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There’s a need to figure out the balance between protection and budget.

A guide on insurance protection

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<p>Having more choices is always a good thing but it certainly makes decision-making challenging. With the array of insurance plans in Singapore, it is mind boggling to figure out how to get the right protection for ourselves and our family. For the sandwich generation, getting the right insurance protection is even more important, for the responsibility of having to take care of both their children and their parents falls squarely on their shoulders.<br /><br />Despite the importance of insurance, some would rather remain ignorant on the coverage related to accidents, falling sick or premature death, as these are deemed as unpleasant or taboo topics. However, to be assured that people who matter most in your life are protected from financial hardships when the unexpected happens, getting sufficient insurance coverage is vital.<br /><br />It is of paramount importance to get the right type of insurance according to your needs. Remember, the earlier you get the appropriate insurance policies in place, the sooner you will be protected financially! Here&rsquo;s help to finding out more about your protection needs and how to meet them.</p>
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<h3>What insurance policies do I need?</h3>
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<p>While most people understand that they need insurance to be financially secure when facing unexpected challenges in life, a large majority are not certain about what type of insurance they need and how much protection they require. Without knowing what and how much to buy, one could end up being over-insured and financially strained, or you could be under-insured and face protection gap risks.<br /><br /> Purchasing the right type and correct amount of insurance depend on the individual&rsquo;s situation and the considerations include age, type of employment and the number of dependents. Here are xx general guidelines:</p>
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<p><img src="/iwov-resources/media/images/Marketplaces/nav/a-guide-on-insurance-protection/a-guide-on-insurance-protection-img01.jpg" alt="A guide on insurance protection" /></p>
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<h3>Income protection</h3>
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<p>It is especially important to get covered with life insurance if you have a family that is financially dependent on you. Such policies typically pay out a lump sum should you be disabled, critically ill, or are no longer around. This ensures that your family can continue with a similar standard of living even if you are no longer around. <br /><br />There are 2 common types of life insurance available and they include term and whole life insurance.<br /><br /> A <a href="https://www.dbs.com.sg/personal/articles/nav/protection/your-quick-guide-to-life-insurance?pid=sg-dbs-pweb-nav-a-guide-on-insurance-protection-txtlink-term-life-insurance" target="_blank" rel="noopener noreferrer">term life insurance</a> typically provides you with coverage for a specified period of time without any investment feature. It offers a lump sum payout in the event of death, terminal illness, and total &amp; permanent disability. You have the choice of adding riders to extend various coverage features.<br /><br /> For instance, a critical illness rider can offer additional coverage by extending your life insurance payout to when you get a critical illness diagnosis. This can help you cover the temporary loss of income and medical expenses while recovering.<br /><br /> A <a href="https://www.dbs.com.sg/personal/insurance/protection/protection-plans/lifereadyplus?pid=sg-dbs-pweb-nav-a-guide-on-insurance-protection-txtlink-whole-life-insurance" target="_blank" rel="noopener noreferrer">whole life insurance</a>, on the contrary, is a long-term plan covering the insured&rsquo;s life of up to 99 years. A key difference between a whole life insurance and term insurance is that the former accumulates cash value after a certain period. Such a plan pays out a sum of money upon the policyholder&rsquo;s death, or when the policy is surrendered. However, the downside is that the premiums are typically much higher compared to those of term plans, so you might end up being underinsured.<br /><br /> If you have a mortgage on your home in your name, you can consider taking up a mortgage term reducing insurance. It is a form of decreasing term insurance where the sum assured declines over time, in line with the decreasing outstanding loan amount. This helps to pay off your home loan upon death.<br /><br /> Do note that if you are using your Central Provident Fund (CPF) savings to pay for your monthly housing loan instalments for your HDB flat, it is mandatory to be insured under the Home Protection Scheme (HPS). The HPS is a mortgage-reducing insurance which protects CPF members and their families from losing their HDB flat in the event of death, terminal illness or total permanent disability by paying off the outstanding home loan amount. The HPS insures members up to age 65 or until the housing loan is paid up, whichever is earlier.</p>
