Complete Guide To Buying A Private Integrated Shield Plan

This article first appeared on DollarsAndSense.sg

When it comes to health insurance, one of the most important health insurance policies that all Singaporeans and Permanent Residents (PRs) should consider getting is a private integrated shield plan.

A private integrated shield plan (IP) helps policyholders cover any potential cost that may be incurred if they are hospitalised, either in public or private hospitals.

A private integrated shield plan comprises of two components. The first is MediShield Life. All Singaporeans and PRs are automatically covered under MediShield Life, Singapore’s basic health insurance plan. Coverage is provided regardless of age or pre-existing conditions.

The main limitation with MediShield Life is that coverage provided will be pegged to the expected treatment cost in Class B2 or C wards in public hospital. What this means is that if a patient chooses to be admitted to a higher-class ward in a public hospital, or in a private hospital, the pay-out provided by MediShield Life is likely to only be a fraction of the total bill.

To ensure coverage is provided for higher-class public hospital wards or at private hospitals, Singapore residents can choose to upgrade their existing MediShield Life to an Integrated Shield Plan.

Different Types Of Integrated Shield Plan

Coverage for integrated shield plans can be grouped into three different types.

Standard Integrated Shield Plan (Standard IP)

Standard IP provides coverage for policyholders for Class B1 wards at public hospitals. Benefits provided by the Standard IP are identical across all IP insurers.

Class A Plans

Class A plans provide coverage for policyholders for Class A wards at public hospitals. Benefits provided by the plan may differ from insurers.

Private Hospital Plans

Private hospital plans provide coverage for policyholders at private hospitals. Similar to Class A plans, benefits provided may differ from insurers.

Coverage Provided By Integrated Shield Plan

As mentioned above, benefits provided by Standard IP plans are identical across all insurers while benefits provided for private hospitals and Class A plans may differ among insurers.

In general, here are the different types of coverage one can expect.

Inpatient & Day Surgery: This includes daily ward, treatment cost and surgery

Outpatient Treatment: This includes treatment for kidney dialysis, cancer treatment and chemotherapy

Pre & Post Hospital Treatment: This covers the cost of any related treatments that are incurred before or after the hospitalisation stay.

* To find out more about the benefits provided by the Standard IP, please refer to MOH comparison here.

** To find out more about the benefits provided for Class A wards, please refer to MOH comparison here.

*** To find out more about the benefits provided for Private Hospital plans, please refer to MOH comparison here.

Who Are The Different Insurers?

As the name suggests, private integrated shield plans are offered by private insurers. Today, there are a total of six insurers that offer these private insurance plans. They are:

AIA: AIA HealthShield Gold Max

Aviva: Aviva MyShield

AXA: AXA Shield

Great Eastern: Supreme Health

Income: IncomeShield

Prudential: PruShield

Except for Standard IPs, exact benefits and premiums across the various private insurers differ slightly.

Besides choosing the plan which provides you with the most extensive coverage, policyholders should also be mindful about the premiums that they will be paying. This applies not just to what they are paying today, but also its affordability over the long-term.

Paying For Your Integrated Shield Plans Premiums

Similar to MediShield Life, annual premiums for your private integrated shield plans can be paid for using your Medisave.

However, unlike MediShield Life premiums, which can be paid fully using your Medisave, there is a cap to how much Singapore residents can use from their Medisave account to pay for the premium for their private integrated shield plan.

The amount they are able to use from their Medisave to pay for their private integrated shield plan, also known as the Additional Withdrawal Limits, are as follows.

However, do take note of the withdrawals limits.

Medishield withdrawal limit

For example, if the premium for the private integrated shield plan is $375 and the individual is 35 years old, he will be able to use $300 from his Medisave to pay for his premiums and will need a cash outlay of just $75.

As a person grows older, annual premiums for private integrated shield plans will naturally increase. This increase reflects the situation that older people are more likely to require hospitalisation and treatment as compared to younger folks.

Buying A Rider

Similar to MediShield Life, coverage provided at higher-class wards does not mean hospitalisation bills are fully paid for. All integrated shield plans still include deductibles and co-insurance.

In the past, if you want complete coverage so that you do not have to pay for any deductibles and co-insurance, you have the option of purchasing a separate rider that can fully cover all hospitalisation bills incurred.

In March 2018, the Ministry of Health announced that all new integrated shield plan riders will have to incorporate a co-payment of at least 5%. However, this applies only to new integrated shield plan riders. Existing integrated shield plan with full riders will not be affected.

