You Might be in Massive Trouble, Without These 3 Insurance Policies

“Insurance? I don't need it!”

We have all been guilty of saying that at some point in our lives. When we were younger and feeling invincible, it is naturally hard to see the point in a piece of paper that promises payment when something unfortunate happens to you. As we get older and our priority shifts, many other worries catches up on us and getting the proper coverage takes second place in our minds.

Everyone's needs are different. If you have no dependents or liabilities, there may not be much of a need for life protection. However, you may require protection against the reduction or loss of income if you are diagnosed with cancer or any major critical illness. Insurance is more than just life and death, it is about helping to pick up the pieces when the world comes crashing down on your feet.

Here are 3 important insurance plans you should first look at, without them, you and your loved ones could face massive financial troubles:

#1 Term Life Protection Plan (or Whole Life)

Life protection plans (whether it is term or whole life), are meant to ease your family's financial burden on the loss of a breadwinner. When the breadwinner faces a critical accident and unexpectedly passes away, there will be a sudden reduction or halt in income for the family. This could mean the inability to keep up with your child's future education, repayments, and other living expenses.

As this is a heart-breaking and major loss for the family, they will need time to come to terms and cope with the loss of their loved one. While your loved ones are trying to overcome the harsh reality, there would likely be a period of time before they can find a means to take on some replacement income.

Term life protection plans provides the highest coverage for the amount of premiums paid. For life protection plans, ideally priority should be given to cover your protection needs which includes, family's living expenses, outstanding liabilities, and some bequest to be left for your family.

(See "Protect Yourself for $1 Million with a Term Plan and Save Close to $1,000!")

#2 Critical Illness Plan

We've heard a person utilize this analogy: A term or whole life plan is for your loved one, but a critical illness plan is for yourself when you survive a devastating illness. With medical advancements, it means that survival rates for many critical illnesses are improving especially if you are diagnosed early and the appropriate treatment are administered. In recent years, there are a number of plans that allow claims for early to advanced stage critical illnesses.

Although Medisave and private integrated shield plans can help cover hospitalization costs, recurring treatment and consultation costs can quickly add up and erode your cash savings. Some treatments are also extremely harsh on the human body which will affect your ability to attend work therefore reducing your income earning capability. With the inability to work and the possibility of high medical cost, this will result in most people being able to financially survive only one¹ critical illness.

Critical illness plans pays out a lump sum to help cover out of pocket medical costs, and ease the financial impact of a reduced income during your recovery period.

(See "Worried About Critical Illness? Here’s 3 Plans You Should Know")

#3 Hospitalization Plan

Medisave and Medishield Life helps to cover the cost of hospitalization, with Medifund providing a form of safety net for the underprivileged who requires greater assistance. As these are national healthcare schemes, the focus is to make it as affordable and inclusive for everyone. This means that to benefit the most from the government scheme, you will need to stay in a Class C ward (8 to 10 bedder) which provides a subsidy level of 65% to 80%.

If you are looking at getting treatment in higher class wards or private hospitals, you will need to utilize an integrated shield plan (IP) to cover the hospitalization costs. Most of the IPs also adopt as charged model, where there are no sub-limits for each claim component. IPs also allows the addition of riders which can help reduce or waive the need to pay any deductibles or co-insurance.

An interesting fact of the Medisave scheme we found is that the interest earned from Medisave can be more than sufficient to pay your premiums till age 74 (for the Basic plan), or even longer if you choose to stay within the Medishield Life scheme. In addition, excess interest earned from Medisave can help enhance your retirement savings in your CPF account.

(See "5 Awesome Facts You Didn’t Know About Medisave & Shield Plans!")

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 customize 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.

Protect yourself and your love ones now and enjoy savings at FSMone Insurance now!

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

Interested to learn more? Check out these articles:

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