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5 Types of Insurance Plans You Should Get as a Young Adult in Singapore

When should we begin to consider insurance? The earlier the better! The ideal time to begin building your health and lifetime protection is as soon as you obtain your first salary. In addition to providing additional protection, getting coverage earlier in life also results in reduced premiums. 

However, there are many types of insurance plans in Singapore, and each one can be confusing to understand at first. That’s why we’ve put together this article on the different kinds of insurance policies available in Singapore so that you can make an informed decision about what kind of coverage might suit your needs best.

1. Health insurance

Health insurance is the most well-known and commonly purchased insurance in Singapore. It is a type of coverage that helps you pay for medical expenses such as hospitalisation, surgery and outpatient treatments. Every young adult should be getting health insurance because it protects against unexpected expenses related to illness or injury. Furthermore, when you are still young and healthy, you pay a lower premium as compared to when you are older and tend to have more medical conditions. 

MediShield Life, Integrated Shield Plan (IP) or Riders: Which should I get? 

There are many types of health insurance plans available to meet different needs. MediShield Life is the national health insurance policy for all Singaporeans and PRs. The plan subsidies costly hospital bills and outpatient treatments such as chemotherapy and hospital stays at Class B2/C wards in public hospitals. The maximum claim limit per year is $150,000 and limits on specific treatments like chemotherapy. 

For young adults who prefer higher coverage and the option of staying in a private hospital or upgrading to a Class A/B1 ward, an Integrated Shield Plan is a good choice. With this insurance policy, you can increase your claim limit up to $1,500,000 per year with a peace of mind knowing that your insurance can help pay for the treatments that you require, no matter how costly they could be.

Riders are essentially supplementary medical expense insurance. They can further enhance your medical coverage with an integrated shield plan. For example, getting a rider can reduce your co-payment from 20% to 5% which means lesser out-of-pocket expenses.

There are many health insurance policies and service providers in Singapore. Before you make your decision on the insurance product, you may want to look at the different types of health insurance.

2. Life insurance

Life insurance provides financial protection to your loved ones in the event of your death. It can be used to pay off debt, provide an income for your family, or cover funeral expenses. 

Although life insurance policies help you to accumulate funds over time, it is ultimately a protection and not a savings plan. The premiums you pay depend on factors such as the desired sum assured, the age at which you purchase the policy and the payment period. Buying life insurance earlier in life can be more cost-effective in terms of premiums. 

A good rule of thumb to aim for a sum assured is around 10 times your annual income, which may vary based on individual circumstances. This allows the policyholder sufficient time to look for new sources of income and recover from the loss of income. It is best to seek advice from a Financial Advisor.

According to the Life Insurance Association Singapore, Singaporeans are buying more life insurance policies than ever. Learn more about the common mistakes young adults make when buying life insurance

3. Travel Insurance 

Singaporeans love travelling, especially young adults. After the pandemic, so many Singaporeans are now travelling and bumping into friends all around the water. If you travel frequently for leisure or work, it is essential to purchase travel insurance to shield yourself against unexpected occurrences such as lost luggage, trip cancellations or medical emergencies. 

The most common type of travel insurance plans are single-trip policies; however there are also annual cover policies available depending on your needs.

4. Personal accident insurance

As a young adult, is it common to try out adventurous activities such as trekking, mountain climbing, skydiving etc. But did you know that these activities are high-risk and easily prone to accidents. If this sounds exactly like you, you should definitely consider getting personal accident insurance. 

Personal accident insurance offers coverage for accidental death, permanent disability and medical expenses related to accidents or infectious diseases. This is especially important for young adults who take on a lifestyle with a higher risk of getting into an accident for example riding a motorcycle or doing contact sports. 

Although there may be some concerns about coverage overlaps with health insurance as mentioned earlier, personal accident insurance provides different coverage and complements with health insurance to give a better comprehensive protection in case of accidents. Furthermore, this plan is generally quite affordable in terms of premiums.

5. Critical Illness (CI) plan 

In Singapore, critical illness plan is regarded as good to have and it is not as critical as hospitalisation or life insurance despite its name. If you have already gotten your basic needs covered with life and health insurance, you may want to consider a critical illness plan as a next step. 

A critical illness plan essentially provides a lump sum payment if you are diagnosed with a critical illness such as major cancer and stroke. Find out the 37 severe stage critical illnesses that are covered in the policy. Depending on the terms of the policy, the payment could be made to you at the time of diagnosis or when reaching a certain stage of the illness. It works in conjunction with health insurance which allows you to get all the treatments and care you need without worrying about financial limitations. 

The one-time payment from your critical illness plan can be used for anything you require. This includes your daily expenses, hospital visits, transportation or any other treatment expenses not covered by your health insurance. 

When considering getting a critical illness plan, do keep in mind the final payment you require based on your lifestyle needs. For example, you would want to aim for at least five years of your income so that you can take time off from work and focus entirely on recovery. 

Get the right insurance policy for your needs

I hope this article has helped you understand the different types of insurance plans available in Singapore and what you should be getting as a young adult. It is important that you know what type of coverage suits your needs best so that you can make an informed decision when purchasing it.

Eugene Chai

With five years of financial experience (and maybe a few too many all-nighters fueled by cold brew and craft beer), Eugene tackles complex financial concepts and breaks them down for young adults. Featured on Investment sites and CNA's Money Talks, this self-proclaimed "Finance Whisperer" isn't your stuffy suit. He uses relatable narratives (think "adulting, but make it money") to turn numbers into your financial BFFs, guiding you towards smart choices with your hard-earned dough.