a) risk of premature death
b) medical expenses
c) disability
You need to insure against premature death during the time when your children are still young. This insurance will provide a regular income to your family until all your children have grown up and have started to work.
You should buy term insurance, as just provide pure coverage (not combined with savings), and the cost is quite low.
You should have insurance to cover you up to age 60, or for a period of 25 years (if shorter). The cost of insurance increases according to the period of insurance, i.e. you pay more if you want to insure for a longer period. You should avoid paying a higher premium than is necessary.
You should insure for an adequate sum. It can be 10 years of your earnings or to provide 50% of your earnings each month for the remainder of the period of insurance.
For example, if you earn $40,000 a year, you can buy insurance to pay $400,0000 on premature death or to pay $2,000 a month for the remainder of the period of insurance. If you insure for 25 years and death occurs after 15 years, the monthly income is payable for the remaining 10 years.
You can buy an insurance policy to cover your medical expenses. In choosing the suitable policy, you should consider the coverage and the cost. The insurance that offers the best value for money is the basic Medishield offered by the Central Provident Fund.
If you buy a private Shield plan, you may get 50% more coverage, but you have to pay a premium that is 100% more costly. If you are well off, you may not mind paying a higher premium. But, if you do not have adequate savings for your future needs, you should avoid wasting the money on expensive, unnecessary insurance.
If you are covered under basic Medishield and you wish to be treated in a private ward, you can pay the uninsured expenses out of your savings. The risk of this happening is likely to be quite low.
Disability insurance will pay you a monthly income during the period that you are disabled due to accident or sickness. You have to consider the cost and benefit of this insurance, and the chance of making a claim. If the insurance is too expensive, relative to the chance of making a claim, you can carry this risk on your own. If you are disabled, you can draw down on your savings and replace the drawdown in the future.
to recap: consider the benefit, the chance of making a claim and the cost. Insurance is costly, so you have to choose an insurance coverage that gives you good value for your premiums.
Tan Kin Lian
11 comments:
Hi Mr Tan i want to relate my experience for the medical care and expenses. My mum was diagnosed with stage 4 cancer and is undergoing treatment now. Initially my mum was referred from her gynae to a specialist in SGH when her blood test showed abornomal numbers. To diagnose what problem she got she have to undergo colonscopy which cost $1200 without subsidy. The doctor then referred us to a cancer specialist. We have to do a scan next either CTscan + bone scan or PET scan the price is 1500 and 2000++ for either scan. The doctor suggested that we tried to downgrade to be under subsidy because just meeting with him cost 105$ per sessios. We met the social worker but was refused downgrade because our combined income of three of us(my father, my brother and me was $8000)Luckily the doctor suggested my mum get warded for one night before going for the CT scan this allowed her to be downgraded to subsidized patients.
However we found that she got cancer and so she had to undergo cancer treatment. The cost for the chemo treatment is 2200-2500 every cycle(each cycle is three weeks) and she had to undergo 6 cycles.There are other costs like CT scans bone scans during the whole 6 cycles.Unfortunately she do not have any private shield plan but luckily she was able to get free treatment by participating in a drug trial.
For us we are very lucky for now. However i want to ask suppose a normal people who only got medishield and the withdrawal limit for cancer is only $1240 every three weeks compared to 15k withdrawal limit for great eastern supreme health B or 50k withdrawal annual limit for great eastern supreme health B plus. Comparing the premium of 225(medishield) for age 51-60 to premium of 292 for great eastern supreme health B and $398 for great eastern supreme health B plus. One can save at least $6000 from your medisave.
In my opinion, i believe the moderate coverage private shield like great eastern supreme health B or B plus offer better value because up to age 70 the annual premium can be met just by using your medisave in contrast to other life insurance where one need cash to pay the premium.
Hi Mr. Tan, thanks for the good article. However, I think $400,0000 is a typo, should be one less zero?
I beg to differ. My mum went for a colon operation (remove a cancerous portion). I think it was Stage 0 but still malignant. The total bill for the operation and stay came up to almost S$26,000 as she was warded in Class A at Mount Alvernia Hospital. If she had been on the Basic Medishield, I believed I would have forked out much more to pay the uninsured expenses i.e. which I think would come up easily to S$22,000.
To 9:46 PM
This story is what insurance agents tell the customers. So, I am not sure if you are taking of a real story or you are an agent making up this story.