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<p><img src="/iwov-resources/media/images/Marketplaces/nav/a-guide-on-insurance-protection/a-guide-on-insurance-protection-img02.jpg" alt="A guide on insurance protection" /></p>
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<p>All Singaporeans and Permanent Residents (PRs) are covered under <a href="https://www.dbs.com.sg/personal/articles/nav/protection/should-you-upgrade-your-MediShieldLife?pid=sg-dbs-pweb-nav-a-guide-on-insurance-protection-txtlink-MediShield-Life" target="_blank" rel="noopener noreferrer">MediShield Life</a>, a national health insurance plan that provides lifelong protection. It is administered by the CPF Board and helps to pay for/subsidise large hospital bills and selected costly outpatient treatments, such as dialysis and chemotherapy for cancer.<br /><br /> The coverage is meant for subsidised treatment in public hospitals (e.g. Class B2/C wards). If you prefer to cover charges for staying in Class A/B1 wards in public hospitals or private hospitals, you may wish to consider purchasing additional private insurance coverage, known as the <a href="https://www.dbs.com.sg/personal/insurance/protection/medical-health/myshield?pid=sg-dbs-pweb-nav-a-guide-on-insurance-protection-txtlink-Integrated-Shield-Plan" target="_blank" rel="noopener noreferrer">Integrated Shield Plan</a>. Premiums for MediShield Life can be fully paid using CPF Medisave savings.<br /><br /> As the incidence of pre-existing conditions is lower when you are younger, it is worth the while to consider taking up an IP earlier in life. After all, you can choose to downgrade to a cheaper plan when you get older and the premiums are higher. <br /><br /> Hospitalisation &amp; surgical policies cover expensive medical costs when the need for hospitalisation arises due to illness or injury. There are rider options, or enhanced benefits at additional premiums, to cover your portion of the bill known as &ldquo;co-insurance&rdquo; and &ldquo;deductible&rdquo;. Some of these policies also come with a hospital cash benefit that offers daily cash payouts during the time spent in hospital.<br /><br /> Being critically ill can be debilitating not just physically and mentally, but it can also take a toll on your financials. While you may have a health insurance in place that can help cover the cost of hospitalisation and medical treatment, it may not be sufficient due to specified caps or limits. This is where critical illness policies can help you with the expenses.<br /><br /> <a href="https://www.dbs.com.sg/personal/articles/nav/protection/understanding-critical-illness-insurance?pid=sg-dbs-pweb-nav-a-guide-on-insurance-protection-txtlink-Critical-illness" target="_blank" rel="noopener noreferrer">Critical illness</a> plans pay out a lump sum in the event that the insured is diagnosed to be suffering from one of the covered critical illnesses or has undergone a surgical procedure covered by the policy, to defray your expenses. Even though a critical illness can strike any individual at any time, understanding your family&rsquo;s health history can help to identify your risk propensity for certain illnesses or disorders. It is advisable to get critical illness coverage if you have higher-than-usual chance of having certain critical illnesses based on your family medical history.<br /><br /> Other healthcare plans cover doctor visits and emergency treatment, as well as long-term care in the event of disability. For a more holistic coverage, you can buy a personal accident insurance on top of your existing health insurance. A personal accident insurance provides a payout in the event you meet with an accident and incur medical expenses, or if you pass away or become permanently disabled due to an accident, food poisoning or infectious diseases that are covered under the policy.</p>
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<h3>Planning ahead for your children</h3>
