If You’re Short on Time:
- Many young Singaporeans remain underinsured, focusing more on immediate pleasures and experiences than long-term financial security.
- Starting insurance early helps you lock in lower premiums, ensure insurability, and protect against unforeseen health issues.
- First-time job seekers and young adults should consider plans like Integrated Shield Plans, Critical Illness (CI) policies, and CareShield Life Supplements to protect against unexpected medical expenses and income loss.
Misconception: "Insurance Can Wait Until Later"
Many young people make the mistake of thinking that insurance is only necessary when you’re older or after a major life event like marriage or having children. This mindset often leads to a reactive approach—seeking insurance only after facing a health scare or major life changes. Unfortunately, by then, it may be too late to secure adequate protection, leaving individuals and their families financially vulnerable.
Waiting too long to get coverage can create several challenges. As health deteriorates with age, premiums skyrocket, and sometimes, even after you’re willing to pay the higher price, insurance companies may impose exclusions or outright deny coverage. This reactive approach puts individuals in a precarious situation when they can no longer secure protection after they need it most.
Young Singaporeans Are Underinsured
A recent 2023 survey conducted by a prominent insurer revealed a worrying statistic: more than 68% of Gen Z respondents in Singapore lack critical illness (CI) coverage for life-threatening conditions like cancer, stroke, or heart disease. This leaves them exposed to the high costs associated with long-term treatment and the potential loss of income during recovery.
The “live for the moment” mentality is one of the reasons why young adults are underinsured. They often prioritize lifestyle spending—like dining, travel, and entertainment—over long-term financial planning. The perceived complexity and cost of insurance further compound this issue, as many believe they have time to “figure it out later.” But with critical illnesses becoming more prevalent at younger ages, waiting could be costly.
Why You Should Secure Insurance Early
1. Protection Against Life’s Uncertainties
It’s easy to feel invincible when you’re young and healthy. The idea of needing insurance can feel unnecessary when health problems seem like something distant and reserved for the future. But life is unpredictable, and health issues can arise at any age. Being young and healthy today does not guarantee that your circumstances won’t change tomorrow.
Consider the case of Peter, a 29-year-old with no pre-existing conditions who suffered a stroke seemingly out of the blue. Thankfully, he had comprehensive insurance in place, which covered his treatment costs and provided an income replacement during his six-month recovery. Stories like Peter’s underscore the importance of being prepared for life’s uncertainties, even when you feel perfectly healthy.
Securing insurance while you’re still young gives you the flexibility to explore and choose policies that fit your needs and life stage. Over time, as your circumstances change—such as starting a family or buying a home—you can gradually expand your insurance portfolio to include additional coverage.
2. Insurability: Your Health Won’t Always Be the Same
As we age, the likelihood of developing chronic health conditions increases. Unfortunately, health issues like diabetes, high blood pressure, and heart disease can complicate the insurance application process. Insurers may charge higher premiums or impose exclusions on coverage for those with pre-existing conditions.
Take the case of Linda, a 28-year-old who developed Type 2 diabetes due to poor lifestyle choices. When she applied for life insurance, her condition, combined with a high Body Mass Index (BMI), resulted in higher premiums and several exclusions, particularly for hospitalisation and critical illness coverage. According to the Life Insurance Association Singapore (LIA), Linda’s policy would be offered with much higher premiums, and certain benefits, like Total and Permanent Disability (TPD) and CI coverage, might even be declined altogether.
Getting insurance while you’re young and healthy ensures that your insurability remains intact, allowing you to secure the protection you need without worrying about exclusions or higher premiums.
3. Lower Premiums: Saving You Money Over Time
One of the most compelling reasons to start your insurance journey early is the ability to lock in lower premiums. Insurers base premium rates on factors such as age and health condition. By securing coverage early, while you’re generally healthier, you can enjoy lower rates and significant savings over time.
Consider the example of two individuals, both interested in purchasing term life insurance with a sum assured of S$300,000 until the age of 65.
- Jane, who buys her policy at age 25, will pay S$500 per year.
- Mark, who waits until age 35, will pay S$1,200 per year.
Over the policy’s duration, Jane would save over S$8,000 in premiums compared to Mark while receiving the same coverage.
Learn More: Take Charge Of Your Financial Journey!
Ideal Insurance Plans for Young Adults
If you’re just entering the workforce, it’s a great time to start exploring your insurance options. Here are some key policies to consider:
1. Integrated Shield Plans (IP)
Integrated Shield Plans enhance the basic coverage provided by MediShield Life, which is designed for stays in B2 and C wards. IPs offer better coverage, including options for stays in A/B1 or private hospital wards, allowing greater flexibility, privacy, and access to specialists. As hospital bills can quickly become a financial burden, having an IP in place is a smart move to protect yourself from the high costs of unforeseen medical events.
Some IPs come with riders that cap out-of-pocket costs, offering comprehensive healthcare coverage with peace of mind.
2. Critical Illness (CI) Coverage
Critical Illness policies provide a lump sum payout upon the diagnosis of a major illness such as cancer, stroke, or heart attack. This lump sum can help cover expensive medical treatments and lost income while you recover. The payout offers financial security, allowing you to focus on your health without the stress of mounting bills.
It’s recommended that your CI coverage should be at least four times your annual income. For example, if you earn S$50,000 a year, your CI coverage should be around S$200,000 to ensure that you’re adequately protected during treatment and recovery.
3. CareShield Life Supplement
While CareShield Life provides basic protection for long-term care, particularly in the event of severe disability, supplements can significantly enhance your coverage. These supplements increase the monthly payouts, providing better financial support if you ever face a long-term disability. Additionally, these plans can include benefits not offered by the basic CareShield Life scheme.
The great news is that you can use up to S$600 annually from your Medisave Account to pay for your CareShield Life Supplement, making it an affordable and practical addition to your insurance portfolio.
Haven’t Gotten Coverage Yet? It’s Not Too Late
If you haven’t secured insurance yet, don’t worry—it’s never too late to start. The key is to evaluate your current needs, assess your health, and determine what kind of financial protection you require. If your budget is tight, consider starting with the basics, such as hospitalisation and CI coverage, and expand your portfolio as your financial situation improves.
If you’re unsure where to begin, consulting a financial planner can be a helpful step. They can provide personalised advice, help you understand your coverage gaps, and recommend suitable options based on your budget and needs.
Secure Your Future Today
Whether you’re just starting your career or already building your financial foundation, securing insurance now ensures peace of mind and financial stability for the future. Acting early prevents bigger problems down the road. As the saying goes, “A stitch in time saves nine”—taking action today can save you from significant challenges tomorrow.
Don’t wait for a wake-up call to secure your future. Take control of your financial health by getting the coverage you need today.