WORKING adults are now more adequately insured than they were several years ago, according to a study commissioned by the Life Insurance Association (LIA).
The study used a measure called the protection gap to assess the extent of coverage. This refers to the amount of life insurance coverage the person needs minus the amount he has plus his Central Provident Fund savings.
It found that the average protection gap for a working adult narrowed to $242,500 last year, roughly equivalent to 3.7 times his or her annual income.
In 2006, the last time a similar study was done, the protection gap was 7.6 times annual income.
According to the new study, a working adult needs $626,000 worth of life insurance coverage.
This figure is arrived at after accounting for a person's financial commitments, including ongoing expenses for dependants, outstanding loans and other liabilities. The spouse's income is also taken into consideration.
But the total life insurance coverage was $319,500 on average last year. This covers life insurance policies bought by working adults and employer-sponsored group life insurance coverage.
LIA president Tan Hak Leh said that while the LIA was "encouraged that the gap between Singaporeans' protection needs and the existing level of coverage they have has shrunk, we are determined to further our efforts in helping Singaporeans close their protection gap".
The association also released figures for the first half of the year last Friday. It said weighted new business premiums had increased 11 per cent to $1.05 billion for the first half of this year, from the corresponding period a year ago.
This was driven by "continuous growth of regular premium products," it noted, where weighted regular premiums sales grew 21 per cent to $752.2 million. But single premium business dipped 9 per cent to $293.5 million.
The total sum assured, or protection coverage for policyholders, was $36.6 billion for the first half of the year, 15 per cent more than the same period last year.
Insurers paid out a total of $2.8 billion to policyholders and beneficiaries in the six months to June 30 - $210 million in respect of death, critical illness or disability claims and the remaining $2.59 billion for policies that matured.
More health insurance plans were taken up, with sales growing 7 per cent to $84 million compared with the first half of last year. About 88 per cent went to Integrated Shield Plans and riders.