Am I over-insured or under-insured in Singapore?

Many people in Singapore often worry that they may be over-insured, especially when they compare themselves with friends or colleagues who appear to have fewer policies.

But a more reliable way to answer this question is not through anecdotes, but through published data, government-linked guidance, and population-level benchmarks. When viewed through this lens, this question of whether you are over- or under-insured becomes much clearer.

What does “average” insurance coverage look like in Singapore?

Singapore tracks insurance adequacy through the concept of the protection gap. This measures the difference between the financial resources households would require after a major adverse event, such as death or serious illness, and the resources they already have through insurance and savings.

According to the last national assessment published by the Life Insurance Association Singapore in 2022,

• The mortality and total permanent disability protection need for economically active Singaporeans and permanent residents was estimated at S$1.78 trillion, equivalent to approximately nine times annual income at a population level.
• After accounting for existing insurance coverage and savings, the remaining mortality protection gap was estimated at S$373 billion, representing a 21% shortfall.
• The critical illness protection need was estimated at S$783 billion, equivalent to about four times annual income.
• The corresponding critical illness protection gap was significantly larger at 74%, meaning that only around one quarter of estimated need was covered.

These are aggregate figures rather than personal recommendations. Even so, they point to a consistent conclusion: Singaporeans, on average, are more likely to be under-protected than over-protected, particularly when it comes to serious illness and prolonged income disruption.

Is there any official or government advice for insurance planning?

Singapore’s national financial education programme, MoneySense, publishes a Basic Financial Planning Guide to help households make senses of financial decisions, including around your insurance coverage.

For working adults with dependants or major financial commitments, MoneySense suggests the following as starting points:

• Life and permanent disability cover of around nine times annual income
• Critical illness cover of around four times annual income
• Total protection premiums that generally do not exceed 15% of take-home pay

The last point matters more than many people realise. It exists to prevent over-insurance. If insurance costs are so high that they crowd out savings, daily expenses, or long-term goals, then coverage has become unhealthy, even if the benefits look impressive on paper.

Why age and life stage matter more than the “average”

Your insurance needs also vary significantly depending on your age, income stability, dependants, and liabilities.

As such a useful question is to ask yourself whether your coverage matches your current responsibilities rather than just comparing yourself to national averages.

Indicative benchmarks by life stage

The following ranges are intended as planning references rather than targets.

These benchmarks reflect two principles embedded in official guidance. Protection should broadly track income and responsibilities, and affordability should be preserved.

Why insurance can sometimes feel excessive even when it is not

The reality is: many people feel over-insured for reasons that have little to do with actual coverage levels.

Firstly, premiums are immediate, while risks such as illness or disability are probabilistic and difficult to visualise.

Second, coverage is often unevenly distributed. Many households have some death cover and basic medical cover, but limited protection against income disruption, even though national data shows this to be one of the largest gaps.

Third, policies are rarely reviewed as life circumstances change. Coverage purchased at one life stage may become inefficient at another, creating the impression of excess even when overall protection remains incomplete.

In most cases, the issue is not the absolute amount of insurance, but how well it aligns with current needs.

A neutral self-assessment framework

Using only publicly available guidance, you can perform a simple review.

• Establish baseline references
  Use the MoneySense benchmarks of approximately nine times income for death and disability, four times income for critical illness, and the 15% affordability guideline.
• Account for existing resources
  Include employer-provided insurance, national schemes, and savings specifically earmarked for financial protection.
• Consider income disruption scenarios
  Assess what would realistically happen if work were disrupted for one to two years due to illness or disability.

If premiums are low but financial resilience would be compromised, the issue is likely under-insurance. If premiums are high but protection no longer reflects current responsibilities, the issue is more likely inefficiency.

So, over- or under-insured?

When assessed against the latest national protection gap data, government-linked planning benchmarks, and published healthcare cost information, the evidence suggests that:

• System-wide over-insurance is not typical in Singapore.
• Under-protection, particularly against serious illness and income disruption, remains more prevalent.
• Genuine over-insurance tends to arise from outdated or poorly structured coverage rather than excessive protection overall.

Remember: Insurance is not about keeping up with others. It is about protecting what depends on you, in a way that you can sustain over time.

You can speak to a trusted financial representative to do annual reviews for both your insurance policies and your financial needs.