If your mother is insured under Class A, you would of course want to go to class A. After you, you paid for it.
However, if your mother is insured under Basic Medishield, she can be treated in a restructured hospital at much lower cost. Furthermore, 50%to 60% of the bill is paid by Government subsidy, so the actual bill will be much lower.
It is up to you. If you want to pay class A and pay out of your premium, it is your business.
My advise is for other people to be careful about using their Medisave. The lifetime cost of insuring under class A is $70,000. The cost under basic Medishield is $20,000. So, make your choice. Do not have to argue with me.
To JamesNeo
Basic Medishield used to be inadequate. I remember reading that it has been increased recently, so I expect that the increased rate should be sufficient to pay for most cancer treatment in B2 ward.
I have written about the lifetime cost of insuring under Basic Medishield and Private Shield A. If people want to pay more for Private Shield, it is their money.
My aim is to tell them that they have an option to pay less, and have more money for retirement.
Correction. The lifetime (age 25 to 85) for insuring under Shield A is $50,000, compared to $20,000 for Basic Medishield. The additional cost of $20,000 (to make $70,000) is to cover the deductible and co-insurance.
JamesNeo has showed a real life example based on his personal experience, to which you have said "Basic Medishield used to be inadequate. I remember reading that it has been increased recently, so I expect that the increased rate should be sufficient to pay for most cancer treatment in B2 ward."
You "remember reading" and "expect"? And you say that insurance agents exaggerate stories of medical bills and MediShield not be sufficient?
Please, your work to get a fair settlement for people mis-sold on the mini-bonds is admirable, but the advice you give based on your bias against the insurance industry is quite worrying.
My mum has stage 3 cancer and she is on basic Medishield. She underwent 6 cycles of chemo treatment. Each cycle is a weekly session in the hospital. So she went to the hospital about 18 weeks during that period.
The medical bill was huge; paid from both Medishield and her Medisave a/c. I saw her Medisave deduction was something like each week at $100+. In addition, the CT scans are not covered by Medishield and were deducted from her Medisave a/c. Each scan can cost up to $200.
I have yet to mention her hospitalisation bills to remove tumours.
Falling sick is really no joke in singapore.
PS: I am not an insurance agent or adviser.
Hi Mr Seth do not need to be so agitated. Actually i have investigated the different private shield plans and i agree with Mr Tan that the private shield A is not justified cost wise. But i think a shield B plus is a better compromise as it is an outpatient treatment which do not have things like A, B1 B2 or C. For the national cancer centre you are classified as either private or subsidized patients. For this type of patients
a shield B plus offer better protection in my opinion as the premium can be met by medisave until age 70. It is especially useful for certain cancers such as woman breast cancer as the highest incidence are among the people of age 35-64yrs.
Mr Tan's advice is still very good for patients with illness that can be hospitalized for their treatment as we can choose to stay in B2 or C but for outpatient treatment there is no such choices for now.
Mr Tan i am discussing so much so as to let you understand about the improvement that i feel can be made to outpatient treatments.
i hope the MOE can revamp this to be fully like hospitalization because a lot of people will be classified as private patients based on the critiea in this website: http://www.cgh.com.sg/patient/outpatientcharges.asp
I have to undergo a worrisome few days wondering how to downgrade to susidized patient as my mum were referred from her gynae.Luckily the specialist suggested that we downgrade by first hospitalized first for one night. If the doctor is a newbie and did not suggest this at all we would have to pay for private charges unknowningly which we did for the colonscopy and two times meeting with two specialist
Hi JamesNeo
Why not write a letter to send to the Straits Times asking for Medishield to give better payouts for outpatient treatment. You can send your letter to me, and I help to improve it. Send to kinlian@gmail.com.
"I beg to differ. My mum went for a colon operation (remove a cancerous portion). I think it was Stage 0 but still malignant. The total bill for the operation and stay came up to almost S$26,000 as she was warded in Class A at Mount Alvernia Hospital. If she had been on the Basic Medishield, I believed I would have forked out much more to pay the uninsured expenses i.e. which I think would come up easily to S$22,000."
I am not an insurance agent in the first place. And I am not making up the story. My point is to highlight that if you just subscribe to Medisave and want to upgrade to A class later, you would be paying a bomb.
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