Plugging the Critical Illness Insurance Gap for Expats in Singapore

Plugging the Critical Illness Insurance Gap for Expats in Singapore

When it comes to Critical Illness coverage in Singapore, the average person only has approximately 20% of what they require accordingly to a recent study released by the Life Insurance Association (LIA). The study revealed that the average working individual in Singapore has just $59,776, while the LIA recommends that you need $316,603, a staggering shortfall.

This week I explore why such a shortfall exists and what Australian expats amongst other working professionals in Singapore need to consider addressing this gap before it’s too late. We’ll cover some of the common oversights or myths surrounding critical illness insurance, as well as some simple tools for you to determine how much critical illness cover you should actually have in place.

First, let’s consider why such a significant shortfall gap exists:

  1. “I already have insurance inside my superannuation fund”

Within your superannuation fund, you are able to take out Life insurance, Total & Permanent Disability (TPD) and some forms of Income Protection cover, however since July 2014, you’ve not been able to take out Critical Illness cover, or Trauma cover as it’s commonly referring to in Australia. If you held Critical Illness cover inside your super fund prior to this date, there is a chance that you may still be covered, however it’s important to do your homework here. If you’re not sure, I’d suggest that you complete the following:

  • Review your latest superannuation statement to review if you have critical illness cover inside your fund.
  • Contact your superannuation fund to assess whether you have critical illness cover and if it’s still valid (don’t just assume that it is)
  • Read your Product Disclosure Statement (PDS) and pay particular attention to whether you’re covered as a non-resident of Australia as many superannuation funds won’t cover you abroad.
  1. “I already have health insurance to cover for critical illnesses”

This is far too common that we hear this one with many making the mistake that health insurance and critical illness cover are designed to cover the same items or events. Critical Illness cover, in most instances, is designed to cover all of the expenses and liabilities that don’t disappear just because you’ve been diagnosed. This could include rent, school fees, mortgage or vehicle repayments, ongoing living expenses and any other commitments that you may have. The LIA highlights that the average recovery period is approximately 5 years, which can be a significant period to be covering your expenses, particularly if you’re not able to generate a salary throughout this period.

In many cases, critical illness insurance payouts will also be utilitised to fund the best possible treatment available rather than being limited to what your health insurance provider will actually cover. If your loved one was suddenly diagnosed with a terminal illness, it’s likely that you would want to at least have the choice to fund the treatment that is generating the best results, which may or may not be covered by your health insurer.

  1. “The insurance premiums are just too expensive”

When it comes to insurance policies, it is often far better to have it and not need it, than to need it and not have it, and this is particularly true for critical illness cover. The insurance premiums for critical illness cover can often be more costly than Life and TPD policies, due to the fact that they are far more likely to be claimed upon. Many studies highlight that a critical illness policy is 3x more likely to be claimed on than a life insurance policy.

It’s also important to recognise that there are a number of different ways to structure your critical illness policy, which could create some significant savings. If you’re currently relatively young, you may want to consider a Level Term policy, which stops the substantial premium increases as you get older. You may also want to consider whether your policy pays out only on late stage diagnoses, early stage or a combination of both in the event that it’s required.

  1. “It won’t happen to me..”

The interesting fact about insurance is that it’s one of the only products in the world that you purchase and hope never have to use. This can make it a difficult one to make sense of and implement for many. Research has highlighted that many people just don’t place enough importance on being protected from the financial burden of a critical illness and there under-insure or even worse, hold no cover at all.

Australian studies show that 1 in 3 working Australians will spend 3 months unable to work due to illness or disability before the age of 65. Combining this with the cancer and critical illness statistics makes this an important insurance policy to have in place.

What should I do next..?

The first important step is to review how much critical illness coverage you should have in place, ensure that the policy and provider is right for you and if you’re an Australian expat planning on moving back home in future, you may want to consider that you can take your insurance policy with you. To assess how much cover you should have in place, it’s important to speak to your financial planner and review your options. You can also use my online critical illness insurance calculator here as a starting point.

Having the right critical illness policy in place can help you to recover from any future illness by removing the financial burden and worries from consideration so that you can focus on getting better.


To Your Financial Success!


Jarrad Brown is an Australian-trained and qualified Fee-Based Financial Planner with Australian Expatriate Group of Global Financial Consultants Pte Ltd providing specialist financial advice and portfolio management services to Australian professionals in Singapore. Jarrad Brown is an Authorised Representative of Global Financial Consultants Pte Ltd – No: 200305462G | MAS License No: FA100035-3

Australian Expatriate Group is a division of Global Financial Consultants in Singapore providing specialist advice to Australians living abroad.

To learn more about how we may be able to help you, please contact us:

✆         +65 8282 5702

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General Information Only: The information on this site is of a general nature only. It does not take into account your individual financial situation, objectives or needs. You should consider your own financial position and requirements before making a decision.

*Please note that Jarrad Brown is not a tax agent or accountant and none of the content outlined here should be taken as personal advice. You should consult your tax agent and financial adviser to review your current personal finances and financial goals to consider whether this strategy is appropriate for you.


Jarrad Brown is the trusted fee-based financial adviser in Singapore working with professional expats in the region. An Australian qualified and experienced Financial Adviser, Jarrad provides specialist advice to Australian expats as well as other nationalities.

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