NINE out of ten Singaporeans are underinsured and will be forced to downgrade their living standards should anything happen, according to a recent AIA Singapore survey.
The 2011 AIA Singapore Nationwide Protection Survey, conducted between March and June this year, made five key findings with respect to Singaporeans’ perception of life insurance. It found out that Singaporean couples were not having either the correct or complete conversations about their family protection’s needs, and that it was acceptable for dependents to downgrade their living standards or remarry to make up for loss of income should anything happen.
Furthermore, there is the perception that insurance is not affordable, especially with rising costs of living, as well as a slightly misguided idea of what adequate insurance entails.
AIA’s survey was prompted by a 2007 study done by the Life Insurance Association (LIA), which found that the average Singaporean was underinsured by more than 65 per cent. It showed that the average Singaporean was covered for an average of approximately $165,000, when adequate protection, to maintain a similar level of living standards, was estimated to be $495,000.
LIA defines adequate protection as total coverage of approximately ten times one’s annual income.
AIA’s CEO and president of LIA Tan Hak Leh pointed out the discrepancy between knowledge and action.
“We found out that approximately six in ten Singaporeans claim to have a clear idea of how much they need to set aside for their dependents in the event of the death or permanent disability. However, only one in ten Singaporeans is sufficiently protected,” said Mr Tan.
AIA is rolling out a series of public awareness campaigns to inform and increase public knowledge of the insurance gap. It has also collaborated with the National Family Council to implement future plans that would help inform families about the insurance gap and to help build financial resilience for families.
Lim Soon Hock, chairman of the council, says that the collaboration would help with the council’s charter in building “strong, resilient and happier families”.