Why life insurance still matters—even if you’re young and healthy

Most people in Singapore don’t wake up thinking about life insurance. It feels remote, bureaucratic, and for many, optional. If you’re single, have no dependents, or are just starting out in your career, it might seem like something for future you to worry about.

But life insurance isn’t about predicting the future. It’s about preparing for risk—especially when that risk affects others. If someone relies on your income, your stability, or your ability to keep the household running, then life insurance becomes not just relevant—but responsible.

In Singapore, where dual-income families, intergenerational households, and mortgage-linked liabilities are common, the financial impact of a breadwinner’s sudden death or disability can be long-lasting. The good news? Working out how much life insurance you need isn’t complex. You don’t need a financial adviser to do the math—just a clear head and a calculator.

This is where most financial planning begins. If no one is relying on your income—no spouse, no children, no elderly parents—then your life insurance needs may be limited. You might still need to cover a mortgage, or protect your income in case of illness or disability, but your planning framework is very different.

Now consider the other side.

Take Michael, for example. He’s 35, earns S$4,000 a month, and contributes half of his family’s household expenses. He lives with his wife, a working professional, and their three-year-old son. He also tops up his retired parents’ CPF each year to support their daily expenses. If something happens to Michael, his family loses S$2,000 of monthly income. That’s not a temporary inconvenience—that’s a structural hole in their financial system. His wife would either have to double her workload, dip into savings, or downgrade their lifestyle dramatically.

So the first rule is simple: If you have dependents, you need coverage.

Step 1: Estimate the Income Replacement Needed

This is the core of any life insurance calculation—how much annual income your dependents would need to maintain their current lifestyle, and for how long.

Back to Michael. He wants to make sure his wife and child can continue with their current standard of living for at least 20 years—until his child finishes university and becomes financially independent. That means replacing S$24,000 a year (S$2,000 per month) in income.

Now assume the insurance payout is invested in a relatively safe vehicle yielding a 4% annual return. To generate S$24,000 a year in passive income, Michael would need a lump sum of S$600,000.

This approach—sometimes called the capital preservation method—ensures the payout isn’t just spent, but sustains income over time. For simplicity, this doesn’t include inflation adjustments or lifestyle upgrades. If you want to future-proof your family further, you can increase the target yield or adjust for projected costs.

Step 2: Add Outstanding Liabilities

If you’re still paying off a mortgage, business loan, car loan, or any other long-term liability, that debt doesn’t disappear when you do. In most cases, it transfers to your estate—or your surviving spouse or guarantor. Most Singaporean homeowners are already required to purchase a mortgage reducing term assurance (MRTA) or home protection scheme (HPS) when they take up an HDB or bank loan. That clears the home loan if the insured passes away.

But what about everything else? Michael has a car loan of S$60,000 and no additional personal loans. He’s also set aside a tertiary education fund for his child, but it’s only partially funded.

To close the gap, he calculates:

• Car loan: S$60,000
• Education top-up: S$100,000
• Total additional cover needed: S$160,000

Add that to the earlier S$600,000, and Michael’s minimum life insurance coverage should be S$760,000.

Step 3: Include Critical Illness and Disability Protection Separately

Death is not the only risk. In fact, a serious illness or disability is more statistically likely—and often more financially disruptive—because the person is still alive and incurring ongoing costs.

In Singapore, the Ministry of Health reports cancer as the leading cause of death, but survival rates have improved. That means long-term recovery, medical bills, and loss of income are all realistic outcomes.

A practical benchmark:
Cover 5 years of your annual income for critical illness.

If Michael earns S$48,000 a year, that means he should aim for at least S$240,000 in critical illness coverage.

Total permanent disability (TPD) coverage is slightly different. It’s meant to replace your income all the way to retirement—usually age 65. If Michael becomes disabled at 40, he has 25 years of lost income. At a minimum of S$48,000 per year, that’s S$1.2 million. Of course, not all of this has to come from life insurance. CPF, Eldershield/CareShield Life, Medishield Life, and your employer's group plans can cover part of the gap. But you need to run the numbers.

Step 4: Account for What You Already Have

Many Singaporeans already have some form of insurance—from their employer, CPF-linked plans, or earlier purchases. Before you buy more coverage, subtract what’s already in place:

• Employer death and disability cover
• Mortgage-linked term insurance
• Existing term or whole life policies
• SRS or CPF savings earmarked for retirement or dependents
• Investment portfolios designed for passive income

The goal is to calculate the net protection gap—the difference between what your dependents would need, and what they’d actually get.

Step 5: Decide on Term vs. Whole Life

Once you know the quantum of cover needed, you’ll need to choose the type of life insurance:

Term Life Insurance

• Cheaper premiums
• Covers a fixed duration (e.g., until age 65 or 70)
• No cash value
• Ideal for income replacement and debt coverage

Whole Life Insurance

• Higher premiums
• Lifetime coverage
• Builds cash value you can withdraw or borrow against
• Often bundled with savings or investment components

For most young families with income responsibilities, term insurance is more cost-effective. You pay for what you need, when you need it, and direct the savings toward investment or other planning priorities.

Even if no one relies on your income, you may still need personal protection in case of disability or critical illness. This is especially important for:

• Freelancers or self-employed individuals with no employer benefits
• Singles who still have debts or financial responsibilities
• Young professionals who want to lock in lower premiums while healthy

Think of it as income continuity insurance. If you couldn’t work for two years, how would you pay rent? Fund rehab? Maintain your lifestyle? This is where critical illness and TPD coverage becomes crucial. Life insurance in the death-benefit sense may not be necessary—but protection against life-altering conditions still is.

One common trap is to underinsure because of premium cost. But with term insurance, the cost is often surprisingly affordable—especially if you’re under 35 and in good health.

A 30-year-old non-smoker in Singapore might pay:

• ~S$30/month for S$500,000 of term life insurance
• ~S$50/month for S$200,000 of critical illness cover

Bundled plans like whole life or investment-linked insurance may cost 4–10x more for the same death benefit. If your goal is pure protection, term remains the most efficient.

The MAS has made it easier to compare and purchase insurance directly. Platforms like CompareFirst, run jointly by MAS, CPF Board, and the Life Insurance Association, let you shop for term life and whole life policies without pressure from agents.

Pros of going direct:

• Lower premiums (no commission costs)
• Transparent comparison
• Simpler products (pure protection, no bundling)

Cons:

• No personalized advice
• Must self-evaluate needs
• Limited to participating insurers on the platform

If you know what you want and how much you need, buying direct is a smart, cost-effective route. Just remember to read the fine print: some policies have exclusions, waiting periods, or tiered payouts.

Your insurance needs will evolve. The coverage you buy in your 30s may no longer fit when:

• You have another child
• You take on a second mortgage
• Your parents require long-term care
• You leave your job and lose group benefits
• You hit 50 and want to scale back coverage as kids become independent

Make it a point to review your insurance portfolio every 3–5 years, or after any major life event.

A simple rule of thumb:
As responsibilities increase, coverage should follow. As liabilities decrease, you can scale down.

Buying life insurance isn’t a sign of fear—it’s a sign of financial responsibility. It ensures that your family’s future doesn’t hinge on your presence. And it gives you something invaluable in return: peace of mind. You don’t need to over-insure. You just need to be aligned—to match your real risks to the right level of cover, and update it as life changes.

Life insurance is not about predicting death. It’s about protecting life—the life your family deserves to continue.