Insurance Singapore Guide — All You Need to Know Before Buying Your First Plan

When you’re young and naive and believe that everything will work out somehow, it’s pretty hard to imagine ever needing to buy insurance.

Yet, getting your insurance portfolio in order is probably one of the best things you can do for your finances. And in fact, it’s best to do it while you’re young and healthy.

To help you make sense of the world of insurance so you can compare the different insurance plans, we have crafted this comprehensive guide. Consider it your very own Idiot’s Guide to Insurance in Singapore.

Contents

1. What types of insurance are there?
2. Top 5 insurance companies in Singapore
3. Life insurance – what is it & who should get it?
4. Health insurance – what should you know before buying?
5. Travel insurance – how do you choose the right one?
6. Other types of insurance you may come across
7. Final note: it pays to compare insurance in Singapore

 

Types of insurance in Singapore

If you’re in your 20s, insurance isn’t likely to be among your fave things to talk or think about. Disease, death and disaster are probably the last things on your mind. Of course you haven’t started planning for those events.

So you’re probably totally unprepared when your ex-schoolmate, who’s now at Prudential, meets you for coffee and asks you that dreaded question… “What kind of insurance coverage do you have?” (Probably zilch, right?)

You may feel rather embarrassed to reply honestly. But that’s actually pretty normal for young Singaporeans. Don’t feel too pressured to commit to an insurance plan until you’ve gathered enough information.

For a start, do you even know what insurance is?

You might have an inkling that it’s supposed to help you when things are bad, like if you fall ill or someone dies. But insurance is first and foremost a financial product. You can’t call your insurance agent for a free therapy session, because that’s not her real job. Her job is to help with the paperwork so you can get hold of a financial payout.

And did you know that there are not 1, not 2, but over 20 different types of insurance? The most common types that younger Singaporeans would know about are:

• Life insurance
• Health insurance
• Travel insurance

There’s also:

• Home insurance
• Child insurance
• Maid insurance
• Car insurance
• Pet insurance
• Personal accident insurance

Basically, anything you can imagine spending money on, there’s probably some form of insurance for it.

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Top 5 insurance companies in Singapore

There are hundreds(!) of insurance companies in Singapore, so it’d be crazy to list them all out. But you would definitely have heard of the top 5 insurance companies in Singapore…

• NTUC Income: The NTUC brand hardly needs any introduction. Beyond supermarkets, the co-op also offers life, health and general insurance. NTUC Income was named the top company in Singapore’s insurance sector in 2017.
• Great Eastern: In 2nd place is GE, a life insurance firm that’s among the most established insurers in the market. GE Life has been around since 1908 and has served over a million clients.
• Prudential: Occupying 3rd place is Prudential, another life insurance company that’s been around since 1848 – an unthinkably long time! – has 24 million clients worldwide. They’re also a market leader in investment-linked plans, and manage over $7.5 billion in funds.
• AIA: Ranked 4th among the Singapore insurance companies, AIA has been in Singapore since 1931. They’re known for their life insurance policies and variations of it such as medical, accident, and critical illness protection.
• Aviva: 5th place. Singaporean guys should know this one. Aviva is the appointed insurer for National Service, so you’ve probably been under their protection before. They’re known as a composite insurer as they provide life insurance as well as non-life insurance (property, motor and travel).

Other names that you might have heard of are FWD, AXA, Manulife and Tokio Marine. These are not quite as big in Singapore, but still have a substantial share of the market.

Note, though, that big doesn’t always mean best. While “branded” insurers like GE or Prudential do give you that feeling of assurance, they might not necessarily offer the best plans or most affordable premiums.

It’s always good to know what you’re looking for in each product and be able to compare insurance plans from different companies.

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Life insurance in Singapore — what is it & who should get it?

A life insurance policy pays a certain sum of money (known as “sum assured” in insurance jargon) when something bad happens to you – accident, injury, total permanent disability (TPD) or death.

Usually the payout varies depending on how severe the outcome is. It’s meant to compensate your reduced earning ability – so it’s not pegged to the cost of medical treatment, for example.

The money is meant to help your family if you’re not able to support them or are no longer around to do so. So, it’s really only necessary when you have kids, or if you have other dependents such as siblings or parents.

When you’re considering buying life insurance, the terms “whole life” and “term” will definitely crop up. Don’t be fazed. They are just 2 types of life insurance.

Term life insurance: The cheaper of the two, term life insures you for the duration you choose (10 to 30 years). You’d usually choose this if you’re concerned about family, as the term should cover your life up until your kids are financially independent. Here’s an example:

With term life, the main “drawback” is that you don’t get a single dollar back if you survive the term without dying or getting into an accident. 

Whole life insurance: This variation covers you for life and is a lot more expensive. And we mean a lot. Like, $500/year (term life) vs $13,000/year (whole life) kind of “a lot”.

Despite this stark difference, many Singaporeans like to buy whole life insurance because there is a cash payout you can get at some point… even if you haven’t died by then. Here’s an example:

There are many subtypes of whole life insurance. Endowment plans are a common one. These function as a retirement savings plan or education savings plan, with the idea that you get a big payout when it’s time to retire or your child goes to uni.

Another popular type is ILP (investment-linked plan) which is sort of an investment plan with an insurance feature built into it. It’s undeniably attractive, but with any investment product, there are risks involved.

For more about life insurance, read Life Insurance in Singapore – The Basics of Whole Life and Term Insurance.

When you get to the point of needing to buy life insurance, you would have a better idea of what sort of sum assured you want.

If you’re wondering how much insurance coverage you need, a common rule of thumb for the sum assured is “11 times your annual income”.

This means that if you’re earning $2,800 a month as an entry-level executive, you’ll need life insurance with a sum assured of $369,600.

But really, the sum assured varies from case to case, because the amount is really how much money your family needs to survive comfortably without you.

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Health insurance in Singapore — what should you know before buying?

Health insurance covers the costs of healthcare in Singapore (which as we all know, isn’t exactly cheap). This includes hospital bills, medical treatments and possibly other health-related expenses.

Imagine you get into an accident – non-fatal, thankfully – and are hospitalised. If you buy life insurance, you’d get a cash payout to help your dependents get by while you’re unable to work. Whereas with health insurance, you’d submit the hospital bill to the insurer and get them to foot most of it.

Sounds pretty good, right?

Actually, all Singaporeans and PRs already have basic health insurance – MediShield Life. You’ve been paying the premiums through your CPF MediSave account.

However, MediShield Life coverage is basic. Generally it pays for your hospitalisation bill, but only in a B or C ward at a public hospital. If you want to stay in an A ward, you’d have to top up yourself. And post-hospitalisation recovery – like follow-up visits to the doc – are generally not covered.

Think of it this way. MediShield Life is like the cheapest phone plan offered by your telco, but it only gives you 1GB of data and 30 minutes of talktime. You could live with those limits… but if you exceed them, you need to top up.

Many Singaporeans choose to boost that basic coverage with an Integrated Shield Plan (IP). It’s like upgrading to a better plan with a more reasonable 6GB of data. IPs cover you at A wards or even private hospitals so you can receive better medical care.

You’ll need to pay more for an IP, but the good news is that you can use your CPF MediShield – up to the MediShield withdrawal limits – for those premiums.

Finally, there are also these things called “riders” you can add on to your IP. Think of these as the bells and whistles that you add on to your mobile data plan – caller ID, unlimited phone calls, and whatnot. You need to pay for these extras with cash.

For a more in-depth look at your options, read Health Insurance in Singapore – Everything You Need to Know to Survive 2021.

Oh, and if you’re wondering when the best time to buy health insurance is… it’s now. Or ASAP.

No, we’re not secretly an insurance company trying to pressure you into buying. The younger and healthier you are, the cheaper your premium. Of course, make sure you know what you’re signing up for.

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Travel insurance in Singapore — how do you choose the right one?

Travel insurance is especially important for Singaporeans with wanderlust.

You never know when you will get stranded in an airport because of an airport strike, get your favourite LV bag ripped during a tuk tuk ride (true story) or get food poisoning from hand-picked strawberries (another true story).

While these scenarios don’t sound exactly life-threatening, they can be very costly. Imagine having to pay for a night’s stay at airport hotel when you’re on a backpacker budget.

