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Types of insurance plans in Singapore and which ones you should get first as a young adult

Types of insurance plans in Singapore and which ones you should get first as a young adult
PHOTO: Unsplash

Insurance is one of the key aspects of personal finance. Getting the right type of insurance can not only protect ourselves, but also ensure financial security for our family should anything unfortunate happen.

When should we start thinking about insurance? The sooner, the better! The moment you receive your first paycheck is the best time to start building your health and lifetime protection. Not only does earlier coverage mean more protection, but buying at a younger age also means lower premiums.

However, there are multiple types of insurance, with numerous add-ons with different premiums and coverage. Hence, it is essential to ensure that you buy the right coverage you need, not just what your insurance agent is trying to sell you.

So what are the types of insurance that you should prioritise? Here is a list of insurance that you should consider purchasing as a young adult.

Health Insurance

Perhaps the most well-known and common form of insurance in Singapore, health insurance is also one of the most important insurance one can get to protect themselves and their family.

You might be thinking: aren’t Singaporeans already covered by MediShield Life? You’re right. MediShield Life is a compulsory health insurance scheme that pays for basic public hospital treatments. However, an upgrade to health insurance schemes (also known as Integrated Shield Plans) means you get wider and better coverage.

In comparison, Medisave has rather limited withdrawal limits:

Surgery: Depends on how complex the procedure is. Ranges from $250 (simplest) to $7,550 (most complex).

  • Surgery: Depends on how complex the procedure is. Ranges from $250 (simplest) to $7,550 (most complex).
  • Daily ward fees: $450/day for a regular hospital stay. For day surgery, it’s $300/day.

Any amount above the Medisave limits, including costs like laboratory tests and other screenings that don’t fall under the above categories, will need to be paid out of your pocket.

Here are two integrated shield plans that could complement your existing MediShield basic insurance:

Great Eastern GREAT SupremeHealth Standard

Promo: 20 per cent off 1st year GREAT TotalCare Premiums

  • Co-Insurance
    • 10 per cent
  • Hospital Type
    • Public B1 Ward and below
  • Eligibility Requirement
    • Singapore Citizens, Permanent Residents
  • Last Entry Age
    • 75 (Age Next Birthday)

Its coverage includes $1,700 daily normal ward coverage, $590–$16,720 of surgery coverage, $9,800 surgical implants coverage and accidental dental and examination and lab tests coverage.

This plan is mainly recommended for healthy individuals with no pre-existing conditions who want to add a little extra to their MediShield policy and stay at Class B1 wards. Furthermore, it is also worth noting that you will not be able to add a rider to this plan. As such, if you’re looking for a no-frills, simple and affordable plan to add on to MediShield, this is the plan for you.

Income Enhanced Income Shield Advantage

  • Co-Insurance
    • 10 per cent
  • Hospital Type
    • Public B1 Ward
  • Eligibility Requirement
    • Singapore Citizens, Permanent Residents, Foreigners
  • Last Entry Age
    • 75 (Age Next Birthday)

New families looking for affordable A ward plans will get great value for their money with Income's Enhanced Incomeshield Advantage. Income's health insurance plan provides full hospitalisation, surgery, cancer and post-mastectomy coverage, along with a hard-to-find $10,000 prosthesis benefit.

Lastly, a great value-add that Income offers is that you will be reimbursed for emergency hospital treatment while overseas, so families who will be travelling will have peace of mind.

Critical illness insurance

Many Singaporeans might be confused as to why they should get critical illness (CI) insurance on top of their Integrated Shield Plans. What is the difference between CI insurance and health insurance?

Standard health insurance plans cover hospitalisation costs and reimburse your medical expenses. In contrast, critical illness insurance is a benefit policy that pays you a set amount in one go if you are diagnosed with any of the covered critical illnesses.

In Singapore, the Life Insurance Association defines 37 common critical illnesses that are typically covered by critical illness insurance. Some examples include: cancer, stroke, heart attack or multiple sclerosis.

There are a couple of reasons why the best time to get insured for critical illness is when you’re in your 20s or 30s. Most critical illness insurance policies base their premium levels on different factors such as the policyholder’s age, health, lifestyle, and so on. As such, premiums are much cheaper when you’re younger and healthier.

Furthermore CI insurance policies also exclude coverage for pre-existing medical conditions. This means that if you wait until you are older and have already developed certain conditions, you will not be able to get protection for those illnesses, which drastically reduces the value of your policy.

FWD Big 3 Critical Illness Insurance

With 90 per cent of critical illness claims arising from these cancer, heart attack and stroke, FWD's Big 3 Plan provides coverage for the most likely health events. For an additional fee, you can also choose a heart condition and neurological disorder add-on that provides coverage for a variety of illnesses.

FWD also provides a $20,000 death benefit in the unfortunate event of death while the policy is in force. You can renew your policy up until you turn 85 and you only have to make one health declaration to purchase the policy without any medical examination required.

MSIG CancerCare Plus

A cancer-only critical illness plan can be a suitable option for individuals who put more weight on protecting themselves against cancer as opposed to other illnesses. Upon early-stage diagnosis, you'll get 50 per cent of the sum assured; upon a major cancer diagnosis, you will get the other 50 per cent.

It is also easily accessible, since you can buy this plan online and with just three simple health declarations. You can purchase this plan if you're between the ages of 20 and 64, and is automatically renewable until you turn 84.