Moving forward, riders will have a minimum co-payment of 5% but are likely subjected to an annual cap of $3,000.

For example, if you incur a hospitalisation bill of $15,000, a 5% co-payment will mean having to fork out $750, with the remaining $14,250 being covered by the private integrated shield plan.

To find out more about the changes to shield plan riders, you can read this article about 5 facts about the latest integrated shield plan changes that Singaporeans need to know about.

DollarsAndSense.sg is a personal finance website that aim to help Singaporeans make better financial decision.

Been doing lots of research, but not sure who to engage to take the final step? Look no further! fundMyLife connects you to credible and incredible financial advisers privately and anonymously, based on the financial planning questions that you ask. We aim to empower Singaporeans to make financial decisions confidently.

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How Personal Accident Plans In Singapore Work

How Personal Accident Plans Work

This article first appeared on DollarsAndSense.sg

When compared to other insurance types such as life and critical illness policies, personal accident plans are generally less well understood by consumers.

In this article, we will explain what exactly personal accident plans are, and how they help give us added protection in our lives.

What Are Personal Accident Plans?

Simply put, personal accident plans are a type of general insurance that provides policyholders with financial support in the event of an unfortunate accident occurring. Payouts are either in the form of a reimbursement basis, based on medical expenses incurred, or a lump-sum payout, depending on the type of injuries sustained.

For example, in the event of a permeant loss of a limp due to an accident, a personal accident plan will provide the policyholder with a lump-sum payout.

Beyond permeant injuries sustained, medical expenses are also covered under most personal accident plans on a reimbursement basis. The total amount that is claimable depends on the coverage limit. Expenses that can be claimed from include surgical, hospital or even Chinese physician expenses.

It’s important to note that personal accident plans differ from life and health insurance as coverage provided is only meant for injuries and treatments which arises due to an accident. This is in contrast to life and health insurance, which provides coverage regardless of the circumstances which lead to death, illness or injuries, be it accidental or natural.

This is why personal accident plans are usually regarded as a useful complement to other existing insurance policies that a person may already have, and not a substitute.

Coverage Provided By Personal Accident Plans

In general, here are the types of coverage that you can get from a personal accident plan.

# 1 Death Benefit

This refers to accidental death, and not natural death.

# 2 Permanent & Partial Disability

Similar to death benefit, this is payable if caused by an accident.

# 3 Income Benefit

This is payable if the policyholder is 1) gainfully employed at the time of the injury and 2) unable to work due to the injury. Benefit are usually paid on a weekly basis.

# 4 Medical Expenses

Most personal accident plans will cover medical expenses incurred up to a certain limit.

# 5 Daily Hospital Benefit

This is payable if you are hospitalized due to the accident. Unlike income benefit, you do not need to be employed to receive this.

Do note that the coverage highlighted above may not be applicable for all personal accident plans. It’s also a non-exhaustive list and that there might be other coverage provided by your personal accident plans beyond what is listed. If you are intending to buy a personal accident plan, we suggest that you look through in details the areas that are covered.

Why Consider A Personal Accident Plan?

Not all consumers may see a personal accident plan as being essential. Some consumers may already enjoy coverage from their company’s group insurance plan. Some occupations and lifestyle would also require a higher degree of coverage as they are generally deemed as riskier.

This article from fundMyLife helps explain 5 things you should consider before buying a personal accident plan.

Even if you think you are adequately insured, there are still merits to getting a personal accident plan if you wish to enjoy a higher level of insurance protection.

For a start, even with a hospitalization plan, your medical expenses may not be fully covered. A minor accident which does not leave you hospitalised may still require x-rays and MRI scans and other follow-up treatments. A personal accident plan helps you defray some of the out-of-pocket expenses arising from these treatments.

For individuals who are self-employed, buying a personal accident plan can help provide them with additional protection on top of their existing private integrated shield plan. That’s because most personal accident plans provide policyholders with added coverage such as a weekly payout, up to a certain cap, if a policyholder is unable to work due to a temporary injury sustained from an accident.

If you are unsure about whether a personal accident plan is something that you truly need, and would like to seek the opinion and advice of a trusted financial advisor, DollarsAndSense have team up with fundMyLife to help get your financial planning questions answered. fundMyLife is a platform that connects users financial planning questions to the right advisers using an intelligent matching system.

