While one in two (50%) Singaporeans aged 18-65 said they feel financially prepared for the onset of a critical illness - like cancer, heart attack, and stroke - a large majority do not have adequate protection. Only 15% of respondents have critical illness coverage that meets the Life Insurance Association (LIA) Singapore's recommended level of 3.9 times of annual income.
This is according to a survey commissioned by AXA Insurance on Singaporeans’ financial preparedness for emergencies. The survey, conducted in May 2021 by NielsenIQ amid the COVID-19 pandemic, polled 1,562 respondents aged 18-65 years old across a spectrum of gender, age, ethnicity and monthly household incomes representative of the resident population.
Among those who said they feel financially prepared for critical illnesses, 6 in 10 (64%) cited having insurance protection as a reason for their confidence. However, eight in 10 (79%) did not have the recommended amount of protection, and nine in 10 (92%) did not have an accurate view of the amount of coverage needed to sustain through recovery.
The precarious position is also observed in certain key demographics, particularly looking at household structure and employment type. Among sole breadwinners who shoulder the financial responsibility for their family, eight in 10 (82%) did not have adequate critical illness coverage and close to three in 10 (27%) said they did not have any critical illness coverage at all. Additionally, nearly six in 10 (59%) homemakers and more than three in 10 (35%) of those who are self-employed said they did not have any critical illness protection.
“Many people in Singapore know by now the importance of life insurance protection and getting coverage for critical illness. With our survey, we wanted to uncover if people are truly prepared for the financial implications of critical illness. Not only do we need to ask ourselves ‘Are we covered?’ but also ‘Are we covered enough?’,” said AXA Insurance life managing director Li Choo Kwek-Perroy.
Findings from the survey revealed that inaccurate knowledge could be a factor, as 95% of Singaporeans have one or more misconceptions about critical illness plans or coverage. Common misconceptions include:
- Critical illness plans pay out regardless of diagnosis stage: Over 6 in 10 (66%) Singaporeans think that they will receive a payout from their critical illness plan regardless of diagnosis stage, even though some plans may exclude early-stage critical illnesses.
- Hospitalisation plans will cover every need: More than half (54%) of Singaporeans believe that their hospitalisation plan will cover all their needs if they are diagnosed with a critical illness, despite the fact that there may be other costs such as insurance co-payments, medical appliances, supplements, and even their daily expenses that will continue to be incurred if they need to take time off work to recuperate.
- Critical illness plans are expensive: Overall, 7 in 10 (72%) think that critical illness plans are expensive even though there are affordable options available.
Furthermore, among those who said they feel financially unprepared for critical illnesses, 3 in 10 (31%) cited a lack of financial knowledge as a reason for it.
“The survey has shown us that there is a lot more we can do to educate people in Singapore about critical illness, and the potential costs associated with treatment and carrying on life after critical illness occurs. We also need to continue our efforts to raise awareness about the different types of insurance plans that are available to meet varied customer needs. At AXA, we see this as our basic social responsibility,” said Ms Kwek-Perroy.
Despite the worrying coverage gap, more Singaporeans are recognising the need for critical illness protection. When compared to an earlier AXA survey from 2018, the results showed improvement in the ownership of critical illness insurance which has grown from 52% to 72%.
Overall, among the different types of emergencies, there were significantly more Singaporeans who said they feel financially prepared for minor emergencies like daily medical needs (89%) and hospitalisation expenses (70%), compared to major emergencies like critical illnesses (50%) and death of family breadwinner (51%).
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