Getty Images New Year's resolutions can be easy to make and even easier to break, but having a goal can help keep you upbeat and ... Read more »

Crypto is the 'top contender' for correction, money managers say

NEW YORK (BLOOMBERG) – By many counts, 2021 was the year cryptocurrencies were finally embraced by institutions. Now those same money-managers say the asset class is ripe for a big ... Read more »

Figuring out these three budget numbers will help you pay off debt and save more for retirement in 2022

The start of a new year can be a great time to revisit your budget. Your first steps should be figuring out how much money you actually have and finding ... Read more »

Covid mortgage bailout is expiring. Here's what to do if you still can't pay

courtneyk | E+ | Getty Images Covid relief programs allowed millions of struggling Americans to pause mortgage payments, and many of those bailouts are now expiring, putting cash-strapped borrowers at ... Read more »

BlackRock, Goldman opt for China over more pricey India stocks

(Bloomberg) In a change of tone over the world’s two biggest emerging markets, global investors overseeing billions of dollars are slowly starting to favour China over India – reversing a ... Read more »

Inflation-proof gifts with your time and schmaltz

Consider the gifts of tech, travel and time, says the writer. (NYTIMES) If groceries, petrol or cars were any part of your budget this year, inflation has hit you hard. ... Read more »

Australia's $3.3 trillion pension pot reaps dividends with ESG

Australians are moving their money to reap not only benefits for society and the environment, but also their retirement savings. (BLOOMBERG) Responsible investing is paying dividends for Australia’s A$3.4 trillion ... Read more »

Investors snap up metaverse real estate in virtual land boom

A tower in Decentraland that hopes will generate revenue from leases and advertising. Digital realms may appear as cartoonish, gummy-coloured fantasy worlds, or digital applications of places we know. ... Read more »

Four keys that could unlock a better, more sustainable world

To reduce the world’s reliance on fossil fuels and reach net-zero emissions by 2050, global investments in clean energy must triple by the end of the decade, says the International ... Read more »

How much you'll need to invest to earn $35,000, $40,000 or $50,000 per year in interest for retirement

Living off your investment returns can help remove one of the biggest fears about life after leaving your job: Will my money outlast me? Once you decide how much you ... Read more »

Did you work from home this year? When you can claim the home-office tax deduction

Did your “Great Resignation” lead you to start a business or become your own boss this year? You may be able to write off the cost of your home office ... Read more »

This is how you can make the world a better place as you invest

With the range of investment opportunities offered by Prudential, investors can protect and grow their wealth while playing their part to leave a better world for the future. Our roles, ... Read more »

How much you can expect to get from Social Security if you make $30,000, $35,000 or $40,000 per year

The largest Social Security cost-of-living adjustment increase in decades is set to go into effect in 2022. The 5.9% pay bump was meant to help seniors cover the cost of ... Read more »

How a government shutdown would affect your Dec. 15 child tax credit payment

lisegagne | E+ | Getty Images Millions of American families with kids are set to receive the last of six advance monthly child tax credit payments Dec. 15. Yet, just ... Read more »

This millennial saved $100,000 and quit her marketing job by age 25. Here's how she did it

Having an emergency fund should be a cornerstone of household budgets. Experts commonly recommend you have at least three months of expenses in savings to handle unexpected setbacks. But how ... Read more »

The metaverse, crypto and EVs are among 2021's big tech winners

SAN FRANCISCO (BLOOMBERG) – When Americans gather around the Thanksgiving table this week, the blistering rally in technology, electric vehicles and crypto-related stocks is likely to be a part of ... Read more »

7 ways college students can help save the environment — and not go broke

The environment is one of the top concerns for Gen Z — even amid a pandemic. And, while some products that are billed as sustainable cost more, there are a ... Read more »

Fintech tools take the guesswork out of investing

The recent integration of Central Depository investment data to the SGFinDex further democratises financial planning for investors of all levels. When the pandemic hit last year, human resources executive Ms ... Read more »

If you don't get a 6% raise, are you taking a pay cut due to inflation? Here's what experts say

A worker helps a customer at the Presidente Supermarket in Miami on April 13, 2020.Joe Raedle | Getty Images Workers across the U.S. are wondering how rising inflation might be ... Read more »

Suze Orman: Can you afford to join the Great Resignation? Answer these 5 questions

Charnchai | iStock | Getty Images Working is not working out for a record number of us. According to federal data, the number of people quitting has never been higher ... Read more »

How much you need to invest per month to retire with $500,000, $750,000 or $1 million, broken down by age

Saving for retirement traditionally takes more than 40 years of work. Given that kind of time, investing a little extra cash every month can pay off exponentially in the stock ... Read more »

As inflation rises, here's where to find opportunities to make and save money

LeoPatrizi | E+ | Getty Images Rising inflation has Americans worried about purchasing power and their retirement plans. Yet there are some opportunities to make and save money in this ... Read more »

The 'Great Resignation' may help you land your dream job. What to know

Ben Hasty | MediaNews Group/Reading Eagle | Getty Images Thinking of quitting your job soon? It may help you find a better gig. Many Americans are leaving their current employers ... Read more »

Temasek offers Singapore retail investors rare opportunity to buy its bonds

SINGAPORE – Temasek Holdings launched a $350 million five-year bonds sale on Monday (Nov 15), part of which will be available for purchase by retail investors in Singapore. The state ... Read more »

Seizing Asia's investment moment in an increasingly multipolar world

To effectively position for Asia’s long-term opportunities, it is vital for business leaders and investors to understand the context and the dynamics of underlying trends in the region and how ... Read more »

TikTok Resumes and Instagram portfolios: How college students are using social media to find jobs

College students are on social media pretty much every day but when it comes to their job search, more than a third said they don't use social media at all, ... Read more »

Better to be smart than lucky

“I’d rather be lucky than be smart!” A lecturer in fund management for my Master of Science in Applied Finance course used to repeat this mantra in class. He used ... Read more »

How investors can have more say

Big index fund companies such as BlackRock, Vanguard, State Street and Fidelity are typically among the largest shareholders of publicly traded companies. Yet their ultimate owners – the millions of ... Read more »

Risk of having too much cash on flights in US

Travellers wait to drop their baggage at Miami International Airport in September 2021. (NYTIMES) – Odd-job worker Kermit Warren had about US$30,000 (S$40,600) cash on him when he flew from ... Read more »

Tips to avoid online shopping scams

A steady rise in online card fraud in recent years accelerated during the pandemic as more people shopped on the Internet. (NYTIMES) – You are expected to do much of ... Read more »

The money woes in Squid Game are real

In the hit TV series Squid Game, as in real life in South Korea, discrimination against women, the elderly and migrant workers is deeply entrenched, and many younger people find ... Read more »
On you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic