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Singaporeans lack 80% of critical illness protection needs: Life Insurance Association

SINGAPORE — In times of critical illness, economically active Singaporeans and permanent residents are only covered for a year of their expenses – or 20 per cent of what is needed should they be out of the workforce for five years.

Singaporeans lack 80% of critical illness protection needs: Life Insurance Association

Singaporeans lack 80% of critical illness protection needs

SINGAPORE — In times of critical illness, economically active Singaporeans and permanent residents are only covered for a year of their expenses – or 20 per cent of what is needed should they be out of the workforce for five years.

The average employed person here has about S$60,000 worth of critical illness coverage, but requires about five times the amount to ensure their families are well taken care of, according to the Life Insurance Association (LIA)’s 2017 Protection Gap Study.

The study, conducted by Ernst & Young Advisory, used public Government data of economically active individuals with at least one dependent. As of the end of 2016, there were about two million such adults in Singapore.

They need a total of about S$663 billion in critical illness protection but are only covered for about S$125 billion, the study concluded.

Critical illness was a new component in the latest edition of the study – which was last conducted in 2012 – because people here are living longer and rates of chronic diseases are growing, said LIA president Patrick Teow on Thursday (April 26). Healthcare costs are also going up, but the rate of survival after developing a critical illness is also higher due to medical advancements, he said.

The average Singaporean spends eight out of 82 years in ill health.

Most critical illness insurance policies provide coverage for at least 37 illnesses, including cancer, heart attack and stroke. They ensure critically ill adults will be able to cover future household expenses, loans and the needs of their children or elderly parents, among other things.

Reasons for the 80 per cent critical illness protection gap include a lack of understanding of such protection, people thinking they are unlikely to develop a critical illness, giving it lower priority, as well as the perceived cost of getting such insurance, said Mr Teow.

The LIA will embark on a qualitative study to better understand the reasons and develop ways to get them to beef up critical illness coverage, he added.

As for mortality protection – covering the needs of dependents for a defined period, should one die – the study found economically active Singaporeans having 80 per cent of the coverage they need, similar to the 2012 study. They need a total of about S$155 billion in mortality protection but have about S$119 billion in insurance and savings.

The average economically active Singaporean has S$569,110 worth of mortality protection, but needs S$738,783, according to the study.

The LIA said it will do more to raise awareness of health and protection needs and develop a digital calculator for the public.

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