You are now leaving the Standard Chartered Bank (Singapore) Limited (“SCBSL”) website to access a third party website ("Third Party Website").

SCBSL shall not be liable for the handling of any information you may provide on the Third Party Website, or for any loss incurred in connection with your access to or use of the Third Party Website. SCBSL makes no warranties, representations or undertakings about the Third Party Website.

A young singaporean couple smiling and looking at a laptop inside their house

Singaporeans are buying more life insurance policies than ever. Learn about the five common mistakes people make when buying life insurance.

Singaporeans are buying more life insurance policies than ever. According to the Life Insurance Association, Singapore, Singaporeans bought life insurance policies worth a total of SGD4.2 billion in premiums in 2018, a four per cent increase from 2017. This upward trend is a positive sign since life insurance is important. However, before you commit to one, make sure you learn about the five common mistakes people make when buying life insurance to avoid doing the same.

Mistake #1: Not understanding the various types of life insurance policies

Did you know there are three main types of life insurance policies in Singapore? They are:

  1. Term Life Insurance: The cheapest and most basic form of life insurance. It has a fixed expiry date – usually five to forty years, or up to a specified age. It does not have any cash benefit and pays out upon death or disability. This type of insurance is used purely for protection purposes.
  2. Endowment and Whole Life Insurance: Life insurance with a savings component. The savings part will be paid out at a fixed maturity date and may have a guaranteed and non-guaranteed portion depending on the specific policy.
  3. Investment-Linked Insurance: Life insurance with an investment component. Premiums are invested into mutual funds, and some of these units are then sold each year to cover insurance costs and other policy expenses. Returns are tracked according to the funds’ performance and there is no guaranteed portion.

Understanding these key differences will help you identify the right type of life insurance policy for your needs.

Mistake #2: Not having a clear objective before deciding on a life insurance policy

It helps to know exactly what you want covered in your life insurance policy. Is it only for protection in case of death or disability or illness? Or do you want to save for your retirement or your child’s education?  When would you need the funds? What is the target amount you need to achieve your objective?

Mistake #3: Using life insurance primarily as an investment vehicle

Combining life insurance coverage with wealth-accumulation goals via an investment-linked policy may seem like a good idea. After all, you get the best of both worlds plus extra convenience.

However, the mutual funds you could invest in through an investment-linked insurance policy are likely also available separately as unit trusts. Depending on the specific fund or policy, it may turn out to be cheaper from a fees perspective to buy a term product for insurance protection and invest the premium difference directly via unit trusts instead. So, make sure you understand the pros and cons of each available option before making your decision.

Mistake #4: Focusing on the wrong coverage priorities

Always review and prioritise your plans based on changes in your life stages as your objectives will change, depending on whether you are young and single or married with children.

Consider the level of coverage that’s best for your current needs. Being over-insured is better than being under-insured, but there are opportunity costs involved – could that extra money going towards premiums be used more productively?

Mistake #5: Buying on impulse

Don’t make the mistake of getting into a policy without understanding how the policy works and how it can meet your needs. Understand the policy’s features, risks, returns and limitations before making a commitment.

Be sure to shop around and compare policies if you are unsure. While there are only a few broad categories of life insurance policies, there can be many differences between policies and insurers.

Everyone’s life and goals are unique. While life insurance is undoubtedly important, you should always get one tailored to your individual needs. Now that you’ve learned which mistakes to avoid, you are better equipped to get a policy that is best for you.

Whether it’s wealth-accumulation or making sure your loved ones are protected, Standard Chartered is here to help you achieve your goals. The earlier you get started on your journey, the better. Speak to one of our trusted financial advisers today to learn more about how we can help you.

This article is brought to you by Standard Chartered Bank (Singapore) Limited. All information provided is for informational purposes only.

Insurance x fullbanner


Buying a life insurance policy is a long-term commitment. An early termination of the life insurance policy usually involves high cost and the surrender value payable (if any) may be less than the total premiums paid.

The contents of this article do not constitute a contract of insurance and reference should be made to the actual policy for the exact terms and conditions applicable to the respective insurance policies.

This article is for general information only and it does not constitute an offer to buy or sell an insurance product or service, nor is it intended to provide any insurance or financial advice. This article has not been prepared for any particular person or class of persons and it has been prepared without regard to the specific investment or insurance objectives, financial situation or particular needs of any person. You may wish to seek advice from a licensed or an exempt financial adviser on the suitability of a product for you, taking into account these factors before making a commitment to purchase any product. In the event that you choose not to seek advice from a licensed or an exempt financial adviser, you should carefully consider whether the product is suitable for you. In facilitating insurance arrangements or in referring customers to the respective insurer(s), Standard Chartered Bank (Singapore) Limited is acting in alliance with the insurer(s) and not as an agent for customers.