|By Charissa Yong|
An average Singaporean needs life insurance protection of $494,851. However, his existing life cover is only $165,628 on average. -- ST GRAPHIC
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.
Read the full story in Friday's edition of The Straits Times