Very often, we hear people complaining that insurance companies never pay out claims. How true is that? Obviously, we know this is not true. We know insurance policy is a legal contract and an insurance company is legally obliged to honour the terms if the claim meets the definitions defined in the policy. I have been sharing claims payout from NTUC Income previously and there were feedbacks asking for more details. Instead of sharing claims from various companies, I thought it is better to share claim payout as an industry.
Below shows the payout for Death and TPD as well as Critical Illness from 2021 Q1 to 2022 Q2.
Based on LIA Source, the total number of policies for Death & TPD claims were 2,199 and Critical Illness policies were 2,121 in 2021 Q2. That average the payout per policy to be $73,215 and $82,036 for Death/TPD and Critical Illness respectively. Compare this with 2022 Q2, the average payout for Death/TPD was $76,610 and Critical Illness was $87,482.
The average monthly household expenditure in Singapore is about $4,900 in 2018 and below shows the distribution breakdown by expenditure category.
Considering the average Death payout of $88,000 over the 6 Quarters, it can last a family with $4,900 per month only 17 months or less than 1.5 years. With inflation at a high today, how long will that amount last? Personally, I would like to see an average payout of at least $100,000 which is grossly insufficient if we want to ensure a family meets their basic needs over 5 years.
What will be the minimum amount that you will accept?