Singaporeans are living longer, with average life expectancy increasing from 68 years in 1970 to over 84 years today1. This remarkable progress reflects advancements in healthcare, increased awareness of healthy living, and a deeply rooted tradition of familial care, where families prioritise the wellbeing of their elderly members. However, this tradition is being tested by escalating living and care costs, which are placing a growing financial burden on households.
Longevity brings with it the challenge of maintaining quality of life for potentially decades. Healthcare costs in Singapore have surged by over 57 per cent in the past decade, and high inflation continues to drive expenses higher. The question is no longer “How can we live longer?” but rather “How can we afford to live longer?”2
Source: Smartwealth: The Average Healthcare (Medical) Inflation Rate in Singapore [2024] 3
Dr Khoo Kah Siang, president and CEO of Manulife Singapore, highlights these challenges, focusing on how life insurance can play a crucial role in mitigating financial risks. By providing a safety net, life insurance offers families peace of mind as they navigate the complexities of end-of-life living.
“Financial planning is crucial for managing the increase in life expectancy,” explains Khoo. “And retirement planning should be taken very seriously and done in a timely manner.” The financial demands of living longer include maintaining an expected standard of living and quality of life. “Longer lifespans mean a need for more resources and better management of the unpredictability that comes with it,” Khoo says. “Portfolios must grow accordingly, coupled with adequate insurance coverage.”
“Longer lifespans mean a need for more resources and better management of the unpredictability that comes with it. Portfolios must grow accordingly, coupled with adequate insurance coverage.”
Dr Khoo Kah Siang
President and CEO of Manulife Singapore
This financial challenge is further heightened by the impact of inflation, underscoring the importance of regularly reviewing and reevaluating retirement pots. “You have to protect your purchasing power over longer periods,” emphasises Khoo. “This can involve adopting investment strategies that offer inflation protection and can adapt to changing economic conditions.” At the same time, a longer time horizon provides the opportunity to implement longer-term investment strategies – because it’s never too early to start planning for retirement.
“Early planning offers greater flexibility and more runway to diversify investments. It also helps mitigate the risks associated with market volatility and provides an opportunity to invest in real assets that could mitigate the value dilution of assets due to inflation.”
Dr Khoo Kah Siang
President and CEO of Manulife Singapore
“Early planning offers greater flexibility, and more runway to diversify investments,” highlights Khoo. “It also helps mitigate the risks associated with market volatility and provides an opportunity to invest in real assets that could mitigate the value dilution of assets due to inflation.” This is especially critical for those nearing retirement, as a market downturn can be catastrophic; retirement savings fell by an estimated 30 per cent during the pandemic in just a few weeks.4
Longevity also presents difficult trade-offs for high-net worth individuals (HNWIs) and their families. Without proactive planning, HNWIs may need to dip into their legacy plans to cover long-term care or uphold their standard of living during retirement.
These concerns are particularly pressing for Singapore’s HNWIs. According to a 2024 study by AFFLUENTIAL and Agility Research and Strategy, health and wellness, along with personal wellbeing, rank as the most important life needs and goals among HNWIs in Singapore over the next three to five years.5 Financially, this focus is reflected in respondents’ planned retirement age increasing from 60 in 2023 to 62 in 2024. This shift highlights the financial challenges tied to the primary retirement planning concerns of HNWIs – specifically, saving enough to cover living expenses and meeting the costs of healthcare and long-term care.
Key Life Needs and Goals of Singaporean HNWIs in the Next 3-5 Years
Source: AFFLUENTIAL and Agility Research and Strategy, 2024 study
Against such headwinds, life insurance can provide some certainty. While often associated with legacy planning, it brings benefits well before death – supporting wealth accumulation, protection and transfer.
“With indexed universal life insurance (IUL), when the index performs well, the cash value of the IUL can experience significant growth. This allows policyholders to benefit from market gains without directly investing in the stock market.”
Dr Khoo Kah Siang
President and CEO of Manulife Singapore
One popular option is indexed universal life insurance (IUL). These policies are tied to stock market performance, offering the potential for higher returns compared to traditional whole life insurance. “With IULs, when the index performs well, the cash value of the IUL can experience significant growth,” explains Khoo.6 One of the most notable features of IULs is their downside protection, ensuring that even if the index performs poorly, the cash value is preserved through a minimum floor rate. “This allows policyholders to benefit from market gains without directly investing in the stock market.”
IUL policies also provide a death benefit to heirs, providing liquidity for estate transfers during critical moments. Many IULs additionally include an accelerated death benefit feature. “This gives policyholders access to a portion of the death benefit if they are diagnosed with a terminal illness, providing financial support for medical expenses at a challenging time,” explains Khoo.
Alongside IULs, a new indexed income life insurance plan designed for the HNWI sector delivers greater financial stability. In exchange for a reduced death benefit payout, it provides an index-based income to support policyholders through retirement, ageing and declining health. With cognitive decline a common aspect of ageing, this income eases financial decision-making for both policyholders and their families.
An integrated approach bundles indexed income products within a portfolio to strengthen legacy protection while ensuring a dependable retirement income. The IUL component provides death benefits and potential cash value growth, while indexed income products offer steady returns. This approach balances financial plans, supporting both long-term wealth preservation and immediate needs during retirement.
Regardless of the strategy, Manulife Singapore has observed retirement planning become a priority for Singaporeans, including HNWIs. “Strong retirement planning not only safeguards an individual’s lifestyle for longer, but also ensures that they can handle unexpected expenses such as healthcare costs and maintain financial independence while still ensuring a legacy,” concludes Khoo. With lifespans increasing, retirement planning has become essential to financial stability, enabling a secure and comfortable future.
Important Notes
Manulife Signature plans are underwritten by Manulife (Singapore) Pte. Ltd. (Reg. No. 198002116D). This advertisement has not been reviewed by the Monetary Authority of Singapore. Buying a life insurance policy is a long-term commitment. There may be high costs involved if you terminate the policy early, and your policy's surrender value (if any) may be zero or less than the total premiums paid.
This article is for your information only and does not consider your specific investment objectives, financial situation or needs. It is not a contract of insurance and is not intended as an offer or recommendation to purchase the plan. You can find the full terms and conditions, details, and exclusions for the mentioned insurance product(s) in the policy contract.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the LIA or SDIC websites (www.lia.org.sg or www.sdic.org.sg).
We recommend that you seek advice from a Manulife Financial Consultant or our Appointed Distributors before making a commitment to purchase a policy.
Information is correct as at 2 December 2024
- https://www.macrotrends.net/global-metrics/countries/sgp/singapore/life-expectancy
- https://www.dbs.com.sg/personal/articles/nav/retirement/inflation-how-it-messes-with-your-retirement-planning
- https://smartwealth.sg/medical-inflation-rate-singapore/
-
https://www.manulife.com.sg/en/insights/find_stability_in_uncertain_times_with_legacy_insurance_plans.html
https://www.forbes.com/sites/lizfrazierpeck/2021/02/11/the-coronavirus-crash-of-2020-and-the-investing-lesson-it-taught-us/ - https://affluential.com/wealthlens-2024-unveiling-the-aspirations-and-priorities-of-asias-hnwis-in-singapore-and-hong-kong/
