Dear Mr. Tan,
An insurance agent said that it is necessary to insure a child against critical illness, as the cost of treating leukemia could be more than $20,000 and it is not covered under a Shield policy. What is your advice?
REPLY
The chance of a serious illness of this nature is extremely small, maybe less than 1 in 10,000. To insure this risk and other similar risks, the pure cost should be less than $2 a month (my guess only, as I do not have the data). The critical illness policy that you to pay a premium of $100 per month. Is it worth paying so much?
Although a Shield plan does not pay the full cost of the treatment for leukemia, it does cover a large part of the cost.
Advice: Do not over-pay on the cost of insurance. Make sure that you pay a fair premium. You need to save money for your future use also.
We will agree that we should not be overpaying on the cost of insurance and the risk is low.
ReplyDeleteHowever we must not forget that this is precisely why Insurance exist in the first place.
A $50k term CI cover for a kid probably cost $5.
A $50k whole life CI cover probably cost $35.
If I have a kid, I'll get a small $50k Whole Life plan to ensure he have CI cover for life and a term plan for the additional cover.
How much it cost for $100k? $40/month?
It really up to you if you really want to save that $40 and not covering your kid for CI.
Adrian Khiat
http://akhiat.blogspot.com
The first thing to do is to insure your children with a shield. This is cheap and is life long. You can think of other cover for your children when you or the bread winner has all the NECESSARY AND ENOUGH coverage and all the priorities in place. Don't let the insurance agents frighten you. They like to show you articles or pictures of children or adults being devastated by illness.These are rare cases.This is salesman's trick. If the agents are really SINCERE AND TRUTHFUL AND HONEST AND CARING they should make sure you have enough coverage with term instead of selling whole life and leave you insufficient.They should give you the best advice instead of selling you products that give them high commission.
ReplyDeleteRecommending your child a shield plan is your priority but not the insurance agent's because of miserable commission.
The next time, think about it.
You did the right thing by coming here to seek advice from Mr. Tan. His advice is objective, unbiased and he has no vested interest in any product he advises.
Zhumeng:o)
Why do you need for whole life?
ReplyDeleteWhy not till 65 years old? You have any other needs after 65? You need insurance? Let me tell you what you need is TAKE GOOD CARE OF YOUR HEALTH if this is what you are worrying. Insurance WILL NOT keep you in good health and dying. Don't be misled by insurance agents.
Money is what you need at this age although insurance also gives money
but that is when you are in bad health.
Insurance is protection but who says it must be whole life. In the first place insurance was pure protection until they came out with so call "permanent" insurance. let me tell why insurance agents are so keen to sell you whole life . It is PERMANENT REVENUE FOR INSURANCE COMPANIES AND HIGH COMMISSION FOR AGENTS.
whole life insurance is not proper insurance: you are insuring against an event that is certain to happen. after accounting for time value of money, it is almost certain that you will end up paying more than you or your family will ever receive.
ReplyDeleteI agree with Mr. Tan.
ReplyDeleteYou just need to make sure that you take care of your health and your child's health and ensure that the 0.01% doesn't happen to your child or you. The rest of the money you just invest.
Anyway, even if the 0.01% happens, you can always consider advertising on TV to solicit donations. It is a sure-fire way to make money. Time and test by MediaCorp. I always give my $5 call to support the needy. I don't even mind if Singtel charges me a little extra for my one call. I was so touched the last time by the old woman who had to look after her paralysed son.
You need critical illness insurance most is when you are working, with family to take care and dependents and assets to protect. When you are 65 your needs tapper to zero. At this time your concern is money for retirement and medical treatment. Medical is well taken care of by a H&S plan. You don't need a critical illness plan, term or whole life.
ReplyDeleteSometimes this term versus whole life is a pure academic debate. For me, I am a pragmatist. I got a term plan with critical illness coverage for 20 years. The premiums is very affordable. When the term ends, I project I would have enough cash value built up from investment (projected 6% return) to self-insure.
ReplyDeleteActually, it is more important to have a good Shield plan. What Dr Money suggests about the claims payout ratio from Medishield and private insurers is a skewed argument as it looks at the issue from an insurer perspective. Obviously, Medishield has such low benefit levels thus the payout ratio is higher. Being a pragmatist, I opt for a higher Shield plan so that if I need to downgrade in future there is no underwriting.
As for whether a child needs CI coverage is debatable. If a child has CI, one parent may have to quit her/his job to take care of the child. So there is a potential loss of income. My personal take is be practical. Cover a 25 years CI term for the child which is really cheap. Then in these 25 years you can invest for your child in a separate investment account if you have spare cash. After 25 years, this cash value will be substantial for self-insurance.
blackbox
Yes it is good approach. Have a shieild plan plus a small term coverage for CI. Together they don't cost much and therefore not a strain financially on the bread winner who is the most important person in the family.If buying a policy for the child deprives the breadwinner coverage then it is not right,because what good is coverage for the child when the child can't live on.
ReplyDeleteIdeally the bread winner has unlimited income then there is no need to think what comes first.Alas, we all earn limited income therefore there is a need to PRIORITISE OUR NEEDS. The debate isn't about whether we should have a cover for the child or not.
The chance of a serious illness of this nature is extremely small, but who knows who will be that one that will be affected.
ReplyDeleteJust be prepared, Shield Plan is the most basic, but critical illness cover will be good supplement.
In young age, it may not happen, but along life's pathway, no one can say the same.
If insurance coverage can start early, it may be prudent to start with a comfortable sum, and as discussed, look into premium commitment.
Never take the advice of "The chance of a serious illness of this nature is extremely small", it may happen to any one, no matter how small. You may end up to be that small one.
In my opinion, the basic Medishield is inadequate. Just take a look at the highest surgical benefit provided and go MOH's website to find the 50th percentile bill of an illness that corresponds to this benefit.
ReplyDeleteWhen you are young, take the highest plan first. You can downgrade later on without underwriting. The premium you pay is not very high. It is worth paying a low cost to hedge the risk.
Critical Illness is optional.
blackbox
H&S is not the ultimate.
ReplyDeleteThere are some illness that need regular followup and medication that can be a strain long term.
Shield Plan is the most basic, but critical illness coverage is good to have.
As you have discussed about the information that to insure a child against critical illness to treat leukaemia. In my opinion, critical illness cover may be available for the people who had leukamia. If sufficient time has passed and you have fully recovered from the leukaemia you could have access to normal terms for Life Insurance with some providers.
ReplyDeleteThank you for sharing such great information.
ReplyDeleteIt has help me in finding out more detail about healthcare insurance