Tan Kin Lian's Blog: Avoid over-lapping insurance policies

Wednesday, September 19, 2007

Avoid over-lapping insurance policies

Take this example of a policyholder who has two medical insurance policies:

1. A Shield policy that pays 90% of the hospital bill in excess of $1,000.
2. A medical policy that pays 100% of the bill up to $5,000

The policyholder incurs a hospital bill for $8,000. The claimable amount is:

1. Shield policy: 90% of (8,000 - $1000) = $6,500
2. Medical policy: $5,000

The policyholder can only claim up to the bill of $8,000, i.e. $5,000 from the medical plan and $3,000 from the Shield plan. But, he had to pay a full premium for each policy.

It is better to avoid over-insurance through two over-lapping policies.

3 comments:

Thomas Phua's Blog said...: The situation is between the gap in Shield Plan for the Deductible and Co-insurance that is difficult to balance.

The other scenario is one has employer benefit, and Shield Plan acts as a backup.

Shield Plan is a primary need.

If one has not other coverage, look at covering the Deductible and Co-insurance.

Insurers like Ntuc Income has Plus Rider that covers the Deductible and Co-insurance gap nicely.

Then again, some people do a low plan, example Plan Basic and seek private hospital care, then there will be a different scenario.

Some time it is difficult to decide on type of level of coverage unless one is sure which type of medical care one will need.

Generally, most will be comfortable in B1 or B2 government restructured hospital care.

Most parents will prefer private hospital care for their young children.

Some ladies, like privacy when come to woman's problem and sough private medical care.

Unless one is able to be firm on the need, some time overlapping cover may be useful in such situation.

But example if one has Plan Prefered with Rider, this will cover mostly all types of care, as this is private hospital level of plan.

- Thomas Phua; September 19, 2007 11:09 AM
Anonymous said...: It is not uncommon to find clients having overlapping plans, over covered , or under covered. This would not have happened if clients' needs were checked first before products were recommended. But as you know insurance salespeople don't bother or don't know how. All they want is to make a quick sale.
That is why a third party review is
recommended strongly because a lot of rubbish can be uncovered. But of course the third party must be a good, qualified and competent adviser otherwise it would end up even worser.
Just like the Income's Revosave, if
need based approach is used no way can this product be recommended.No client who is serious about his or
her financial future will have those kinds of 'needs' as Revosave supposed to cater to. Revosave panders to clients' life style wants and not needs. The insurance salesman's sales script is designed to achieve that purpose.
Clients will be better off and safe to seek a qualified financial planner or adviser who can check their financial health first before prescribing the medicine(products).
See an insurance salesman you will be loaded with useless products that will burden you financially in the future.; September 19, 2007 12:42 PM
Anonymous said...: Why this happens because insurance agents don't assess the existing cover and if they do and if they find out the clients have enough they have nothing to sell. Better don't find out and this is the attitude of agents. I am not surprised some clients may have as many 3 almost the same cover.
Well, what can clients do. They have no idea which agent is honest and trustworthy.It is going to depend on luck.; September 19, 2007 7:50 PM