The Secret Behind Avoiding Expensive Medical Bills

Is coffee a part of your daily routine? In our previous article "5 Luxuries You Can (Almost...) Purchase With Your Daily Coffee", we explained how your daily cuppa could set you back by nearly S$159.6 a month thus adding up to approximately S$1973.72 a year. However, could your money be better spent elsewhere? With Critical Illness insurance often deemed as an "expensive luxury", did you know that its prices are in fact similar to your daily cuppa?

Providing a peace of mind, critical illness insurance provides you with protection in the event that you were to be diagnosed with a critical illness. With an average of 3.5 years required for treatments, pay-outs from critical illness insurance can help to reduce your financial burden should you be diagnosed with a critical illness.¹ Moreover, it could also prevent you from missing out on the opportunity for treatments due to the high costs involved. Hence, having critical illness insurance could help to alleviate one of our biggest concerns - the lack of money for our medical expenses.²

(See "Do you know that Medical Inflation in Singapore is 15% now? Part 1")

What is Critical Illness Insurance

Providing for the replacement of a loss of income, critical illness insurance offers a lump sum pay-out in the event of a successful claim. Claims could be made for various critical illnesses and ranges from the early to advanced stages of your medical condition. While hospitalisation plans such as MediShield helps to offset our hospital-related bills, critical illness insurance helps with other expenses. This includes follow up treatments, long term medication and the loss of income during the recovery period. Therefore, it is suggested to have coverage of at least 3 times your annual income to ensure that you have enough income protection for your recovery period.

(See "Your Must-Have Guide To Term Insurance")

#1 Having insufficient funds for medical bills during retirement

A recent survey found that Singaporeans are hoping to retire at age 60 despite our increasing life expectancy.³ This results in a longer retirement period and would require a larger nest egg to sustain the rising cost of living. Furthermore, with the cost of healthcare for the elderly set to increase by 10 times over the next 15 years, having sufficient protection for our later years inevitably becomes a concern.⁴

Therefore, critical illness insurance could provide reassurance with the promise of coverage in the event of a critical illness. The lump sum pay-out could also help with your long term medical costs and daily living expenses should you be diagnosed with any of the specified critical illnesses. This could then help to relieve any worries of having insufficient funds for your healthcare expenses in retirement.

(See "Want To Retire By 55? Here's How Annuities Can Help")

#2 Becoming uninsurable after one Critical Illness

One of the top concerns we have about falling ill is that we could then be uninsurable thus lacking protection should another critical illness strike. With 94% of those diagnosed failing to obtain subsequent insurance coverage, the fear of having insufficient funds and coverage for another critical illness is not unfounded. Moreover, with a 32% chance of being diagnosed with another critical illness later in life, insufficient coverage could be financially draining on you and your family.⁵

Therefore, it is important for you to determine your required coverage when choosing your critical illness policy. Do you wish to receive a one-time coverage for critical illnesses or would you like the option for making multiple claims if necessary? Some other considerations would be the medical conditions covered, the maximum amount claimable and the ability to waive subsequent premiums after a diagnosis.

(See "Why Cheapest Isn't The Best (Policy)?")

#3 Lack of coverage for gender specific illnesses

With critical illness coverage mostly generic, you may not be aware of alternative gender specific policies. However, with gender specific illnesses contributing a substantial amount to the hospitalisation and death statistics in Singapore, you may perhaps want to consider looking at such policies.

Take for example the NTUC Lady 360, designed to address women’s needs, it provides affordable coverage tailored to suit females. This means coverage for female illnesses, female surgeries and other necessary support benefits. The complimentary biennial health check-up is also customised to suit females with age-appropriate screenings also offered. Coverage is also given for procedures such as eggs freezing and hormone replacement therapy, procedures that are not covered by other generic insurance. Therefore, females can consider NTUC Lady 360 should you wish to receive coverage for gender specified conditions.

(See "3 Tips To Get The Most Out Of Your Health Insurance")

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.

^{1Source: http://www.straitstimes.com/singapore/aia-survey-uncovers-3-gaps-in-critical-illness-coverage-here}

^{2Source: http://www.straitstimes.com/singapore/lack-of-money-for-medical-bills-tops-singaporeans-retirement-fears-nielsen-survey}

^{3Source: http://www.straitstimes.com/business/invest/millennials-expect-to-retire-by-60-survey}

^{4Source: http://www.straitstimes.com/singapore/health/elderly-health-costs-to-rise-tenfold-by-2030-report}

^{5Source: https://www.aia.com.sg/content/dam/sg/en/docs/press-releases/2015/aia-infographic-bridging-the-gaps-in-critical-illness-protection-in-Singapore.pdf}

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