DollarsAndSense.sg is a personal finance website that aim to help Singaporeans make better financial decision.

fundMyLife is a platform that aims to empower Singaporeans to make financial decisions confidently. We also connect consumers to the right financial planners in a private and anonymous manner, based on their financial planning questions.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

Different Types Of Endowment Plans In Singapore

Different types of endowment plans

This article first appeared on DollarsAndSense.sg

If you have been through a financial planning session with an advisor, there is a good chance that you would have heard of Endowment Plans. You may even have bought a plan (or two) after discussing with your financial advisor.

But what exactly are endowment plans? More importantly, are you buying the right plans that fulfill your needs?

What Are Endowment Plans?

In Singapore, endowment plans are sometimes known as “endowment insurance”, mainly because there is usually an insurance component tied to the plan.

There are a few characteristics that typically defines an endowment plan is.

Maturity Period: Endowment plans will have a fixed maturity period. This is generally between five years to 20 years, depending on the type of plans that you buy. Usually, the maturity of your endowment plan should coincide with your objective for having bought it in the first place.

Fixed Regular Premiums: Endowment plans typically require the regular payment of a fixed premium. Insurers usually offer the choice of paying for your premiums on a monthly, quarterly, semi-annually or annually. Alternatively, some insurers also provide plans that allows for the plan to be bought using a single premium (i.e. a lump-sum payment).

Insurance Coverage: Endowment plans usually comes with some insurance component. Do note however that in most cases, insurance coverage provided by endowment plans are usually insufficient, on its own, to adequately insure individuals. You should avoid thinking that your endowment plan is a suitable alternative to a life insurance plan.

Why Do People Buy Endowment Plans?

People buy endowment plans for a variety of reasons. Usually, this involved financially working towards something important.

Education:

The most common example in Singapore would be to plan towards a child’s education. Parents who buy an endowment plan will pay fixed regular premium. When the plan matures, the payout received can be used to fund a child’s education.

An example of such a plan will be the AIA Smart Growth (II).

Source: AIA

Retirement:

There are endowment plans that are specially designed to help policyholders work towards their retirement.

The key difference between these retirement-focused plans and the ones that are designed for education is the way payouts are disbursed upon maturity.

Instead of a lump-sum payout, most retirement-focus plans provide a steady stream of monthly income to policyholders upon reaching a certain age. Very often, this payout comprises of both guaranteed returns and non-guaranteed returns.

An example of such a plan will be the MaxRetire Income. MaxRetire Income provides policyholders with a steady stream of monthly retirement income from 65 (age next birthday) to either age 85 or 100 (age next birthday).

Here’s an example of how it works.

Source: DollarsAndSense, Information extracted from OCBC

Another example of a retirement-focus plan is AXA Retire Happy. Similar to the MaxRetire Income, the plan provides regular payouts comprising of both guaranteed and non-guaranteed returns for policyholders upon maturity.

The biggest draw for these retirement-focus plans is that it provides a guarantee retirement income. Regardless of how badly the financial markets perform, insurers are obliged to pay the guaranteed payout promised to policyholders.

At the same time, the non-guaranteed payout is a bonus that policyholders can also look forward to, with the exact amount depending on the performance of the insurer’s participating fund.

Savings:

In recent years, we have seen insurers offering savings plans to consumers in Singapore. These savings plans are a type of endowment plan. Commitment period for such plans tend to be shorter, from as little as three years.

As its name suggests, the primary purpose of these plans is to help policyholders save, and to earn an interest that is higher than what they would earn in a regular savings account. An example of savings plan would be the Easy save series offered by Etiqa. You can read up more about the plan in our article.

Questions That You Should Also Be Asking

Besides knowing the different types of endowment plans there are, and whether they are really suitable for your needs, there are some other factors that you should consider before committing to any plans.

Is Your Endowment Plan A Participating Or A Non-Participating Policy?

A participating policy means that part of your returns will be tied to the performance of an insurer’s participating fund. If you are enticed by the attractive payout offered by an endowment plan, check if the returns are guaranteed or simply projected (i.e. non-guaranteed). If they are projected returns, then you should also differentiate between what’s guaranteed, and what’s non-guaranteed.

What Are The Insurance Coverage?

As mentioned earlier, most endowment plans offered by insurers will have some form of insurance coverage.

The extent of the coverage you receive from the endowment plans do matter, as it would indirectly affect the actual returns that you receive. With all things being equal, you should be expecting lower returns if the insurance coverage that you receive is higher, and vice versa.

