Types of Insurance and what they cover
Whatever your insurance needs, focus on your desired financial outcomes "no matter what happens," not on the specific routes to those outcomes. Insurance companies and their salespeople are very effective at tugging on your heartstrings, but does it actually matter whether you cannot work (and cannot generate an income to support yourself and your dependents) because a bus ran you over or because you suffer from dementia? No, it doesn't, yet insurance policies vary in whether they will cover "all risks" or not. (By the way, dementia is a much more statistically common risk than accidents.) Read the policy documents very carefully to understand what is included and what is not. Then buy only the insurance you need in your personal circumstances.
Term life insurance
Payout in the event of death (or "total and permanent disability," narrowly defined) within a specified period, for example before age 65. Life insurance is intended to support the lifestyles of surviving dependents. Dependents can be anyone who is financially dependent on your earnings/income potential, including (potentially) children, spouses, partners, parents, and/or grandparents, depending on your situation. If you do not have any dependents, or if their lifestyles would already be adequately supported (with savings, wealth, and/or other income) in the event of your untimely death, then you do not need life insurance.
Whole life insurance
Provides protection and savings in a composite, bundled product. Not generally recommended due to poor value for money (compared to keeping insurance simple and separate from investing) and opaque, complex products.
Critical illness insurance
Lump sum payout in the event of "critical illness," as the policy defines the term. More affordable than disability income insurance, but that's because it doesn't provide as much protection.
Disability income insurance
Payouts to cover against loss of income in the event of disability, generally defined straightforwardly as partial or full inability to work/earn an income, with few exclusions. Payouts typically stop at a target retirement age, usually age 65.
Personal accident insurance
Payout in the event of accidents that injure the policyholder to at least a serious degree. As with critical illness insurance, this type of insurance is more affordable than disability income insurance because it doesn't provide as much protection.
Hospitalization insurance
Partially or fully pays for medically necessary hospitalization (and usually hospitalization-related outpatient care), up to policy limits. Generally territorially limited, i.e. will not cover (or will cover less well) hospitalization outside Singapore. ("Travel medical insurance" can help close that gap.) Integrated Shield plans are the most common form of hospitalization insurance in Singapore.
Long-term care insurance
Monthly payouts if you are unable to perform certain "activities of daily living," as the policy defines it. As its name suggests, this type of insurance can help support nursing home, home-based care, and other, similar care needs. Sometimes LTC insurance is not truly "LT" (for life, if the daily living limitations persist), such as with the standard ElderShield insurance which is capped at 72 months of payouts.
Term life insurance
Payout in the event of death (or "total and permanent disability," narrowly defined) within a specified period, for example before age 65. Life insurance is intended to support the lifestyles of surviving dependents. Dependents can be anyone who is financially dependent on your earnings/income potential, including (potentially) children, spouses, partners, parents, and/or grandparents, depending on your situation. If you do not have any dependents, or if their lifestyles would already be adequately supported (with savings, wealth, and/or other income) in the event of your untimely death, then you do not need life insurance.
Whole life insurance
Provides protection and savings in a composite, bundled product. Not generally recommended due to poor value for money (compared to keeping insurance simple and separate from investing) and opaque, complex products.
Critical illness insurance
Lump sum payout in the event of "critical illness," as the policy defines the term. More affordable than disability income insurance, but that's because it doesn't provide as much protection.
Disability income insurance
Payouts to cover against loss of income in the event of disability, generally defined straightforwardly as partial or full inability to work/earn an income, with few exclusions. Payouts typically stop at a target retirement age, usually age 65.
Personal accident insurance
Payout in the event of accidents that injure the policyholder to at least a serious degree. As with critical illness insurance, this type of insurance is more affordable than disability income insurance because it doesn't provide as much protection.
Hospitalization insurance
Partially or fully pays for medically necessary hospitalization (and usually hospitalization-related outpatient care), up to policy limits. Generally territorially limited, i.e. will not cover (or will cover less well) hospitalization outside Singapore. ("Travel medical insurance" can help close that gap.) Integrated Shield plans are the most common form of hospitalization insurance in Singapore.
Long-term care insurance
Monthly payouts if you are unable to perform certain "activities of daily living," as the policy defines it. As its name suggests, this type of insurance can help support nursing home, home-based care, and other, similar care needs. Sometimes LTC insurance is not truly "LT" (for life, if the daily living limitations persist), such as with the standard ElderShield insurance which is capped at 72 months of payouts.
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