Health Insurance

Here’s What Singaporeans Really Need To Know About Planning for Health Shocks

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Joanne Poh

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Most Singaporeans have some awareness of how expensive falling sick can get here. But guess what—it seems like, for all our complaining, we’re still not fully aware of the financial impact a health shock can have on us.

A recent news report revealed that major health shocks (say, a heart attack, stroke or chronic illness) have a longer lasting financial impact on Singaporeans than previously thought, compared to minor health shocks like diabetes.

More scarily, out of the 10,000 50-to-70 year olds surveyed, 6% received a major health shock during the 14-month period of the study. On average, these households went from spending $235 a month before they received the shock to $861 in the month they were diagnosed. However, their miseries didn’t end there, as there was a long lasting impact on their income in the months after the shock, too.

What this means is that if you end up spending $5,000 in the month of a major health shock, you shouldn’t allow yourself to be relieved that you could afford to pay your bills that month, as you can expect your monthly health spending to be higher for a long time to come.

Given the statistics, you’ve got a high chance of experiencing a major health shock when you reach your fifties. Here’s how to plan for that.

 

Insurance coverage needs to be able to sustain post-shock expenses

When we buy health insurance, we tend to focus on how much we can claim should something disastrous happen to us. We want to know what fraction of the hospital bill will be claimable, what kind of hospital ward we can stay in on the insurance company’s dime, and what treatment options qualify.

But it’s important to also consider the fact that even after you’ve received treatment and been discharged from the hospital, you’re going to be spending more on healthcare for a long time to come. It’s thus important to know to what extent your insurance policy will allow you to make claims for post-shock expenses, too.

For instance, if you get a stroke, will your policy also take care of physiotherapy sessions afterwards, as well as follow-up visits the doctor, even if you are not technically hospitalised (hospitalisation is often required in order to make health insurance claims)?

If you suffer from secondary conditions as a result of your stroke, will you be covered for them, too? And for how long will you continue to be able to make claims? These are all questions you need to ask before purchasing a policy.

 

Consider term coverage for life insurance rather than an investment-linked product

Insurance agents tend to aggressively push their investment-linked life insurance products, mainly because they get a lot of commission from these types of insurance.

As a result, many Singaporeans end up purchasing expensive investment-linked products and thinking they can rely on them in times of financial trouble. The most popular of these is life insurance, which typically promises a pay out if you die or contract a critical illness.

Unfortunately, investment-linked policies aren’t as sound an investment as many people seem to think. If you want to receive adequate insurance coverage, there’s a good chance you’ll end up channeling all your premiums into this, which also means you’ll have no investment money to collect when the term is up.

On the other hand, if you’re buying the policy in order to reap investment gains, you’ll have to sacrifice some insurance coverage.

Unless you know how to fully maximise an investment-linked policy, it’s probably a better idea to purchase a term life insurance policy instead if you think you need life insurance to tide your family or yourself through a serious illness. You’ll be receiving consistent coverage at a lower premium, and you can then channel the balance into other types of investments.

 

Understanding your medical history is important when deciding what insurance coverage you need

It might be tempting to think of insurance coverage as a one-size-fits-all solution, since it’s a lot easier to just get what everyone else is buying.

However, depending on your medical history, you might need more coverage than the average Singaporean. A guy who has no history of cancer in the family, and has maintained a healthy diet and exercised daily from a young age has a lower chance of being struck by a major health shock than an obese chain smoker who consistently fails his IPPT, is pre-diabetic and has a family history of cancer.

Sure, sometimes life throws you a curve ball and otherwise healthy people get struck down by unexpected illnesses. But based on the probabilities, the second guy should probably buy more health insurance coverage than the first guy, assuming they are in similar financial situations.

It’s important to consider your own medical history (and, in the case of illnesses that can be hereditary like many kinds of cancers, your family’s), your lifestyle and how well you’re maintaining your health when trying to decide how much medical insurance coverage you need.

How are you planning to protect yourself in the event that you someday suffer a major health shock? Tell us in the comments!

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.