You probably have some life insurance. Perhaps a policy your parents bought, a plan you signed up for in your 20s, or the group cover that came with your job.
So does almost every working adult in Singapore. And yet, the average working adult here is still around $170,000 short on death cover and more than $260,000 short on critical illness cover. Scale that across the country and the shortfall comes to $373 billion on death protection and $579 billion on critical illness, going by the latest national study.
Being underinsured is the normal state of affairs here, not the exception. Here’s the full picture in numbers.
Top Insurance Protection Gap Statistics in Singapore
All figures are from the Life Insurance Association’s Protection Gap Studies 2017 and 2022 (base years end-2016 and end-2021).
- Singapore’s mortality protection gap was $373 billion, or 21% of protection needs, as at end-2021
- The critical illness protection gap was larger still at $579 billion, or 74% of needs
- The LIA’s 2022 study puts the average working adult $170,352 short on death cover and $264,586 short on critical illness cover
- Singaporeans are buying more critical illness cover: the CI gap narrowed from 81% of needs in 2017 to 74% in 2022
- The average policyholder holds $331,200 in death cover, spread across about three policies
- The average policyholder holds just $193,300 in critical illness cover, up around 50% since 2017
- Official MoneySense guidelines recommend 9x annual income in death and TPD cover and 4x in CI cover
SIDE NOTE
A policy bought years ago. Savings in three places. A will that's still on the to-do list.
None of it is wrong. It's just not a plan yet.
There's an order that turns the pieces into one system, and it doesn't require becoming a finance expert. Here's the order, in 7 steps, so you know what to sort out first.
What Is the Insurance Protection Gap?
The insurance protection gap is the shortfall between the money your dependants would need if you passed away or fell critically ill, and the resources actually available to them.
The formula is simple:
Protection needed – resources available (insurance, CPF savings, other assets) = protection gap
There are two main gaps measured in Singapore. The mortality protection gap covers the shortfall if you pass away. The critical illness (CI) protection gap covers the shortfall if a serious illness stops you from working. Related gaps exist for hospital bills and disability, but the mortality and CI gaps are the two the national data tracks.
Worth clearing up one confusion early. The Life Insurance Association (LIA) publishes two different kinds of multiples. Figures like 2.1x or 3.1x annual income describe the size of the gap itself, as measured in the 2017 study. Figures like 9x and 4x are guidelines for how much cover you should hold in total. Mix them up and you end up with some odd conclusions about how much insurance you need.
Understanding your own gap is a core part of insurance planning, and the national statistics below give you a benchmark to measure against.
The Key Numbers From the LIA Protection Gap Study
The LIA commissions a nationwide Protection Gap Study roughly every five years, with editions in 2012, 2017, and 2022. The 2022 edition, published in September 2023, measures economically active Singaporeans and PRs aged 20 to 69 with at least one dependant, based on data as at the end of 2021.
Every statistic below is labelled with the year of the study it comes from.
1) Singapore’s mortality protection gap is $373 billion, or 21% of protection needs
As at the end of 2021, working adults in Singapore collectively needed $1.78 trillion in mortality protection but had cover and savings for only 79% of it, leaving a gap of $373 billion.
In percentage terms, the gap has barely shifted between the two most recent studies, easing from 23% in 2017 to 21% in 2022. In dollar terms, though, it actually grew, from $355 billion to $373 billion, because protection needs rose faster than coverage did.
2) The average working adult has a mortality protection gap of $170,352
Per economically active adult, the 2022 study puts the mortality protection gap at $170,352 as at end-2021.
Yet actual payouts tend to run far below that. One insurer’s claims data points to an average death payout of around $48,000, a rough indication rather than an official figure, though still well short of the gap.
For comparison, the 2017 study put this figure at $169,673. In per-person terms, the mortality gap has barely moved in five years.