DollarsAndSense.sg is a personal finance website that aim to help Singaporeans make better financial decision.

fundMyLife is a platform that aims to empower Singaporeans to make financial decisions confidently. We also connect consumers to the right financial planners in a private and anonymous manner, based on their financial planning questions.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

The Pros and Cons Of Buying An Endowment Plan In Singapore

This article first appeared on DollarsAndSense.sg

Commonly sold by both insurance agents and personal bankers, people in Singapore have varying degrees of understanding when it comes to endowment plans, sometimes, even after they have bought one.

Even among finance professionals, there may be different understanding of what an endowment plan is, and isn’t. Some advisors may look at endowment plans as a type of “forced savings”. Others may think of it as a tool for investment, while some may see it as an insurance policy.

In this article, we will look at some of the pros and cons of an endowment plan.

As there are many different types of endowment plans in Singapore, all of which, offering its own advantages (and of course, disadvantages), do note that our article may be a generalised take on the category as a whole.

Also, any reference we make in this article to actual products is simply for the purpose of education, and in no way, representing our approval or disapproval of these products.

Let’s start with some of the pros.

Pros Of Endowment Plans:

#1 Guaranteed Returns

Compared to investing in the stock market, endowment plans generally come with some form of guaranteed returns. As long as you pay all the committed premiums and hold on to the policy till maturity, you will receive the guaranteed returns.

Here’s an example based on the AIA Smart Growth (II).

Source: AIA

The illustration above is self-explanatory. The policyholder will have to commit to the annual premiums of $2,483.60 per year for 12 years, paying a total of $29,803.20. The policy matures after 21 years. If the policy is held till maturity, there is a guaranteed return of $35,000.

In other words, the minimum amount the policyholder will get is $35,000, regardless of the performance of the market.

If you were to invest on your own, there is no guarantee that you will be able earn additional returns, or even retain your principal. In extreme cases, you may even lose your entire principal.

#2 Non-Guaranteed Returns

Non-guaranteed returns can be seen as both a pro and a con. For now, let’s look at it as a pro.

Compared to other instruments such as savings accounts and fixed deposits, endowment plans are able to generate higher, non-guaranteed returns for their policyholders. These non-guaranteed returns is dependent on the performance of the insurer’s participating fund.

For example, in the case of the AIA Smart Growth (II), policyholders will earn an additional return of $19,028, if the participating fund achieves a long-term annual return of 4.75%.

The ability to generate additional, non-guaranteed returns, makes an endowment plan more attractive than a regular fixed deposit. This is especially so if the guaranteed returns from the plan already provide a similar return to what fixed deposits would be giving. In some sense, it’s almost like getting the fixed deposit returns plus a “bonus” non-guaranteed return, subject to the performance of the insurer’s participating fund.

#3 Some Insurance Coverage

Most endowment plans provide some form of insurance coverage as part of the overall benefit of the plan.

For example, Great Eastern provides a Flexi Endowment plan that offers coverage against death, terminal illness or permanent disability for the duration of the policy term. This provides some form of insurance coverage, on top of both the guaranteed and non-guaranteed benefits offered by the policy.

This is in contrast with regular investments that do not provide any insurance coverage in the event that a person passes on, even while they are investing for the future of someone important to them.

As such, endowment plans are popular among parents who would like to save and invest for their children’s education, since there is a guaranteed fixed amount given to their child, regardless of what happens in the future.

Cons Of Endowment Plans:

#1 Guaranteed Return Does Not Equate To Guaranteed Principal

One misconception to avoid when buying an endowment plan is to be assuming that the premiums you pay for the policy would automatically be guaranteed, and that you will receive all of it back, plus some extra, when the policy matures.

This is not always true. And you need to understand this for yourself to avoid major disappointment in the future.

Here’s an example based on a Straits Times article.

Source: The Straits Times

From the benefit illustration above, you can see that while premiums paid to date is $200,378, the guaranteed return at maturity is only $189,000. This may not look too attractive for a person who buys an endowment plan hoping to get guarantee returns from it.

At the same time, the death benefit in the example above is substantial. If death occurs during the policy term, a payout of $189,000 is given. In a way, the lower guaranteed payout is somewhat balanced off by the fact that there is significant insurance coverage during the policy term.

At the end of the day however, you need to ask yourself what is the reason for buying an endowment plan in the first place.

#2 Long Commitment Period

Typically, most endowment plans tend to have a period of between 10 to 20 years where you have to stay committed to the plan. This means 1) making prompt payment on your premiums and 2) not surrendering the plan.

