Are you aware of the various types of health insurance available in Singapore? With Singapore's medical inflation being higher than the average Asian medical inflation, it inevitably results in the saying of being "cheaper to die than to fall sick in Singapore".1 Therefore it is important for us to ensure that we are prepared for the rising medical cost.
Therefore, proper financial planning could provide us with a peace of mind knowing that we have ample coverage for unforeseen medical expenses. An emergency fund or health insurance could also help to offset the cost of these hefty medical bills. However, while it is important to have adequate health insurance, the purpose and benefits of the various policies differs. Hence, to provide a better understanding of health insurance and to ensure a suitable purchase, we provide 3 points to consider when purchasing health insurance.
(See "Do you know that Medical Inflation in Singapore is 15% now? Part 1")
#1 Understand Medishield Life and its coverage
Medishield Life is a basic health insurance implemented by the CPF board for all Singaporeans. This aims to allow all Singaporeans to receive some degree of protection against the rising healthcare costs regardless of their pre-existing medical conditions.2 Providing coverage through the reimbursement of medical bills incurred, Medishield Life is an example of medical expense insurance. By giving a portion of the incurred costs back to the insured, this allows medical costs to be partially compensated by health insurance.
However, it is important to understand that coverage levels for Medishield Life only provides for public hospitals up to Class B2/C wards. Therefore, should you wish to receive treatment in Class B1/A or private hospitals and require additional coverage for your medical bills, you may opt for an additional Integrated Shield Plan. This could help to offset your bills from Class B1/A wards and private hospitals with a rider also available should you want a full reimbursement of your medical bills.
(See "How Much Does It Cost To Live In Singapore 30 Years From Now?")
#2 Calculate your monthly expenses required and ensure sufficient coverage
Do you know how much your monthly expenses are? Calculating how much you need to sustain your current lifestyle is important in ensuring adequate health insurance as this would determine your necessary income protection levels. Providing regular pay outs for a specified amount of time, health insurance with periodic income compensation is therefore suitable for those who are looking to receive income protection.
Some health insurance examples include disability income, long term care and hospital cash income insurance. This ensures that the insured has enough to sustain his lifestyle in the unfortunate event that he/she is unable to work due to an accident or illness. Additionally, CPF members above the age of 40 are automatically enrolled into Eldershield, the severe disability insurance scheme that provides regular monthly income in the event of severe disability.3 With hospital cash insurance usually embedded into medical expense insurance, the insured would receive a fixed amount of cash daily during his/her hospitalisation. This could then serve as temporary income replacement or help to offset the hospitalisation bills.
(See "Want To Retire By 55? Here's How Annuities Can Help")
#3 Be prepared for rainy days and unforeseen circumstances
Lastly, setting aside an emergency fund for rainy days could help you with any unexpected costs. This is to protect you and your family from being burdened by medical bills should you be unable to work or fall seriously ill. Alternatively, consider health insurance that provides a fixed cash amount upon claims. These refer to policies with a lump sum pay-out such as critical illnesses and disability insurance.
By providing a one-time lump sum payment, this allows the insured to off-set any immediate costs thus preventing him/her from burdening his/her family with the hefty medical bills. Additionally, the pay-out could also be used to temporarily sustain their lifestyle while the family adjusts to the new situation thus helping to alleviate the financial burden of the family
(See "Should Your Insurance Look The Same When You're 25 And 50?")
How FSMOne can help you get on track
Our team of friendly advisers are able to help you review your financial objectives, long term commitments, and offer you investment and insurance advice specific to your needs. If you would like assistance in reviewing your financial and protection portfolio, or simply to get a quote for an insurance plan, you can contact our advisers at advisory@fundsupermart.com.
Available Products on FSMOne Insurance |
Term Life, Whole Life, Critical Illness, Annuity, Health, Endowment from Manulife, NTUC Income and Tokio Marine Life Insurance *Please check with our advisory team if the product you want is available on FSMOne Insurance |
1Source: http://www.aon.com/attachments/human-capital-consulting/2017_GB_Trends_brochure_20170105.pdf
2Source: https://www.cpf.gov.sg/Members/Schemes/schemes/healthcare/medishield-life
3Source: https://www.cpf.gov.sg/Members/Schemes/schemes/healthcare/eldershield
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