Why you should get coverage early
If you’ve only got a minute:
- A high percentage of young Singaporeans are under-insured due to a focus on immediate needs and experiences instead of long-term protection.
- Starting insurance early helps lock in lower premiums, increase insurability and ensure protection against unforeseen health issues.
- First jobbers and young adults should consider plans like Integrated Shield Plans, critical illness policies and CareShield Life Supplement to safeguard against unexpected expenses and lost income.
The misconception that insurance is a concern later in life often leads to a reactive approach, where individuals only seek insurance coverage after a health scare or significant life event. Unfortunately, by then it may be too late to secure adequate protection, leaving them financially vulnerable.
Young adults in Singapore are under-insured
A 2023 survey by an insurer indicated that a significant number of young adults in Singapore are under-insured. It revealed that over 68% of Gen Z respondents lack coverage for critical illnesses (CI) such as cancer and stroke. This trend is compounded by a "live in the moment" mindset, where immediate experiences take precedence over long-term financial planning1.
This is unsurprising as these young adults, who would have just embarked on their financial journeys, often view insurance as complex, costly and unnecessary. As such, they tend to overlook its importance, believing that such concerns are reserved for older generations, and instead prioritise spending on travel, dining, and other experiences.
The importance of early coverage
Claims statistics from our national long-term care insurance scheme CareShield Life, highlight why early coverage is essential.
According to the Ministry of Health (MOH), more than 50% of CareShield Life claimants are under 40 years old. This shows that severe disabilities do affect younger individuals2.
1. Protection against unforeseen situations
As a young adult, you might feel invincible, with health concerns seeming like a distant worry. However, life can change dramatically and unpredictably at any moment.
Fathima Zohra, serves as a stark reminder of why early insurance coverage is crucial. She was a fit and healthy student, part-time model and social media influencer. In 2017, at the young age of 20, Zohra’s life took an unexpected turn when she got into a severe car accident during a trip to India that left her paralysed from the neck down3. This highlights a critical point that accidents and illnesses do not discriminate based on age or location.
Starting early also allows you to explore and select plans tailored to your specific needs and goals at your particular life stage. You can then gradually build your insurance portfolio over time, adding coverage as your life circumstances change.
2. Insurability
As you age, the risk of developing chronic conditions increases, which can lead to higher premiums, loading (extra premiums charged due to pre-existing conditions) or even exclusions from coverage.
For example, a 28-year-old non-smoker with Type 2 diabetes, who neglects proper treatment and dietary control, resulting in obesity (BMI 32), faces significant insurance challenges. This combination of factors, including the lack of health management, substantially increases the risk of complications such as amputation, blindness, and organ damage, making underwriting more complex4. According to the Life Insurance Association Singapore (LIA), life insurance may be offered with higher premiums, however, coverage for TPD, CI and hospitalisation (except MediShield Life) is likely to be declined due to the elevated risk profile.
Besides securing insurance early, it is important to maintain good health practices too.
3. Lower premiums
Purchasing insurance early allows you to lock in lower premiums (for certain coverage) while you’re generally healthier saving significant amounts over time without overburdening your finances. It also increases your insurability as some plans allow for automatic renewals without underwriting.
Consider 2 individuals, both interested in a term life policy with a sum assured of S$300,000, with coverage until age 655:
|
|
Jane |
Mary |
|---|---|---|
| Age | 24 | 44 |
| Coverage term (till age 65) | 41 | 21 |
| Annual premium | S$572 | S$1,529 |
| Total premiums payable | S$23,452 | S$32,117 |
Jane pays S$957 less per year, enjoys nearly double the coverage period and ultimately saves S$8,665 in total premiums.
Suitable plans for young adults
If you've just started working, it's an opportune time to consider your insurance options. Here are a few plans to consider:
1. Integrated Shield Plans (IP)
These plans enhance your MediShield Life coverage, offering better protection against hospital bills. As a first jobber, this is a crucial step to safeguard your finances against unforeseen medical expenses.
MediShield Life offers basic coverage and is designed for hospital stays in B2/C wards. An IP extends coverage to A/B1/Private wards that come with advantages such as increased privacy and choice of doctors.
By getting a rider with your IP that caps your out-of-pocket costs, you can enjoy comprehensive healthcare coverage with a greater peace of mind.
2. Critical illness coverage
This plan is designed to offer a lump sum amount upon diagnosis of a specified critical illness.
This can be useful for covering medical expenses and lost income should you decide to stop work while recuperating. The recommended CI protection is 4 times your annual income.
DBS offers affordable CI plans starting from as little as S$6 a month, covering common conditions like cancer, heart disease and stroke. These include CancerCare (which provides cancer and death benefit), eCriticalCare (covers 37 CIs) and ProtectFirst (provides basic and affordable coverage for 5 common CIs along with life protection and serious accident coverage).
3. CareShield Life Supplement
While CareShield Life provides a basic level of coverage, supplements can significantly enhance protection.
They can increase the monthly payouts for severe disabilities, ensuring better financial support and provide benefits not included in the basic plan.
You can use up to S$600/year from your Medisave Account to pay for your CareShield Life Supplement, with any amount over S$600 payable in cash.
Compare CareShield Life Supplement plans here.
Read more: CareShield Life in a summary
Haven’t obtained coverage yet?
It’s not too late to get insurance. Start by evaluating your needs, assessing your health and financial obligations to get suitable coverage. If budget is tight, begin with essential coverage such as hospitalisation and CI plans and expand later.
If you need someone to speak to, consider getting in touch with a Wealth Planning Manager who can provide you with personalised advice and help provide recommendations to close your insurance coverage gaps.
Securing coverage now, whether you're just starting your career or are already established, ensures peace of mind and financial security. Remember, “a stitch in time saves nine” - acting today prevents bigger issues tomorrow. Don't wait for a wake-up call; act now to secure your future!
Read more here: Insurance needs for different life stages
DBS has partnered with major insurers in Singapore to make long-term care insurance easily accessible online for purchase. You can now independently learn, compare, and buy a plan most suited to your own needs. Find out more on DBS Health Marketplace.
Ready to start?
Check out digibank to analyse your real-time insurance coverage. The best part is, it's fuss-free - we automatically work out your gaps and provide planning tips.
Speak to the Wealth Planning Manager today for a financial health check and how you can better plan your finances.
Sources:
1 TODAY, “The Gen Z insurance gap: Why young adults in Singapore are under-insured”. Retrieved 26 Aug 2024.
2 The Straits Times, “Half of CareShield Life beneficiaries are in their 30s ”. Retrieved 26 Aug 2024.
3 CNA Lifestyle, “Paralysed at 20, she now fights for disability rights in Singapore”. Retrieved 2 Sep 2024.
4 “LIA GUIDE TO MEDICAL UNDERWRITING FOR LIFE INSURANCE 2024”. Retrieved 2 Sep 2024.
5 CompareFirst, “Product Details”. Retrieved 2 Sep 2024.
Disclaimers and Important Notice
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.
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