COVID-19 has impacted job stability, and the overall economic outlook of Singapore and the rest of the world. According to the Ministry of Trade and Industry (MTI), Singapore is headed for an economic contraction between -5% and -7% - on par for its worst since independence. The Ministry of Manpower (MOM) doesn’t paint a brighter picture, with total employment declining close to 130,000 in the first half of 2020.
With that being said, you should take the time to review your protection needs and figure out if your insurance coverage and premiums are still affordable, especially if your job or income has been affected by the pandemic. Right-sizing your policy during your insurance review may be an option. As a base case, you should always buy insurance with affordability, in both good and bad times, in mind.
Another option would also be to defer your premium payments. The Life Insurance Association of Singapore (LIA) announced measures where policyholders could leverage on an initial six-month Deferred Premium Payment (DPP) scheme until 30 September 2020. A second Deferred Premium Payment scheme was announced for a further six months between 1 October 2020 and 31 March 2021. However, only policies which are not already on the initial DPP are eligible.
For those who have tapped on the initial DPP and are still facing financial constraints, the LIA recommends that you approach your life insurer for further deferred premium support, which may include:
- Instalment payment plan of 3 months;
- Extension of policyholder’s DPP by 3 months; or
- Existing options stated in the policy contract, for example, automatic premium loan, conversion to a paid-up policy, premium holiday
You should talk to your financial advisor to ensure you understand the specific implications on your policy.