Income & Disability Protection Insurance Planning Singapore

Here we will discuss on income and disability protection insurance planning. Have you ever felt sick so serious (or due to illness or accident) that you need to be warded in hospital for further investigation, surgery or treatment? How do you feel while you are in the hospital? What do you worry about most at that moment? Research shows that being in hospital can impact on your mood. Worrying about your health, feeling anxious or overwhelmed can be a common issue for many people in hospital, regardless of age. And medical cost and income are some of the top concern.


3 Basic Needs and 4 Types of Income Level and Lifestyle

According to Dr. Sanjay Tolani‎ in his concept presentation playbook, our 3 basics needs are home, clothing and food. The type of house we stay in, brand of clothes we wear and quality of food we are having, largely depends on our income level. Every one of us will fall under these 4 types of income categories. Top level of income type will provide a luxury lifestyle. 2nd income level will provide a comfortable lifestyle, 3rd income level will be of low-income level (hand to mouth) and 4th will be charity level (no income). No matter what your income level may be, it will always be worth protecting.


What is Income Protection Insurance?

Let’s imagine, you and your family are having a comfortable lifestyle, and it is held at this level because you are at work (person at work). If you are removed from your work (no income), your family lifestyle will immediately start to fall and might even fall to charity level. In order to bring your family lifestyle back to comfortable level, we need to immediately inject a sum of money into your family account. Because if there is no person at work, we need to have “money at work“, and the simplest way to do that is to have 5 times of your annual income as income protection. This process is call income protection. The reasons why a person will not be able to work, is due to illness, disability or death. And income protection insurance will be the “money at work“, to bring your lifestyle back to a healthy level.

It is the same for your 3 basic needs, when you are healthy you are able to earn an income and provide you and your family with the 3 basic needs. If for example, in the next few hours, days, months or even just moment later, you are unable to work due to illnesses and/or total disability which may last months or even years, your income will eventually stop. This is where income protection insurance comes in, and ensure you and your family have that 3 basic needs in place.


Why Do I Need Income Protection When I Already Have Life Insurance?

Life insurance provide financial protection against your income or financial loss due to death and total and permanent disability, do a review and check if your life insurance includes any income protection like critical and early stages illnesses coverage. Leverage on life insurance, to protect your dependents with death coverage and if you are single without any dependents, focus more on income protection insurance and total and permanent disability benefits. For life insurance there are whole life insurance, term life insurance and whole life term life insurance, you might want to find out more on types of life insurance comparison.


Why Do I Need Income Protection When I Already Have Medical Insurance?

Critical illnesses and early stage illnesses insurance are insurance that provide a lump sum pay-out if you are diagnosed with any of the illnesses covered under your critical or early illness policies. And if unfortunately, you passed on or become total and permanent disabled, you will need life insurance because it will also pay out a lump sum to you, or to your loved ones and family, when you are diagnosed with total disability. Life insurance act as a financial protection against your income or financial loss which medical insurance does not.

Medical insurance will help with your medical and surgical, expenses, like in-patience surgery or day surgery costs. Medical insurance will help to deal with your large medical expenses, but will not provide you with a lump sum pay-out to replace your income.

Every Singaporean are covered by MediShield Life, as it is compulsory health insurance scheme that pays for basic public hospital treatments. You may consider an upgrade to an Integrated Shield Plan with wider coverage, like better type ward. There are two main types of Integrated Shield Plan you can choose from, one which able to provides coverage for medical and surgical expenses at private and restructured hospitals (up to Class A ward) the other will be just restructured hospitals (up to Class A ward). Most Integrated Shield Plan also helps with cost on pre and post hospitalization, from 90 days up to 365 days (as this differs from product to product.).


One Last Thing

Remember the rule of thumb for income protection is to plan, at least 5 times of your annual income as income protection. Disability, critical illnesses and early stage illnesses insurance are types of income protection insurance, that focus in protecting your wealth. And if you have not already done your holistic life insurance and financial planning, seek help from your friendly financial consultant or contact me to help you with your financial planning and your income protection needs.


Note: Opinions expressed are solely in Mr. Chan Kong Meng’s personal capacity and neither express the views or opinions of Prudential nor represent any professional advice in Mr. Chan Kong Meng’s capacity as a PACS representative.



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