S'poreans under-insured
Average person covered for only a third of $495k needed
By Charissa Yong(Taken from the Straits Times on the 21st August 2009)
An average Singaporean needs life insurance protection of $494,851. However, his existing life cover is only $165,628 on average.
The average Singaporean now needs about $495,000 of life insurance, but is covered for only one-third of that amount - a drastic shortfall that needs urgent attention, an expert has warned.
According to a new report by Nanyang Technological University (NTU) Associate Professor David Yee, workers here aged from 20 to 64 are under-insured by as much as $525 billion nationwide.
An average Singaporean needs life insurance protection of $494,851. However, his existing life cover is only $165,628 on average, even after including mortgage insurance and CPF savings. This leaves a stunning shortfall of $329,223.
Prof Yee presented the report at a seminar on insurance held at the Intercontinental Hotel on Thursday.
A working adult's protection needs should provide enough cash to maintain dependants' current living standards. It should also cover any outstanding debts and funeral expenses.
This excludes the contribution of a surviving spouse. In addition, it needs to cover housing costs, allowances given to parents and children's expenses, including education fees.
Working men aged 30 to 49 have the highest protection needs as they have the highest income and are likely to have higher personal loans. Also, more dependants typically rely on them financially.
The male-female income gap is the main driver behind differences in the insurance needs of each gender, he said.
As couples get older, the husband tends to be the more dominant breadwinner, and so the financial burden of protection shifts away from the wife.
Those aged 30 to 39 were found to have the highest level of insurance ownership, but also the most protection needs.
So how does one get enough insurance coverage ? Go for term insurance instead. Given that term insurance is much cheaper than life insurance, everyone should be able to afford it to get sufficient coverage.
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is term insurance better than universal life insurance? what's the down side for universal life insurance. i heard some financial advisors saying single people do not need life insurance.
ReplyDeleteHi $ing,
ReplyDeleteI am of the opinion that term insurance is better as it is much cheaper and cost-effective than life insurance thus one should have no problem in getting sufficient coverage. In general, single people do not have financial dependents i.e. people who depend on them financially as our financial dependents tend to be our family members. Thus in the unfortunate event that they pass away, no one will be financially worse off. As such, single people do not need life or term insurance generally.
Kay