3) The critical illness protection gap is $579 billion, or 74% of needs
The CI gap is the bigger problem, in both dollars and percentage. Working adults needed an estimated $783 billion in CI protection as at end-2021 but held cover for only about a quarter of it, leaving a 74% gap worth $579 billion.
Put another way: for every dollar of critical illness protection the average working adult needs, about 26 cents is in place.
4) The average working adult has a CI protection gap of $264,586
The 2022 study puts the CI protection gap at $264,586 per economically active adult. Across the 2.19 million adults in scope, that adds up to the $579 billion national gap.
That’s a lot for one household to absorb out of savings. As a rough guide, our claims study shows an average critical illness payout of around $52,000, well below the gap, though it comes from a single insurer’s records rather than an official average.
5) The critical illness gap is closing, from 81% of needs in 2017 to 74% in 2022
This is the clearest improvement anywhere in the data. Between the two studies, Singaporeans bought a lot more critical illness cover, up 63%, and the gap narrowed by 7 percentage points as a result. It is still the widest gap of the lot, but it is finally moving in the right direction.
| Measure | 2017 | 2022 |
|---|---|---|
| Mortality protection gap | $355 billion | $373 billion |
| Mortality gap (% of needs) | 23% | 21% |
| Mortality gap per working adult | $169,673 | $170,352 |
| CI protection gap | $538 billion | $579 billion |
| CI gap (% of needs) | 81% | 74% |
Source: LIA Protection Gap Study 2017 and 2022 (base years end-2016 and end-2021)
The direction is encouraging. The size of the gap, still at 74% of what people need, is not.
QUICK CHECK
Can you answer these three questions?
1) If something happened to you tomorrow, how much would your family receive?
2) At 65, what monthly income will your savings and investments pay you?
3) If you never get round to a will, who inherits what, and in what proportion?
Most people manage one at best. Not because they're careless, but because nobody has shown them which order to tackle things in.
That order exists. Work through your finances in this sequence, from income and protection through to investments and estate planning.
How Much Coverage Does the Average Singaporean Have?
The gap only makes sense alongside what people actually hold. The 2022 study’s key findings include coverage data we haven’t seen published anywhere else.
6) The average policyholder holds $331,200 in death cover
Policyholders held an average of $331,200 in death cover in 2022, across roughly three policies each.
7) The average policyholder holds $193,300 in CI cover
Average CI cover per policyholder reached $193,300 in 2022, up around 50% from 2017. Bear in mind these are figures for people who own policies at all. Anyone with no CI cover sits outside the average entirely.
Here’s how the two benchmarks compare, using the study’s average income of $90,855 per economically active adult in 2021:
| Benchmark | Death cover | CI cover |
|---|---|---|
| What the average policyholder holds (LIA, 2022) | $331,200 | $193,300 |
| What official guidelines recommend (9x / 4x income) | ~$818,000 | ~$363,000 |
A quick note on the guideline: the 9x and 4x are total protection targets, meant to be met by your savings and insurance together, not by insurance alone. So holding less than the full amount in cover doesn’t mean you’re short by the difference, since CPF and other savings count towards it. That said, some people would rather not draw down their savings if the worst happens, and prefer their insurance to carry more of the load. There’s no single right answer here. It comes down to how comfortable you are leaning on savings rather than cover.
Part of the reason people feel covered is that Singapore’s baseline layers are easy to overcount. The Dependants’ Protection Scheme pays out $70,000 at most. MediShield Life covers hospital bills, not lost income. Employer group cover helps, but it usually lapses the day you leave the job.
The Official Coverage Guidelines (And Where They Come From)
Singapore’s official guidance on how much cover you need comes from the Basic Financial Planning Guide (BFPG), published by MoneySense with MAS and industry bodies:
- Death and total permanent disability: 9x your annual income
- Critical illness: 4x your annual income
- Premium budget: at most 15% of your take-home pay on protection insurance
Those numbers weren’t plucked from the air. The Protection Gap Study calculated that the average working adult needs mortality cover of about 9 times annual income and critical illness cover of about 4 times. The official consumer FAQ confirms the guidelines “are based on LIA’s most recent Protection Gap Study”.
