The Straits Times/Asia News Network
SINGAPORE–A month after he said Singaporeans were under-insured, Senior Minister Goh Chok Tong gave figures that show how Singapore compares with other economies. Singapore ranks fifth in Asia and 17th in the world in terms of the penetration rate of life insurance cover. This rate measures the total life insurance premiums paid as a proportion of the economy’s gross domestic product. Singapore’s rate was 5.1 percent last year, behind Taiwan (13.8 percent), Hong Kong (9.6 percent), Japan (7.8 percent) and South Korea (6.5 percent). These latest figures, from a report by global reinsurer Swiss Re earlier this year, were cited by Goh in a written reply to Madam Ho Geok Choo (West Coast GRC). She had wanted to know the proportion of Singaporeans with life insurance policies, and how many of those insured had investment-linked policies. Goh, who is chairman of the Monetary Authority of Singapore (MAS), had said at NTUC Income’s 40th anniversary dinner last month that Singaporeans were under-insured. A 2007 survey by the Life Insurance Association (LIA) had found that the average policyholder is under-insured by about SG$362,000 (US$276,000). According to Goh, this was most likely because Singaporeans felt they could not afford the necessary coverage. He thus called for insurers to keep insurance plans affordable to provide cover for more Singaporeans. He suggested that insurers place more emphasis on pure protection or term insurance plans over more costly whole life policies, which bundle insurance with an investment or savings component. Goh’s comments sparked a debate in The Straits Times’ Forum page on the benefits of term insurance and the responsibility of insurance agents to sell the best, instead of the most profitable, policies to people. Goh’s reply has confirmed the popularity of insurance policies with investment components over term insurance plans. Of the total insurance policies in force at the end of last year, 47 percent contained an investment element. These comprise investment-linked policies (14 percent), whole life policies (16 percent) and endowment policies (17 percent). Only 19 percent of the total policies in force were term insurance plans. Goh directed consumers to guides issued by the MAS and the LIA to better understand their insurance needs and the features of different insurance products.
The guides are produced under the national financial education program MoneySense, and are available on its website. The LIA could not be reached for comment.