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 me S$17,000 in Singapore (nearly ₹10 lakh). When I discussed the issue with a doctor in India based in Bhopal, he told me he would do it for ₹50,000,” he says.“Even though I had a private health plan in Singapore, the uncovered expenses would have been 1-2% of the bill. Given the family support and the cost, I decided to do it in India during my next visit.”

His wife, Prabhjot Kaur (36), associate director at a Singapore-based wealth management firm, faced a similar situation when she needed a root canal treatment. She preferred to get it done in India. “The treatment cost along with the travel cost of going back to India was cheaper than getting it done in Singapore,” she says.

Despite living in Singapore for the last seven years, Harshit and Prabhjot have continued their Indian medical insurance policy. They paid ₹22,000 in 2022 for two years for ₹5 lakh cover. “Our next premium is due in November. This year, we shall add our two-year-old son Sabar to the policy,” they say.

In Singapore, apart from having the employer health plan, they also have private insurance plans. “I have a separate policy for which I pay S$2000 per annum. My wife and son are covered by a different plan that costs S$3500 per annum. The coverage in both plans is S$1 million,” says Harshit.

The couple is on an employment pass in Singapore and is trying to get a permanent resident or PR status. “We applied for it in 2021, but it got rejected. We are doing the paperwork to apply for it again,” they say.

Why Singapore?

While the pay package is better in Singapore in Indian rupee terms, the expenses could go up to 300-400% compared to India, say experts. In fact, World Bank’s Purchasing Power Parity index shows what ₹1 lakh can buy in India would require ₹2.56 lakh in Singapore.

“Before coming to Singapore, I earned nearly ₹15 lakh per annum. My Singapore salary in the beginning was just enough to apply for the employment pass. Frankly, I did not make any comparison. I expected a better lifestyle. We could save money for ourselves and send some to India for investments,” says Harshit.

Now, with a child, the couple allocates about 25% of their salary to household expenses. This includes S$9,600 per year to pay for house help and a levy of S$300 per month to the government for hiring one. The additional 20% of the salary goes to paying house rent, 30% to investments, and 10% to leisure and travel. The remaining 10% goes to taxes.

World Bank’s Purchasing Power Parity index shows what ₹1 lakh can buy in India would require ₹2.56 lakh in Singapore.

“We are smartly managing our expenses to live comfortably here. Moreover, every appreciation of the Singapore dollar against the Indian rupee helps us save more. S$1 was equal to ₹46 when we moved here and it is now ₹64,” says Prabhjot.

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The couple had an option to move to the US or Australia. They chose Singapore for its proximity to India. “We are close to our family. The time it takes to reach India from Singapore is nearly the same as it is for our respective hometowns from metro cities,” they say.

Managing investments

When Harshit and Prabhjot first moved to Singapore in 2017, they didn’t have any mutual fund investments. It wasn’t until they settled in that they started investing. Harshit signed up with a wealth management platform, Upwardly (later acquired by Scripbox), for the mutual fund investments and Zerodha for the stock investments.

“When I started in 2017, the market was at its peak. It crashed in 2018 and remained volatile followed by the covid-19 crash in 2020. I did not get worried. I stayed put and added more money. Our portfolios are doing great now,” he says.

Harshit also maintains two endowment policies from LIC, which cost him an annual premium of ₹1.4 lakh. “I still pay premium for the same. These policies will mature around 2044. I understand the internal rate of return in these policies is low and I should get rid of it, but somehow, I have been dodging it,” he says.

The couple invests about 20% of their salary in Singapore. “We either invest in unit trust funds or exchange-traded funds,” says Harshit. They contribute to the supplementary retirement scheme (SRS), a voluntary savings scheme, which offers tax deduction.

“Funds in SRS do not earn interest by itself. We have to deploy it in financial products by ourselves,” he says. Withdrawing funds from SRS before 10 years attracts a hefty penalty for expats. They can withdraw it in full after 10 years. If one gets the PR status in due course, one cannot withdraw it until the age of 63, the retirement age in Singapore.

We are smartly managing our expenses to live comfortably here. Moreover, every appreciation of the Singapore dollar against the Indian rupee helps us save more.

Apart from SRS contribution, the other tax deduction comes from the levy being paid to the government to hire a house help. “The double of the levy can be claimed as the tax deduction. It is available for female taxpayers only. My wife gets a deduction of S$7200 per annum for the same,” Harshit says. The insurance premium also offers tax deduction.

Gaps in financial planning

The couple does not have a term insurance policy. Prabhjot has a small amount of it in the form of employer insurance. The investments, too, are not linked to any specific financial goal. “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,” says Harshit.

So far as goal-based financial planning is concerned, they are unsure about how to do it. For example, buying a house in Singapore would attract 60% extra payment without the PR status. The same goes for school education. “We shall have to spend S$800 per month on school fees while locals or those with PR pay up to S$300. The cost of private school is S$1,500-S$2,000, while international schools charge $2,000 onwards,” says Prabhjot.

A lot depends on the PR status.“We have no plans to go back to India in the near future because the work culture has helped us excel in our careers. So, while saving for retirement, child’s education and buying a property are our key financial goals, we cannot compute it until clarity emerges on the PR status. Getting a PR will help us buy a property here and switch jobs with ease,” says Harshit.

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