The 9x and 4x figures come from the national study rather than a rule of thumb, which is why they’re the benchmarks used throughout this article.
How much of your income should go to insurance premiums?
The BFPG caps protection premiums at 15% of take-home pay. On a $4,000 take-home salary, that’s at most $600 a month across all your protection policies, and ideally well under.
“Am I spending too much on insurance?” is a common worry, and the honest answer is that many people are, but on the wrong policies. A single whole life or investment-linked plan can swallow the entire 15% budget while providing a fraction of the cover that term insurance would buy for the same money.
How Much Life Insurance Do You Need?
As a starting point: 9x your annual income for death and TPD cover, and 4x for critical illness. Then adjust for your own circumstances.
The more precise method takes three steps:
- Estimate what your dependants would need: outstanding mortgage and debts, living expenses for the years they’d depend on you, children’s education, and final expenses
- Tally what’s already in place: existing policies, employer group cover, DPS, CPF savings, and other assets
- Subtract: the difference is your personal protection gap, and the minimum extra sum assured worth considering
Take Daniel, a 35-year-old earning $6,000 a month, or $72,000 a year. The guidelines suggest around $648,000 in death and TPD cover and $288,000 in CI cover. Suppose he holds a $200,000 term plan, $150,000 in employer group cover, $70,000 from DPS, and $80,000 in savings. That’s $500,000 accounted for, leaving a gap of roughly $148,000 on the mortality side, and his CI gap is likely wider still.
Two caveats. Employer cover disappears when you change jobs, so treat it as a bonus rather than a foundation. And every major life event (marriage, a child, a property purchase) pushes your needs up, so the sum is worth redoing every few years.
For a personalised figure, our life insurance calculator walks through the same steps with your own numbers.
The Critical Illness Gap Problem
Why is the CI gap (74%) so much worse than the mortality gap (21%)?
Partly it’s that the financial impact of critical illness is harder to picture than death. Death is a single event with a number attached. Illness arrives as an unpredictable mix of treatment costs, lost income, and however long recovery takes. The products don’t help either: early-stage, late-stage, and multi-pay variants make like-for-like comparison hard work. And CI cover costs more per dollar of protection than term life while building no cash value, which is enough to put a lot of buyers off.
The 4x income guideline has a specific logic behind it: it assumes roughly five years away from work to recover, with close to four years’ worth of income needed to cover expenses and treatment in that time.
Set that against reality. Critical illness strikes more often than most people expect, and payouts tend to be modest relative to the need. For earlier-stage diagnoses, where treatment tends to be most effective, standard CI plans may not pay at all, which is the reason early critical illness cover exists.
One practical note: CI cover is priced on health, so applications are subject to underwriting and full health disclosure. The longer you wait, the more health history you carry into the application.
What Can We Learn From These Statistics?
If you’ve read this far and felt a bit uneasy about your own cover, that reaction is the national norm. The gap has persisted through a decade in which Singaporeans bought more insurance than ever.
The useful part is that your own version of it is a solvable sum. Count the layers you already have, employer cover and DPS included. Work out your number against the 9x and 4x benchmarks. If a sizeable mortality gap is left over, term life insurance is usually the cheapest way to close it.
Most people I speak to are surprised in one direction or the other, and roughly as often as not, they’re better covered than they feared. Either way it’s worth knowing. If you’d rather not do the sums alone, a comprehensive financial planning session puts the whole picture, protection included, on one page.
BEFORE YOU GO
Articles can tell you what generally makes sense. They can't see your policies, your CPF, or your plans.
FullCircle is our comprehensive financial planning session. A licensed consultant goes through what you have, shows you the gaps and overlaps, and tells you what to prioritise across protection, retirement, and estate planning.
It's complimentary, takes about 45 minutes, and if nothing needs changing, we'll say so.