Managing Longevity Risks

Singapore has one of the highest life expectancies in the world – we are now up 7.5 years from the 1990s, at an average of 82.8 years today¹. As a nation, our life expectancy is on par with developed countries such as the United States, United Kingdom and Hong Kong, and higher than other Southeast Asian countries, such as Malaysia (75 years) and Indonesia (69 years)².

Increased longevity means that Singaporeans now have more time and opportunities to expand our horizons and explore hobbies, more so than previous generations.

As managing longevity risks – any risk that results from a longer life span – becomes an increasingly relevant concern today, Singaporeans must educate themselves about these risks and how to best protect themselves against them.  

The Risks Involved

It was recently reported that the prevalence of disability in Singapore rises from 2.1% among those below 18, to 13.3% for people above the age of 50³. Experiencing difficulties in carrying out daily tasks can increase a person’s reliance on others, cause emotional stress and directly affect his or her income.

To mitigate the impact of disabilities on income, income must be protected with the right products. While insurers are working to offer products to give Singaporeans the coverage they need, there is a gap in terms of the availability and accessibility of products. Criteria for coverage is another issue. The usual stringency of such criteria means that there is a segment of people who critically need coverage, but cannot qualify and are therefore exposed and vulnerable.

For instance, typical disability income plans require an individual’s loss of ability to perform at least two standard Activities of Daily Living (ADL) before he or she is eligible. However, being unable to carry out even a single ADL can pose enough of a setback to one’s daily life and cause a strain on family finances, as the individual may require rehabilitation and a caregiver.

Nevertheless, if an individual is able to carry out the other ADLs – of which there are six – it is near-impossible for them to obtain coverage to help cope with the strain on finances. In contrast, those with other disabilities that prevent at least two of the six ADLs from being performed will receive coverage for their expenses, leaving a coverage gap.

Another longevity risk to consider is cancer, the top cause of death in Singapore. According to the National Registry of Diseases Office, the incidence of cancer rose by about 17%, from 11,431 in 2010 to 13,416 in 2014⁴. With the growing prevalence of cancer, Singaporeans must consider protecting their future through various coverage options.

However, those already suffering from non-cancer critical illnesses will face an uphill task getting coverage due to their medical history. There is an extremely limited number of plans on the market that they qualify for, and as an insurer, we are extremely keen on addressing this coverage gap as well.

To do so, we are taking the first step in modifying the criteria that needs to be met for protection against longevity risks.

To address the two abovementioned gaps, we launched TM Protect 1 in January 2017 as an additional coverage option for those concerned with the high costs of disability care. This follows the launch of TM Protect Cancer in November 2015, which covers early and advanced stage cancer.

TM Protect 1 is Singapore’s first disability plan that fills a vital protection gap by providing a monthly benefit upon the inability to perform a single ADL. This offers essential support during the critical early stages of disability, as other plans in the market only provide cover upon the inability to perform at least two ADLs. With this plan, TMLS hopes to help Singaporeans take full advantage of the opportunities of life by protecting them against the heightened risk of disability that comes with longer life expectancy.  

Achieving Aspirations

Protection against longevity risks will ensure a smoother path for Singaporeans to achieve their aspirations, regardless of what they may be. Knowing that we are well-secured gives us the confidence to make plans for our ideal futures, while supporting the dreams of our loved ones.

As part of TMLS’ #iKnowYouBest campaign, we interviewed four couples about their ideal lifestyles and showcased the extent to which they planned for retirement together. Moving overseas, playing golf and even producing a movie are some of the dreams that they shared, though not all of them have made concrete plans to achieve them due to the perception that it is daunting or that it is too early to start.

Most goals can be achieved in a realistic amount of time through careful planning, even if it may seem like a herculean task at first. Once couples have drawn up plans of their own, they can then factor in their plans for their children and enable them to also achieve their aspirations.

As parents plan for their children’s futures, financing their education will inevitably come up. It was found that a four-year degree in Singapore is expected to cost 70.2% of an individual's average yearly income in 2030, nearly a 20% increase compared to 2015⁵. This percentage would be significantly greater should the child wish to pursue an education overseas. To deal with the rapidly-rising costs of education, parents should think ahead and consider education plans with yearly payouts. Products such as the recently launches TM Kidstart plan, would put parents at ease knowing that they have set aside funds for their children’s future.

The Takeaway

Effective management of longevity risks through a combination of products can empower Singaporeans to look forward to the next stage of our lives. The risk of disabilities and critical illnesses should not stop us from achieving our own aspirations while providing opportunities for our loved ones to lead equally fulfilling and meaningful lives.

<sup>1. According to a speech by Singapore’s Minister for Health Mr Gan Kim Yong, in Parliament on 13 Apr 2016
2. The World Bank (2014)
3. The Straits Times, Prevalence of disabilities in different age groups revealed (21 Dec 2016)
4. Singapore Cancer Registry, Trends in Cancer Incidence in Singapore 2010 – 2014 (2015)
5. Economist Intelligence Unit, Yidan Prize Forecast, Education to 2030 (2016)</sup>