Travel insurance

Travelling is almost a necessity for younger Singaporeans. As such, travel insurance has become essential to safeguard one against unforeseen circumstances. It provides you with peace of mind in the event of unforeseen circumstances. These may include cancellation of a trip due to serious illness, accidental injury, high medical bills, travel disruption or loss of personal belongings.

There are mainly two types of travel insurance: single trip and annual cover. As their name suggests, single trip covers a specific trip, usually commencing from and returning to Singapore, while annual cover covers any trips commencing from and returning to Singapore within a one-year period.

Therefore, the type of travel insurance you get heavily depends on your travelling frequency and lifestyle choices. Here are the best travel insurance plans we recommend.

FWD Travel Insurance

PROMO: 35 per cent off Single Travel and 30 per cent off Annual Travel with BESTTRAVEL

A critical illness plan with comprehensive cancer coverage.

  • Personal Accident Coverage
    • $200,000-$400,000
  • Trip Delay Coverage
    • $300-$1,000
  • Baggage Delay Coverage
    • $150 to $900

FWD's travel insurance is a good option whether you're travelling alone, as a group or with a family due to its robust benefits and attractive prices that will appeal to a wide consumer base.

For instance, it includes coverage for loss of passport and money theft, travel agency insolvency and payment of rental car excess, as well as up to $2,000 of coverage for your sports equipment that costs only an additional $8. Additionally, if you want some perks besides just a discount, FWD sometimes has special promotions that include vouchers for things such as CapitaVouchers.

Allianz Travel

A critical illness plan with comprehensive cancer coverage.

  • Personal Accident Coverage
    • $80,000
  • Trip Delay Coverage
    • $1,500
  • Baggage Delay Coverage
    • $1,400

For those who are looking for a combination of affordability and value with a focus on trip and baggage coverage, Allianz Travel can be a great match.

What makes Allianz stand out is that they exhibit very high value with their generous trip inconvenience coverage. If you tend to travel with valuable belongings or you are concerned with sudden changes to your trip itinerary, Allianz Travel plans can provide maximum peace of mind in that area.

House and car insurance

For most young adults who have just begun to work, owning a house or a car might not be in their immediate plans. Especially with COE prices at a record high now, owning a car might not be quite feasible. Regardless, these are still worth considering.

If you currently reside in a place you own, you should seriously consider getting a home insurance plan which covers your belongings, renovations, payout for emergency interim accommodation, medical expenses or your precious pet. Even if Singapore has a low risk of natural disasters or home burglary, it is important to protect your home no matter how small the risk.

In Singapore, car insurance is necessary if you plan on getting a car. Having car insurance is a good way to protect yourself from expensive legal fees and medical expenses. Car accidents are more common than most people expect, and making sure that you and your passengers are well protected can mean saving on car repairs, medical costs, lawsuit fees and even damages to your personal belongings.

Some car insurance plans also cover minor inconveniences like towing charges and alternative transport, which can save you from all the extra hassle.

Life insurance

Life insurance is a complicated but important type of insurance coverage. It mainly consists of two types — Whole Life and Term Life.

Unlike other insurance plans, life insurance does not directly benefit you. It pays out only after the covered policyholder passes away. Rather, the purpose of life insurance is to reduce any financial hardship that your family might have from the loss of your income due to death.

Life insurance is your safety net for those big "what if" moments. It can be useful even when the death benefit is not triggered, so long as it is used appropriately.

For younger people, life insurance might not seem like a priority. That is understandable as preparing for your death might be something that seems too far away in the future to consider especially when you are in your twenties.

However, as you mature, life insurance becomes increasingly important — especially if you have a family or debt. Many do not seem to realise this at an early age and come to regret not purchasing one when they were young.

As health and age are important indicators of the premium payable for life insurance, your premium will be lower, making the policy much more affordable. This means your premiums remain the same for the duration of your policy unless you change the amount of coverage. Purchasing life insurance at a younger age locks in lower premiums and reduces the total amount you will spend on life insurance over the course of your lifetime.

FWD Direct Purchase Term Life Insurance

FWD offers two life insurance policies that you can buy online without requiring financial advice. It offers similar coverage to other classic Direct Purchase Insurance (DPI) term life policies, with up to $400,000 of death, terminal illness & total and permanent disability coverage (TPD).

FWD also offers a traditional term life policy, Term Life Plus, which also costs below the average of its competitors. This policy offers death and terminal illness coverage up to $1.5 million, making it a suitable option for those that prefer higher death and terminal illness coverage.

Etiqa Direct Purchase Term Life Insurance

Etiqa's term life and whole life Direct Purchase Insurance (DPI) plans offer some of the most competitive premiums on the market. Your plan tenure options are up to age 75 and Etiqa will cover you up to $200,000 until your death or a specific maturity date. Since it is a participating policy, there is also a cash value and reversionary bonus accumulation attached to the plan.

Etiqa also offers a traditional term life insurance policy you can buy online if you want higher term life coverage than what its DPI offers, as well as a unique free 12-month term policy and a more substantial, traditional whole life policy.

Conclusion

Insurance is definitely something that every adult Singaporean must consider in their lives. With a limited income especially if you have just started working, it is important to know which insurance policies you should prioritise getting at this stage of your life.

As such, we have compiled an even more comprehensive list of every single type of insurance in Singapore. If you want to find the cheapest plan, or the one with the widest coverage, or one that specifically fits your needs, don’t worry: we got you covered right here.

This article was first published in ValueChampion.

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