Why this Singapore-based couple retains their Indian health insurance plan

“I couldn’t breathe from one side of the nose. The surgery would have cost nearly ₹10 lakh. When I discussed the issue with a doctor based in Bhopal, he told me he would do it for ₹50,000," he said.“While I had a private health plan in Singapore, the uncovered expenses would be 1-2% of the bill. Considering the family support and cost, I decided to do it in India during my next visit."

His wife, Prabhjot Kaur, an associate director at a Singapore-based wealth management firm, also faced a similar situation when she needed root canal treatment. “The treatment along with the travel cost of going back to India was cheaper than getting it done here."

Highlighting the steep living costs in Singapore, wherein even routine medical treatments are significantly higher than in India, the couple has decided to maintain their Indian health insurance policy to manage their costs effectively, despite living in Singapore for the past seven years. In 2022, the couple paid a premium of ₹22,000 for two years with a ₹5 lakh coverage in India. “Our next premium is due this November. This year, we will add our two-year-old son to the policy."

In Singapore, both of them have an employer health plan as well as a private insurance coverage.“I have a separate policy, for which I pay S$2,000 per annum. My wife and son are covered by a different plan that costs S$3,500 per annum. The total coverage of the plans is S$1 million," said Harshit.

The couple is on an employment pass in Singapore and is seeking permanent residency. “We applied for it in 2021, but it got rejected. We are doing the paperwork to apply for it again."

Why Singapore?

While the pay package in Singapore is higher in Indian rupee terms, experts said expenses can be 300-400% higher than in India. The World Bank’s Purchasing Power Parity index revealed that what ₹1 lakh would buy in India require ₹2.56 lakh in Singapore.

“Before coming to Singapore, I was earning nearly ₹15 lakh per annum. My Singapore salary initially was enough to apply for employment pass. Frankly, I didn’t make a comparison, expecting a better lifestyle. We could save money for ourselves and send some to India for investments," said Harshit.

The couple allocates about 25% of their salaries to household expenses, including S$9,600 annually for house help and a S$300 monthly government levy. An additional 20% goes to rent, 30% to investments, 10% to leisure and travel, and the remaining 10% to taxes. “We are managing expenses smartly to live comfortably here. Moreover, every appreciation of the Singapore dollar against the rupee helps us save more. S$1 was equal to ₹46 when we moved here and it is now ₹64," said Prabhjot.

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They had the option to move to the US or Australia, but chose Singapore for its proximity to India. “We are close to our family. It takes almost the same time to reach our home from Singapore as travelling from metro city in India to our hometown," they said.

Managing investments

When the couple moved to Singapore in 2017, they had no mutual fund investments. After settling in, Harshit started investing through Upwardly (acquired by Scripbox) for MFs and Zerodha for stocks.

“When I started in 2017, the market was at its peak. It crashed in 2018 and was volatile, followed by the covid crash in 2020. I was not worried, stayed put to add more to my investments. Our portfolios are doing great now," he said.

Harshit also maintains two endowment policies from LIC, with an annual premium of ₹1.4 lakh. “These policies will mature around 2044. I understand the internal rate of return in the policies is low and I should get rid of them, but somehow, I have been dodging it."

The couple invests 20% of their salaries in Singapore. “We invest in either unit trust funds or exchange-traded funds." Besides, they also contribute to Supplementary Retirement Scheme (SRS), a voluntary savings plan, offering tax deductions. “Funds in SRS do not earn interest. We have to deploy it in financial products by ourselves."

Withdrawing funds from SRS before 10 years attracts a hefty penalty for all expats. Funds can be withdrawn in full after 10 years, but once permanent residency status is obtained, withdrawal is only permitted at 63, the retirement age in Singapore. Besides, they also benefit from a tax deduction for levy paid to the government for hiring house help. “The double of the levy can be claimed as tax deduction. It’s available to female taxpayers only. My wife gets a deduction of S$7200 per year for the same." The insurance premium also offers tax deduction.

Gaps in financial planning

The Sharmas do not have term insurance, though Prabhjot has a small amount through her employer. Their investments are not tied to specific financial goals. “If we have a money query we discuss it with the respective relationship managers of Scripbox and Bank of Singapore for India and Singapore investments," said Harshit.

They are unsure about goal-based financial planning, especially as they have not yet obtained permanent residency, without which costs for buying a house and school education are up to 60% higher. “We have to spend S$800 per month on school fees while locals pay S$300. The cost of private school is S$1,500-2,000 and international schools charge $2,000 onwards."

“We have no plans to go back to India in the near future as we have excelled in our careers here. So, while saving for retirement, child’s education and buying a house are our key financial goals, we can’t compute until clarity emerges on the PR status," said Harshit.

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