Sunday, October 31, 2010

Private shield and employer benefits

In an article in the Sunday Times, the editor recommended that the consumer should buy a Private Shield now, even if the consumer is provided with medical benefits by the employer. I find this to be a wasteful practice.

If the private shield cost $300 a year, the total premium, including interest at 4% per annum payable on the Medisave account, will amount to $22,000 at the end of 35 years. This is a lot of money to give away to a cover that is not really needed.

Although the Minister for Health did make a claim of $20,000 on his Private Shield policy, this is not a common case. For each person who makes a claim, there must be 10 other people who did not make the claim. The Minister is not covered for medical benefits by the employer, so a private shield is necessary.

This is not the case for many people in the private sector who are provided with medical benefits by the employer. Do not waste your money.

The consumer is told by the insurer or the agent that if they buy the private shield at a young age, they are guaranteed with the cover when they grow old. This is only partly true. The cost of private shield above age 65 is so costly (maybe $2,000 or more a year) that many retirees cannot afford it. They are likely to downgrade to Medisheld at that time. So, the consumer will be wasting $22,000, but it will be a lot of commission and profits for the agent and the insurer.

Read my articles in www.tankinlian.com/ask.aspx. Search for "Shield". Remember - even if you pay the premium, you will not find it easy to make a claim under some situations.

Tan Kin Lian

3 comments:

Vincent Sear said...

Actually, I'm puzzled why the Health Minister (or any minister) buys private health insurance. I'm sure they're comfortably self-insured in quantum of millions. I can't believe that they squander all those salaries away and rely on health insurance in case of hospitalisation.

It's not only unnecessary but illogical to buy insurance policies for contingency claims that are smaller than personal fortunes.

Unknown said...

REX comments as follows,

vincent, how true,,, insurance purchase are unnecessary if the benefits are considrably less than one's personal fortunes!!

For sure, even if Khaw is hit with a medical bill of $500,000 it's no sweat for him (or any of the super scale overpaid ministers).

Maybe Khaw is just doing charity work. By buying insurance, he is keeping some numbers of insurance agent gainfully employed. Rich people have their own ways of returning money back to society!!

rex

Tan Kin Lian said...

Reply to SongLip
If you really want to be safe about being coverd while you lose your job, you should buy Medishield and not private shield.

As this is a fallback measure and is not likely to be claimed, it is better to pay a lower premium with Medishield. Do not waste your Medisave savings paying for expensive private shield that you do not really need.

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