Singaporean Are Underinsured!
In recent newspaper, there had been a report by NTU Associate Professor David Yee, stating that singaporean are grossly under-insured for their life insurance by as much as $525 bilion nationwide. According to the report, an average singaporean should be covered for close up to $500,000 but however the statistic has shown that they are only covered for one-third of that amount! So it works out to about $166,667 sum assured.
This report really serve as a wake-up call for ALL singaporeans to realise the important of having a good insurance coverage. Basically we buy insurance is mainly so that we can provide enough cash to maintain dependent’s living standard and to cover any outstanding debts and funeral expenses. This is to avoid any financial burden that we could possibly left behind for our family members.
Looking at that figure i also realised that 70% of my clients have insured themselves to about $180,000 for their death and disability coverage. As for their major illness coverage, the average would work out to be about $100,000. Don’t misunderstood me by saying that i never recommend the right product for them but rather it is mainly because of their budget.
Sometimes no doubt we should insure a higher amount for our clients but most of the time, we still need to depend on their comfortable level of comittment. I can’t possibly force my client to buy a policy that cost more than 20% of their take-home salary just because i feel that it is important for them to have. I need to take into consideration of their pocket. Some will also argued saying that i should recommend term insurance instead for them but however the thing is that most people prefer to have some cash value taken back at the end of their old age if nothing happen to them. It is hard to convince them to throw 5% of their salary into ‘big sea’ without any hope of return.
In Singapore, i believed that although there are a growing population of people who are a firm believer of insurance but there are still much to improve in term of mindset and perspective. They need to realise for themselves that insurance is an alternative way to transfer their risk to insurance company and to reduce their liablity. Actually if we are talking about saving money, i think buying insurance is one of the best way to ’save’ money for a purpose.
Take this for example: You put aside $100 for a life policies which gives you $100,000 death & TPD coverage. So one year you will put around $1,200. Let say if all of the sudden you die after two years, how much do you think your family will be paid? They will be paid a min. of $100,ooo! You put in $2400 and your family get back $100,000 so can i just say that you have ‘earned’ $97,600 for your loved ones! Isn’t that amazing? I am sure your family member will remember what you have done for them when you were alive.
To me, having a good hospitalisation insurance and life insurance is very crucial. In fact, the first policy that i normally share with my clients will be a life insurance. My belief is that you should always fufill your needs first before talking about wants (saving for long term needs) However sad to say that most people often end up getting a large amount of endownment plan first before planning for their insurance needs.
I have met many people in this situation and what i normally do after that was to restructure their insurance porfolio and to maximise their money for all the necessary coverage. I do worked with IFA adviser in the sense that if i can’t fufill my client’s needs using my company products, i will pass to my IFA friend to help her with it. Through such method, i am able to provide a more sound advise for all my clients.
Let’s hope that more and more people will place more emphasize on the needs of a good insurance and stop thinking that we all financial advisers are just out to earn quick buck. Not all are bad apples! At least i still care alot for my client’s pocket than mine =)
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