Travel insurance will compensate for expenses incurred in these common scenarios:

• Lost baggage or other personal items
• Trip delays
• Baggage delays
• Medical expenses during the trip
• Trip cancellation
• Missed flights
• Hijacking or kidnapping
• Travel agency goes bust

Many also come bundled with some form of emergency assistance feature, where the insurer will either arrange for aid or evacuate you back to Singapore in case of an accident or severe illness.

Travel insurance is generally pretty cheap. You can get insured for a week in Asia for less than $30. You can get family/group packages which are even cheaper per person.

But when choosing a travel insurance plan, apart from the price, you should also at least glance at the above benefits to make sure nothing is amiss. Also, learn to read the “Exclusions” part of the policy wording because that’s the insurer’s favourite thing to cite when they refuse to pay out your claims.

Try to buy travel insurance as soon as you’ve confirmed your trip, otherwise you won’t be able to claim anything in the unlikely event that your tour agency dissolves in the meantime.

For more about travel insurance, read Travel Insurance in Singapore – The Total Guide to What You Must Know.

If you travel a lot — like 7 or 8 times a year — consider getting annual travel insurance so you don’t have to keep searching for a plan (and reading T&Cs) each time.

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Other types of insurance you might come across

Consider yourself lucky if travel insurance is the only type of insurance you’ve ever had to buy.

As you earn more money and move on to different stages in life, you’ll find yourself needing more and more forms of insurance.

The more you own, the more you need (or will feel pressured) to “protect”. The moment you buy a home, buy a car, have a child or start a business, you’ll probably need to get it insured.

Here’s a list of common types of insurance in Singapore that are linked to life stages:

Type of insurance	When you need it
Mortgage insurance	When you buy a home with a home loan. This pays back the bank if you die or become disabled, so you don’t pass on the debt to your family
Home insurance	When you buy a home (probably the most expensive thing you’ll own!)
Fire insurance	Compulsory for HDB flat if you take an HDB loan. Not needed for condo, because it’s usually already covered by condo MCST
Car insurance	Compulsory if you buy a car (new or used) in Singapore
Personal accident insurance	If you work in a risky job or commute by motorbike, bicycle or PMD. This is similar to life insurance in that it pays out in the event of death or disability
Prenatal & child insurance	When you have a child (obviously). It’s not a must, but is a good idea because children are very cheap to insure
Pet insurance	If you get a cat or dog. This reimburses vet bills, hospitalisation and kennel fees – some also compensate for pet death
Maid insurance	Compulsory in Singapore if you hire a maid
Business insurance (multiple types)	If you start your own company. Some are required by MOM, some are for preventing disputes, and some just make your company a better place to work
Freelancer income protection	If you choose to go freelance. This is not mandatory but offers you compensation for loss of income if you’re sick or hospitalised
CareShield Life	Singaporeans are auto-enrolled at age 30 to 40. This is a government insurance scheme for people with severe disabilities to help with the cost of long-term care

Click on the links to read our articles about that type of insurance.

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Final note: it pays to compare insurance in Singapore

As you can see from this monster of an article, buying insurance in Singapore isn’t easy. If you have trouble deciding which bubble tea variation you want at Koi, it’s going to be so much worse when you start buying insurance.

The problem is, most Singaporeans are pressured to start buying insurance — particularly life insurance — when we’re young. And often, our decisions are made solely based on whatever our insurance agent friends say.

That’s kind of like only ever ordering the Lemon Yakult Juice at Koi because your friend said it’s nice. You’ll be missing out the Black Tea Macchiato, Hazelnut Milk Tea and Ice Cream Ovaltine. Which are all cheaper, by the way.

So when you’re buying insurance, don’t limit your options. It’s good to research and compare different policies available.

You don’t have to go from company to company to get quotes, as there are online aggregators to make it easier … like us! Use MoneySmart to easily compare general insurance such as travel insurance, car insurance and personal accident insurance. For health and life insurance, simple leave your details and we’ll get back to you with a personalised quote.

Some insurance policies, such as IPs, have a “free-look period” too. During this period (14 or 21 days for IP) you can review your policy to make sure it meets your needs. You can terminate the policy in writing within this period and get a refund on your premiums if you’re not happy with it.

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