20th July, 2026

Mind the gap!


In recent years, the term ‘Protection Gap’ has surfaced and that is a phenomenon which many Singaporeans are facing. The last Life Insurance Association’s (LIA) latest Protection Gap Study showed that many Singaporeans are, on average, covered for only 20% of their CI needs. This translates to protection that is only enough to cover surgical and hospital bills. But many have overlooked the cost of post-treatment recuperation and the subsequent loss of income during the period of hospitalisation and post-treatment recuperation.

The protection gap is a metric to estimate the financial gap required to cover you and your dependents’ needs without significant compromise in life quality in the event of a critical illness or death of a loved one.

What led to this gap?

“I have an integrated shield plan!”
An integrated shield plan only reimburses the hospitalisation, surgical and related expenses that you incur in the event of hospitalisation.

However, they are not designed to help you deal with the longer term expenses associated with a catastrophic or life-threatening illness or income replacement.

 

“Choy! I am not that unlucky!”
Many Singaporeans underestimate their mortality risk. They feel that the risk of critical illness is very low. 
However, the statistics in Singapore paint a very different picture.

HOWEVER…
According to the National Registry of Diseases Office, critical illness statistics in Singapore show that more are falling ill, and more are surviving, due to medical advancements and prompt treatment start-times.

LIA’s study shows that over 90% of severe stage claims for CI insurance fall into one of these five categories: Major cancer, heart attack of specified severity, stroke with permanent neurological deficit, coronary artery bypass surgery, and end stage kidney failure.

Why is there a pressing need?

Premiums become exponentially expensive as you age. The risk of getting ill increases as you age and as you delay your purchase decision.

The “Wait and See” mentality also leads to the problem of development of pre-existing conditions, which may lead to un-insurability or even being accepted under sub standard terms by the insurer.

What should you do?

The study also highlighted two main groups of Singaporeans – The Under Protected and the Unprotected. Whether you have inadequate cover or no cover at all, you should re-look to see if your current protection coverage is sufficient to support you and your family financially in the event of a serious illness.
As a rule of thumb, LIA recommends a CI coverage of at least 3.9 times of one’s annual income. However, everyone’s protection gap varies according to 
  • Number of dependents
  • Amount of liability and financial obligations
  • Level of household expenses and desired lifestyle

 

Make an appointment with your financial adviser to review your portfolio and assess for any potential gaps. Your adviser will work with you to adjust your portfolio and financial plan so that you do not fall into the Protection Gap.