If you’re wondering what kind of insurance you need, you’re not alone. With so many types and all this terminology, it can get confusing! Here, Expat Insurance answers all our questions about life insurance in Singapore and shares the benefits of taking out term life insurance as an expat.
What is life insurance and why do I need it?
Life insurance is a legal contract between an insurance policy holder and an insurer. In exchange for the insured’s monthly premiums, the insurer agrees to pay a lump sum of money – known as the death benefit – to the insured’s named beneficiaries upon the death of the insured.
Beneficiaries can then use the money to cover medical, funeral and other expenses. The idea is to relieve your dependents of any financial burden, with funds to replace future loss of income.
For this reason, purchasing a life insurance policy is essential to ensure your family’s financial security.
Do I need it if I have health insurance?
Life insurance is a protective measure. It provides your family with financial continuity so they don’t struggle, despite losing you and your ability to earn a living.
Health insurance, on the other hand, helps pay for medical expenses such as doctor visits, hospital stays, medications, tests, and procedures. This helps ensure that people can afford medical care and stay as healthy as possible.
That said, it is recommended that you purchase both life and health insurance. Having both will provide financial protection and your family’s health.
Should I take out a life insurance policy if I have one as part of my job?
Most employee benefits offer some level of life insurance. However, this is usually not enough for most families who will have to cover a decade or two of expenses if the breadwinner is gone. Benefits are also not transferable if you lose your job. Purchasing a personal policy, however, will ensure that the cover can be used wherever you go.
Term life insurance vs permanent life insurance in Singapore
There are two types of life insurance policies: permanent life insurance and term life insurance. Both types provide protection against financial loss in the event of death or permanent disability.
A key difference between the two is the length of coverage. Permanent life insurance is designed to cover you for your lifetime, assuming you pay the monthly premiums. Term insurance lasts for a set period of time that you choose when you purchase the policy; for example 10, 20 or 30 years.
The other main difference between permanent life insurance and term life insurance in Singapore is the amount you will receive if nothing happens to you.
In addition to providing a death benefit to your beneficiaries, a permanent life insurance policy includes a savings component in which cash value accumulates over time. If you cancel your life insurance policy, you will receive the accumulated cash value, called cash value, while you are still alive.
Term life insurance, however, does not accumulate cash value and is used only as a tool of protection. This means there is no cash value on the policy, allowing premiums to be more affordable.
How can I determine which type of policy is best for my family?
The best life insurance is the one that pays you when you need it! You will need to determine how long you need coverage and how much you need.
You will also need to consider your budget. Term insurance is the most cost-effective form of pure insurance because it is not associated with any savings or investment component.
The Benefits of Term Life Insurance for Expats
The Expat Insurance team recommends term life insurance for expats in Singapore for many reasons, including flexibility and portability.
Term life insurance can be changed at different stages of your life and can last you until your next posting abroad. It can give you the peace of mind you need during times of transition and uncertainty.
Additionally, you can purchase term life insurance with riders to provide additional levels of coverage. For example, critical illness coverage and total permanent disability insurance, which provides protection in the event of the loss of a limb or sight that prevents them from working.
For more information, contact Expat Insurance. Their brokers are used to working with expats to determine the best term life insurance policies for their needs.
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