If your insurance agent had his way, you’d be insured for everything from the flu to missed MRT trains. On top of that you’d be paying every leftover cent into one of those investment-linked life insurance policies.
But don’t get all sceptical and swear off insurance altogether. Because there are certain types of private insurance that are highly advisable no matter what you do in life. Here are three Singaporeans might want to consider.
Hospitalisation policy (everyone)
Despite the changes to the MediShield Life system, it’s still financially prudent for Singaporeans who can afford to to get a private medical insurance policy that gives you some coverage for your medical costs so long as you’re seriously ill enough to be warded in a hospital.
That means you can’t make claims for those MCs you take to skip work, unless you are such a good actor you actually make it to the hospital. But it does mean you are protected if you get sick enough to ring up financially-damaging medical costs.
MediShield life provides limited coverage, which means that you’re pretty much limited to B2 or C class wards and can only use public hospitals. No matter what you think about the standard of medical care at private hospitals vis a vis public, the fact of the matter is that the waits are longer at public hospitals.
Most people will be looking at getting an Integrated Shield Plan, which basically tops up your existing MediShield Life Plan by giving you a wider choices of hospitals and wards. You’ll be able to stay in A or B1 class wards, as well as private hospitals and doctors.
Another advantage is that many medical insurance plans will cover at least part of your costs should you get hospitalised overseas. So if you get into an accident on your road trip to KL and forgot to buy travel insurance, you don’t need to be evacuated back to Singapore.
Part of the fees will be deducted from your Medisave, and then you will have a cash portion to pay upfront each year.
Early stage critical illness (for those with a relatively high income)
Singaporeans live pretty long on average, but a long life doesn’t mean a healthy one. We have the second highest diabetes rate in the developed world, more people are getting kidney failure and cancer is on the rise. Unfortunately, living longer means you have more chances to get a serious illness.
From Primary 1 to Sec 4, I had 9 different form teachers. Within 5 years after I left secondary school, 3 of these teachers had contracted cancer and passed away.
An early stage critical illness plan offers you a payout if you get struck by any of the diseases on the list, usually including cancer, kidney disease, diabetic complications and dementia.
The downside is that this kind of insurance is fairly expensive if you want a decent amount of coverage of $100,000 and above. If you smoke or are older, the prices can rise quite dramatically.
As a result, this kind of insurance usually does not make financial sense unless you’ve got a fairly high income.
If you do, though, it’s one of the more useful plans out there, since about 30% of Singaporean deaths each year are due to cancer.
Life insurance policy (for those with dependents)
The main purpose of life insurance is to protect your dependents in case you die and your income is lost. So obviously, if you are unemployed and the last time you spoke to another human being was in 1998, you can skip this.
But if there are other people who depend on your income, it would probably be prudent for you to purchase life insurance.
All parents who are the main breadwinner at home must absolutely buy life insurance. So should all those who have aged parents who are not able to survive without their income and those with a non-working spouse without their own income sources.
Need a life insurance policy? Check out MoneySmart’s life insurance wizard to compare plans.
Do you have any of the above types of insurance? Tell us which ones in the comments!