This represents the gap residents must cover in case of emergencies rendering them unable to work and provide for their families' financial needs.
There is a massive $669.97b (SG$893b) mortality and critical illness (CI) protection gap plaguing Singapore, according to a report released by the Life Insurance Association, which represents the necessary gap to cover the needs of family members in case of emergencies like death or illnesses rendering the resident unable to work.
A rule of thumb estimates that the average mortality protection coverage is nine to ten times the annual income of a working adult whilst CI coverage must be valued at about 3.9 times annual income to be able to pay for future household expenses, rent, unpaid services, children and elderly needs of their dependents.
However, the report reveals that Singaporeans and permanent residents are only covered 20% of their CI protection needs and 80% for their mortality protection needs.
On average, every policyholder in Singapore has a mortality protection coverage amounting to $217,618 (SG$290,086) coverage per person which still presents a mortality protection gap of $266.34b (SG$355b). This means that in the case of an emergency like death, Singaporeans would be unable to cover the needs of their family members without a significant change in their current lifestyle.
On the other hand, the critical illness protection gap stands at $403.63b (SG$538b). On average, every policyholder has a critical illness protection coverage amounting to $96,669 (SG$128,861) per person. Having CI protection can help cushion the financial blow after expensive medical treatments in light of sudden income loss.
The LIA report therefore recommends the introduction of a standard industry-wide digital calculator which can encourage Singaporeans to take charge of their health and protection needs supplemented by online awareness campaigns.
“Our role as the life insurance industry is to implement targeted solutions to help consumers better allocate their resources, so that they can effectively manage their finances to ensure adequate protection for themselves and that of their loved ones,” said LIA Singapore president Patrick Teow.
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