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<p>We all want to give the best for our children and for most of us, their education is our main concern, as well as a major financial commitment. Starting to save for your child&rsquo;s tertiary education early is definitely a top priority especially with education costs rising over time.<br /><br /> One of the ways you can save for your child&rsquo;s university education would be through an education endowment plan. Higher education is usually quite costly and even if your child eventually enrols in a local university, you can still expect to pay a minimum of $30,000. With proper planning, you can use the cash payouts from an endowment plan to fund your child&rsquo;s tertiary education.<br /><br /> <a href="https://www.dbs.com.sg/personal/insurance/endowment/wealth-accumulation-plans/savvyendowment?pid=sg-dbs-pweb-nav-a-guide-on-insurance-protection-txtlink-savvyendowment" target="_blank" rel="noopener noreferrer">Endowment plans</a> are available as participating policies, which have guaranteed as well as non-guaranteed benefits. The guaranteed portion, or sum assured, is paid when the policy matures, or the insured person dies. The non-guaranteed portion comprises annual dividends in the form of a cash bonus, that comes from participating in the profits of the insurance company, or the funds it invests in. Hence, besides being used to fund children&rsquo;s tertiary education, endowment plans are a form of disciplined savings.</p>
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<h3>Gig economy workers and insurance</h3>
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<p>Singapore&rsquo;s gig economy is booming and there are many self-employed and freelance workers today. However, they face the danger of missing out on medical benefits as they are not covered by corporate insurance, unlike those who are covered by some form of group insurance provided by their employer. As such, it is essential for gig economy workers to have a more comprehensive insurance coverage, such as health, life, critical illness and disability insurance.<br /><br /> Since their salary is dependent on how much they work, gig economy workers such as ride-share drivers and freelance designers who are suffering from a critical illness may find their income adversely affected. With a critical illness plan in place, they can at least be assured of a lump sum payment to tide them over during their recovery period.<br /><br /> Disability income insurance can also provide financial help for those suffering from a loss of income due to an accident or illness that results in them not being able to perform the duties of their job. This is essential to gig economy workers since they don&rsquo;t get any any form of paid medical leave. If they are unable to work, payouts from the disability insurance can be a form of replacement income, although it may be less than their usual income. Do seek professional advice when getting disability insurance as the case for gig economy workers is more complex.</p>
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<h3>How much protection is required?</h3>
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<p>When deciding on how much insurance you should get, it is prudent to consider the number of dependents you have and the number of years before they become financially independent. Below is a table that illustrates how different family types have different level of needs for life insurances.</p>
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<p style="text-align: center;">Different family types have varying needs for life insurance</p>
<br />
<table style="font-size: 16px; vertical-align: top; color: #2e2e2e; margin: 0; border-top: none; border-collapse: collapse;" border="0" width="100%">
<thead>
<tr>
<th style="border-bottom: 2px solid #f33; padding: 8px 16px 8px;" width="50%">
<p><strong>Family Type</strong></p>
</th>
<th style="border-bottom: 2px solid #f33; padding: 8px 16px 8px;" width="50%">
<p><strong>Need for Life insurance</strong></p>
</th>
</tr>
</thead>

<tbody>
<tr>
<td style="border-right: 1px solid #e6e6e6; border-bottom: 1px solid #e6e6e6; padding: 8px 16px 8px;"><strong>Single person</strong></td>
<td style="border-bottom: 1px solid #e6e6e6; padding: 8px 16px 8px;">Low</td>
</tr>
<tr>
<td style="border-right: 1px solid #e6e6e6; border-bottom: 1px solid #e6e6e6; padding: 8px 16px 8px;"><strong>Dual income family with children</strong></td>
<td style="border-bottom: 1px solid #e6e6e6; padding: 8px 16px 8px;">Moderate</td>
</tr>
<tr>
<td style="border-right: 1px solid #e6e6e6; border-bottom: 1px solid #e6e6e6; padding: 8px 16px 8px;"><strong>Single income family with children</strong></td>
<td style="border-bottom: 1px solid #e6e6e6; padding: 8px 16px 8px;">High</td>
</tr>
<tr>
<td style="border-right: 1px solid #e6e6e6; border-bottom: 1px solid #e6e6e6; padding: 8px 16px 8px;"><strong>Sandwich generation with children and parents to support</strong></td>
<td style="border-bottom: 1px solid #e6e6e6; padding: 8px 16px 8px;">High</td>
</tr>
</tbody>
</table>
