A Guide To Insurance For Foreigners In Singapore
Singapore is a cosmopolitan city. It is a melting pot of cultures, with foreigners making up close to 30% of its 5.6 million population as of 2020. There are people from all over the world on this beautiful island of Singapore who come here to work and live with their families.
Over the span of my career, I have had the privilege of working closely with many foreigners for their insurance needs. One thing is common among them: the fact that navigating the insurance landscape in Singapore, as a foreigner, can be a complicated affair. And for this reason, many do not delve into it.
This is why I decided to write this article to help some of you who may be new to Singapore or who have been living in Singapore for some time but are unsure about your insurance needs here. Is there even a need for you to get insurance if you are only going to be living in Singapore for a few years? What if you already have insurance in the form of a group insurance policy under your employment? Is that enough coverage for you?
Picture this. You are a 45-year-old healthy executive director of a Swiss bank in Singapore. You have come from Switzerland with your wife and 2 children to work here for several years. You are successful in your career and your wife and children love it here. One day you decide to go out cycling and this ride changes your life forever. True story.
Though in the story above, Mr Pollmann received an SGD $13.6 million payout from the insurance company of the motorist, the fact of the matter is this: Anything can happen to anyone at any time. This is why you need to check that all your bases are covered especially so when you are a foreigner in this country. This also includes understanding what your work insurance policy covers.
This scenario is all too common: You come to live in Singapore with the intention of living here for just a couple of years. Those 2+ years turn into a couple more and then some and lo and behold, 10 years have gone by and you are still living in Singapore! Each time you think - I do not need to trouble myself with any form of financial planning since I am not going to be here long anyway. And, in any case, my company insurance should be sufficient!
Well, here are some common problems faced by foreigners in Singapore where their insurance needs are concerned:
1. Insufficient work insurance coverage
Does your company provide you with insurance? If yes, what does it cover? Most company insurance policies I have come across cover a spectrum of things such as hospitalization, outpatient clinical care and specialist treatment, personal accident, critical illness, long term disability as well as life insurance. Many employees think that their group insurance policies provided by their companies are sufficient and that they do not need their own insurance coverage. However, if you were to do a check on the policies offered by your companies, you might find the truth appalling.
Hospitalization plans provided by your company may have limits as to how much you can claim. Should it be a debilitating illness or injury you suffer from, these limits will surely be reached, and the remainder of the bill will need to be out of pocket. Major illnesses like cancer, heart attack or stroke may even require long term care. Will the coverage from your work insurance be able to ensure that all these bills are covered?
2. Developing a medical condition whilst being employed
What happens should you develop a medical condition whilst being employed? Chances are your company will be able to cover you on their group insurance policy. However, this is only true if you are still employed with them. In some cases, there have been foreigners who have had to end their employment due to medical reasons. If they do not have their own insurance policies and are now no longer insured by the company policy, it puts them in a difficult spot as they would have to dip into their savings.
Moreover, once you develop a medical condition, it becomes a pre-existing condition and seeking personal insurance coverage (if you have not already done so) might be a problem in the future.
What types of insurance can foreigners buy?
Integrated Shield Plans (IP) are available to foreigners at the same price they are to residents of Singapore! These plans cover your hospital bills up to 95% (a 5% co-payment is to be borne by the insured). Singapore is known for its high standard of healthcare, but this comes at a hefty price tag especially for foreigners who do not have access to government subsidies. Having your own medical insurance policy also ensures that you are adequately covered without being too reliant on a company insurance policy which may have gaps.
There have also been instances where people have solely depended on their company insurance policies and have required urgent medical attention whilst being in between jobs.
I know of someone who incurred a $25K medical bill due to an accident whilst waiting to start his new job. This was during the 3-week interim period whilst he was between jobs. What he thought would be a good refresher before he started his next job ended up being a freak accident and a hefty hospital bill that stripped his savings.
Accident policies are good to have in your insurance portfolio in Singapore as they can give you relatively high coverage for low premiums. These policies cover you for accidental death, disablement as well as medical reimbursement in the event you seek medical attention due to an accident.
3. Disability Income
If you have fixed monthly expenses such as rent, children’s school fees etc, a disability policy becomes an essential part of your insurance portfolio. This coverage provides a monthly income in the event you are unable to work in your own occupation due to ANY illness or injury if it is certified by a medical practitioner. And it does not limit you geographically. This means if you choose to go back to your home country or any other country, you would still be able to use the coverage.
This coverage is especially important if you are the sole breadwinner of the family. Imagine falling ill, not being able to work and not having any household income. It would put a strain on your savings and more importantly, on your mental health as you would be stressing out about not being able to provide for the family.
4. Critical Illness
A critical illness policy would provide you with a payout in the event you are diagnosed with a listed critical illness. These include illnesses such as major cancers, heart attacks, strokes, kidney failure and so on. The payout will enable you to take time off work to recover from your illness without having to dip into your savings. It will also cover additional expenses that may arise from your illness such as hiring someone to look after you, increased transportation expenses or even enable your spouse to stop working for a while in order to look after you.
Critical illness policies offered by your company usually cover later stages of illnesses leaving a huge gap where early to intermediate stage critical illness is concerned.
5. Death and Total Permanent Disability
If you have liabilities such as a mortgage or loans or if you have dependents a life insurance policy is essential. These policies pay out a lump sum upon death or total and permanent disability. It would be beneficial to your family if you pass on prematurely as it would enable them to buy time to make major life decisions without having to worry about finances. These include having to relocate to another country, sell off assets and so on.
Things to consider:
Purchase TERM insurance policies. These policies do not have any cash value and provide you with essential cover (for all the coverage stated above) for a pre-determined period. Since they are purely protection plans, they can also be terminated at any time at no financial loss to you. This is a good stop-gap measure if you are tight on cash but still need to get covered as the premiums for term plans are relatively low.
You can also consider investments in Singapore such as savings products or unit trust investments. Singapore is a safe and stable country with a strong currency. You do not incur capital gains tax for such products in Singapore making it extremely attractive for foreigners.
It would be beneficial to look at the insurance provided by your company and see what gaps there might be for you and your family. Even if you are unsure about Singapore being a place of residence for the long term, you can still purchase term insurance policies to ensure that you are covered for as long as you are here in Singapore. If you would like to discuss your insurance portfolio, I would be happy to help navigate the policies and find sensible solutions for your insurance needs with you!