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25 September 2020

How to Choose A Life Insurance Plan That Also Protects You Against Job Loss in Singapore

In today’s economic climate, financial security is key. You may consider life insurance plan with life protection coverage and retrenchment benefit.

For the first time in a long time, the Singapore economy is contracting1. Retrenchments rose sharply to 11,350 in the first half of 2020, the Ministry of Manpower (MOM) mentioned that this is higher than was estimated at first2

The ongoing recession is shaping up to be unprecedented in scale and severity, far outstripping anything the Republic of Singapore has gone through in its short history. Jobs are being lost, businesses are floundering, and the economy is showing uncertainty.

Now more than ever, it is important to ensure that you have the protection you need from the financial uncertainties which await.

How to Choose A Life Insurance Plan That Also Protects You Against Job Loss

Biggest spate of retrenchments in history could be on the horizon

In spite of the government’s attempts to help businesses survive during this challenging economic times, the number of retrenchments in 2020 could be between 150,000 to 200,0003 in what looks set to be Singapore’s worst recorded recession, according to the analysts at a bank here.

To put things in perspective, there were about 40,000 retrenchments in the 2008 to 2009 global financial crisis, and 30,000 in the 1997 Asian financial crisis3. Economists predict that the unemployment rate could exceed 5%4, eclipsing the 4.5% experienced during the SARS outbreak and the 4.1% during the 2008 global financial crisis.

In a recent survey5, 1% of the companies queried were considering retrenchments, with another 22% expecting to impose a hiring freeze. This does not bode well for those retrenched or unemployed jobseekers looking for new opportunities.

There have also been reports3 of jobseekers being ghosted by employers who had previously extended job offers, as well as employers forcing employees to resign in order to avoid paying severance packages.

Analysts are uncertain as to when Singapore’s current economic woes will end. Financial security is now on the forefront of Singaporeans’ minds as they tighten their belts and prepare to ride out the storm.

How to Choose A Life Insurance Plan That Also Protects You Against Job Loss

What type of insurance coverage can you get to protect yourself from job loss?

Life insurance is essential for anyone in Singapore whose loved ones rely on their income, as well as anyone who wishes to protect their families or themselves from hardship if they should one day pass away or become permanently disabled.

In order to give yourself an added layer of protection in case you get retrenched, choose life insurance with a retrenchment benefit. Retrenchment benefits give you the assurance that your insurance protection will continue even if you lose your job and are unable to pay your premiums.

Manulife’s LifeReady Plus is one example of a life insurance policy with life protection coverage plus a retrenchment benefit. If you or your spouse get retrenched for a period of 30 days or more, you will not have to pay your insurance premium for 6 months while continuing to enjoy protection.

Let’s take a closer look at the key features of Manulife’s LifeReady Plus:

  • Life protection - Receive a payout in the event of death, terminal illness and total and permanent disability, with the option to enhance your protection by up to five times.
  • Financial flexibility – Accumulate policy cash valuewith the option to convert it into annual payouts7 over 10 years with an additional 5% interest.
  • Retrenchment benefit - Enjoy a premium waiver for 6 months if you or your spouse are retrenched and unemployed for 30 days or more.
  • Health advantage benefit8 – Receive a discount on your premiums for the first two years, and even after that if you meet certain health targets.
  • Upgrade protection – Increase your protection coverage with no medical checkup required at four life stages—graduation (tertiary), marriage, first home and parenthood.
  • Optional critical illness cover – Add an optional rider that will give you a lump sum payout or waiver of future premiums if you are diagnosed with a critical illness.
How to Choose A Life Insurance Plan That Also Protects You Against Job Loss

Case study

Marcus is a 38-year-old father with two young children. In 2018, he purchased a LifeReady Plus plan with a sum insured of S$300,000 without multiplier. He opted not to enhance his protection coverage beyond the basic sum insured.

In April 2020, he was retrenched.

As the family’s sole breadwinner, Marcus could not afford to lose his life insurance protection as his wife and kids would not be taken care of if something were to happen to him.

Thanks to the plan’s retrenchment benefit, he did not have to pay premiums for 6 months after getting retrenched. This enabled him to concentrate on finding a new job without worrying about losing his insurance protection.

As Singapore navigates economic challenges, soften the blow by selecting a life insurance plan that protects you and your family. Click here to find more about Manulife LifeReady Plus.

Footnotes

1. https://www.straitstimes.com/business/economy/singapore-lowers-2020-gdp-forecast-to-between-5-and-7-as-economy-plunges-worse-than

2. https://www.todayonline.com/singapore/retrenchments-first-half-2020-rose-11350-higher-9920-initially-estimated-mom

3. https://www.todayonline.com/singapore/covid-19-pandemic-could-lead-150000-200000-retrenchments-say-economists

4. https://www.channelnewsasia.com/news/business/covid19-strain-labour-market-retrenchments-rescinded-job-offers-12665732

5. https://www.straitstimes.com/singapore/manpower/8-of-singapore-companies-surveyed-have-cut-or-may-cut-salaries-due-to-covid-19

6. This includes guaranteed cash value and non-guaranteed bonuses and it is available if the policy has been in force and you have paid the premiums for 3 years.

7. Annual payout will result in lower cash value when the policy matures. Please refer to the product summary for more details.

8. Upfront premium discount is based on standard underwriting assessment. To qualify for subsequent years premium discounts, please submit the Health Advantage form or a medical report with the health target requirement for verification within the fi­rst 2 policy years.

 

Disclaimer:

LifeReady Plus and its supplementary benefits are underwritten by Manulife (Singapore) Pte. Ltd. (Reg. No. 198002116D). This advertisement has not been reviewed by the Monetary Authority of Singapore. Buying a life insurance policy is a long-term commitment. There may be high costs involved if you terminate the policy early, and your policy's surrender value (if any) may be zero or less than the total premiums paid. Buying health insurance products that are unsuitable for you may affect your ability to finance your future healthcare needs. This article is for your information only and does not consider your specific investment objectives, financial situation or needs. It is not a contract of insurance and is not intended as an offer or recommendation to purchase the plan. You can find the full terms and conditions, details, and exclusions for the mentioned insurance product(s) in the policy contract.

This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the LIA or SDIC web-sites (www.lia.org.sg or www.sdic.org.sg).

We recommend that you seek advice from a Manulife Financial Consultant or its Appointed Distributors before making a commitment to purchase a policy.

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