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<p>For life protection and especially if you have dependents, consider having insurance cover until you retire or when you no longer have dependants. For critical illness cover, it is recommended to use at least five years as the recovery period to calculate the potential income loss and any overseas and alternative treatment. This is because that is typically the period of time the average person needs to recuperate from a critical illness.<br /><br /> If you are still unsure about how much protection you need, consider an appointment with a DBS WPM or use the DBS NAV Planner tool to help you calculate the coverage you&rsquo;d need by considering the number of your dependents, existing insurance, and savings. Login to the NAV Planner to try it out!<br /><br /> At the same time, you can find out your protection gaps for both mortality and critical illness using the <a href="https://www.lia.org.sg/tools-and-resources/insurance-calculator-intro/insurance-calculator?pid=sg-dbs-pweb-nav-a-guide-on-insurance-protection-txtlink-Life-Insurance-Calculator" target="_blank" rel="noopener noreferrer">Life Insurance Calculator</a>, by filling in basic details of your personal profile and financial situation. The Life Insurance Calculator will then estimate how much additional coverage you need for complete life and critical illness protection.</p>
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<h3>4 steps to purchase insurance products</h3>
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<p><strong>1. Understand your insurance and financial needs</strong><br /><br /> Getting comprehensive insurance coverage in Singapore can be expensive. As someone who has to shoulder the responsibilities of supporting 2 generations financially, it is important to buy according to your needs and affordability.<br /><br /> Before you heed anyone&rsquo;s advice that you need to buy certain insurance, give it a second thought and do your own due diligence. What suits him may not suit you, and the amount of money he has budgeted for his premiums could differ from yours.<br /><br /> It is thus extremely important to understand your financial circumstances and needs first, before you start shopping for an insurance product. You can also use the digital financial advisory tool DBS <a href="https://www.dbs.com.sg/personal/nav/nav-planner.page?pid=sg-dbs-pweb-nav-a-guide-on-insurance-protection-txtlink-nav-planner" target="_blank" rel="noopener noreferrer">NAV Planner</a> to help you find out how much coverage you need. <br /><br /> <strong>2. Compare pricing and products among insurers</strong><br /><br /> Similar plans provided by different insurance providers are usually priced quite competitively, but there could be slight differences in coverage. When comparing plans, look into the detailed coverage and exclusions and consider the insurers&rsquo; track record in processing claims. In addition, don&rsquo;t forget to take your budget into consideration!<br /><br /> <strong>3. Get advice from a suitable financial advisor </strong><br /><br /> You can always seek help from an advisor if you need further explanation on the coverage and guidance. Make sure the financial advisor is able to answer all your doubts and questions when assessing if he/she is suitable for you. A good advisor should be able to provide you with personalised solutions that cater to your needs and budget.<br /><br /> That said, it is still important to have some knowledge by reading up first, so that you ask the right questions and make informed decisions. You should also have a good understanding of your financial goals, dependents, existing insurance plans and investments. This will allow your advisor to provide you with a more customised solution to better meet your needs. <br /><br /> <strong>4. Free look period</strong><br /><br /> All insurers in Singapore grant at least a 14-day free look period that starts from the day you get your policy. Do use this period to look through the policy documents and assess if this is what you really need. Should you decide that it is unsuitable, you can request to cancel the policy and get a refund of your premiums minus the medical and administration fees incurred, if any.</p>
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<p>Check out DBS NAV Planner to analyse your real-time financial health. The best part is, it&rsquo;s fuss-free &ndash; we automatically work out your money flows and provide money tips.<br /><br /><a href="https://internet-banking.dbs.com.sg/IB/Welcome?pid=sg-dbs-pweb-mp-articles-nav-a-guide-on-insurance-protection-img-log-in-now&amp;SERVICE_NAME=fp_dashboard"><img style="width: 150px;" src="/iwov-resources/media/images/Marketplaces/nav/nav_login_button.png" alt="nav-login" /></a></p>
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<p style="color: #909090; font-size: 13px;"><strong>Disclaimers and Important Notice</strong><br />This article is meant for information only and should not be relied upon as financial advice. Before making any decision to buy, sell or hold any investment or insurance product, you should seek advice from a financial adviser regarding its suitability</p>

A guide on insurance protection | DBS Singapore

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