What Is Income Protection Insurance & Do I Need It?

What Is Income Protection Insurance & Do I Need It?

Like many other insurance policies, income protection is one of the ways you can keep an eye on your financial protection in the long run. As the name suggests, income protection insurance is a policy that helps pay out an income if an individual becomes unable to work due to an illness, accident, or death. As macabre as it may be, it’s important to think about how you’ll be managing your finances, especially if you have dependents. 

Living and working here in Singapore can be a wonderful experience for expats. With great schools in every neighbourhood and high security, raising a family here can be a good thing. Likewise, the healthcare system here is one of the best in the world, making it an ideal place for expats to move with their families. That said, it’s incredibly important that expats working here do not leave it to chance as sole breadwinners of the family. 

Also referred to as disability* or sickness insurance, expatriates are encouraged to take this into consideration when they’re mapping out their insurance needs here. 

*Total disability would refer to a state of incapacity, resulting from illness or accident, which translates into the individual being unable to perform duties of his own occupation or profession. 

How does income protection insurance work? 

If you’re the sole breadwinner of your family, income protection insurance becomes a sole part of your insurance needs. Because income protection insurance will help you take care of everyday expenses when you can’t work, it’s one of the foolproof ways of ensuring your dependents and yourself included, will be taken care of. It’s akin to a rainy day’s savings. 

Depending on your provider, the insurance policy will have varying definitions of incapacity listed. This is how the provider is able to qualitatively assess your ability to work and kick-start payouts. Often, the definition depends on whether that said individual is able to continue working in that same organisation, post incident. If it’s not possible, the insurance policy will begin payments until after an individual returns to work or encounters death. In other cases, it’ll be when the policy ends. 

Income protection insurance is a great safety net – the individual is able to claim multiple times if they do encounter incidents again, provided that the policy hasn’t paid itself out. As an integral component to yours and your family’s well-being, our team at Diot-Siaci Asia urges you to include it as part of your insurance needs. 

How much insurance should I get or is recommended? 

As it directly correlates with your ability to earn income, you should pay a premium that’ll grant you at least 50 to 70% of your current salary. In Singapore, the maximum cover stands at 65% if you don’t contribute to your CPF. The cost of an income protection plan also varies greatly depending on your choice of provider, deferred period, and level of risk you encounter at work. Some of the more common factors that go into play include: 

  • type of job 
  • age
  • medical history
  • term 
  • deferred period 
  • ideal benefit payout 

Consider the situations in which the income protection insurance might come in handy. It’s much better to have planned for it than not. By offering you some control over your finances in a time of need, it eases the pressure off you and your family. 

What should I take note of when buying one? 

Already planning to procure a comprehensive income protection insurance? We compile the aspects you’ll need to consider deeply prior to making a purchase.

Policy exclusions

There’s nothing worse than finding out you aren’t covered for something months or years into paying premiums consistently. Exclusions refer to conditions that aren’t a part of your policy. Be sure to check on all the policy exclusions, if any, before you agree to a premium. Different insurers will have different exclusions, so reading all your terms and conditions is in fact a must! 


Underwriting is a process applied by insurance companies to be able to better assess your risk for a policy. This, eventually, helps them figure out a premium that’s worth your risk. For instance, questions around your medical health are targeted at measuring your risk of falling ill and the amount of benefit you’ll receive if you encounter an incident. 

Getting started on income protection insurance with Diot-Siaci Asia

Well-versed and experienced with both corporate and individual clients, our team is committed to providing top-range advice and service when it comes to your insurance needs – be it income protection or GP insurance. In a saturated market, getting the right kind of help can vastly alter your experience. Consult our experts today

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