Majority of Singaporeans not financially prepared for life's crises: survey

SINGAPOREANS are at risk of not being adequately prepared to cope with the financial burden of life's crises, a survey has found.

The survey by insurer Prudential shows that in the past five years, about 70 per cent of Singaporeans did not increase their life insurance cover to keep pace with the rising income levels.

This was despite the median gross monthly income of workers rising 21.5 per cent over the same period, Prudential said, citing data from the Manpower Research and Statistics Department.

Some 48 per cent of respondents cited budget constraints as the key barrier to getting more life insurance cover, followed by 35 per cent who cited competing financial needs.

The poll also found that 85 per cent of respondents were potentially under-insured by industry standards, with only five times their annual earnings set aside as contingency funds for unexpected personal and financial events.

One should aim to have approximately 10 times his or her annual earnings as basic life cover, Prudential said, citing data from the Life Insurance Association Singapore.

"It is a cause for concern that the majority of Singaporeans are insufficiently insured but what is even more worrying is that they do not appear to place a priority on increasing their life insurance cover to match their income as it rises," said Prudential Singapore executive vice-president and chief marketing officer Angela Hunter.

A lack of awareness on the right level of financial protection needed during the times of crisis could be one of the reasons Singaporeans are not sufficiently insured, Prudential cited in the survey.

It found that while 61 per cent of respondents believed they had enough savings and life insurance cover to protect themselves and their families against life's eventualities, only 15 per cent had 10 times or more of their annual income set aside as financial protection against life's crises.

"There is obviously a disconnect between what Singaporeans think they need to ensure a secure financial future for themselves and their families and what is actually required," added Ms Hunter. "In deciding on life insurance cover, one should consider factors such as income, expenses, outstanding debts, as well as existing savings and investments."

The poll, conducted online from June 24 to 30, surveyed 353 working adults on their attitudes and motivations towards providing financial security for themselves and their families.