Penalty for early termination of your endowment plan can be very costly. If you surrender your policy within the first few years, you may even get nothing back from your policy.

In our view, if you are unsure of whether you will be able to commit to the entire duration of an endowment plan, you would be better off just using a savings account and to do your own investing.

#3 Actual Investment Returns Are Lower Than Long-Term Returns Earned

Lastly, you should remember that the projected investment returns earned by an insurer’s participating fund does not equate into the actual return that you will be getting from your endowment plan.

For example, in the case of the AIA Smart Growth (II) plan, if the participating fund achieve an investment return of 4.75% per annum, the actual return to policyholder is 3.85%.

Endowment plans offered by different insurers will have their own benefit illustration. For example, here is an illustration extracted from NTUC Income.

Source: NTUC Income

Long-Term Average Return: 4.75%

Actual Return To Policyholder: 2.99%

By now, we hope that you understand enough about endowment plans to know that this does not mean the AIA plan is better than the NTUC Income plan, just because the spread is smaller between achieved returns and actual returns.

Rather, the two policies are not identical and hence, a like-for-like comparison is not possible.

Our point here is that if you are intending to buy an endowment plan for investment purposes, you should know for yourself the difference between long-term average return achieved by the insurer, and the actual returns that you are going to get.

Otherwise, you might unknowingly be buying a product that is more insurance-based, rather than one which is investment-based.

Summary

Here are the pros and cons of an endowment plan which you should fully understand before you even consider a policy.

DollarsAndSense.sg is a personal finance website that aim to help Singaporeans make better financial decision.

fundMyLife is a platform that aims to empower Singaporeans to make financial decisions confidently. We also connect consumers to the right financial planners in a private and anonymous manner, based on their financial planning questions.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

Understanding How An Endowment Plan Works In Singapore

This article first appeared on DollarsAndSense.sg

Endowment plans are a common type of insurance marketed and sold by financial advisors. Some of our recent articles have discussed these policies. Previously, we also wrote an article about why Singaporeans can consider using the Singapore Savings Bonds rather putting money in an endowment plan for long-term savings.

Many people we have spoken to varying degrees of understanding about endowment plans. Some consider it a form of investing. Others see it as a savings plan or a hybrid between a saving and insurance plan. And there are those who don’t care what it is, because they have already sworn off these products completely.

Before you think about getting an endowment plan, perhaps it is best to first understand what an endowment plan actually is.

Endowment Plan For Saving

Most financial advisors market endowment plans as a form of savings. The term, “forced savings” is often used in the sales pitch.

When you buy an endowment plan, you can expect to contribute a regular amount to the plan for a designated time period. For example, you may opt to contribute $3,000 a year to a plan for 10 years. Alternatively, there are also single premium plans, where you put in a lump sum amount at the start of the policy.

The length of your contributions may not necessarily be the maturity of your endowment plan. You could be paying your premiums for 10 years and be expected to hold the policy for another 10 years before it matures, giving it a total duration of 20 years.

An endowment plan is frequently used when a policyholder intends to save up money towards some specific financial goals. For example, a 45-year old person who wants to save up for retirement may choose to buy a 20-year plan that matures when the person turns 65.

Endowment Plan As An Investment…

The main difference between an endowment plan and saving money in a bank account is the investment component of the plan.

The insurance company will use the premiums you contribute to invest in range of financial products. The objective of this is to earn higher returns on the money.

A typical endowment plan would usually consist of a guaranteed and a non-guaranteed return. You NEED to take note of this because a financial advisor may skim through the guaranteed portion and focus only on the non-guaranteed portion of the plan.

Guaranteed Return:

The guaranteed portion of the policy is what the insurance company is obliged to return to you, regardless of how badly the investment portfolio has performed.

Typically, if the guaranteed portion is higher, it also translates into the insurance company taking lower risks in their investments. It is also extremely important at this juncture to note that the guaranteed portion of certain policies may be lower than the premiums you have been putting in.

Non-Guaranteed Returns:

The non-guaranteed component of the policy is the additional returns you may receive if the portfolio performs well. The return rates that would be shown in the benefit illustration will be pegged at 3.25% and 4.75% respectively. This is standardised across the industry.

Two things to take note here.

Firstly, these two numbers do not necessarily represent what the insurance company is aiming for or hopes to get. It simply shows how much you will get if the participating fund achieve 3.25% or 4.75%. That’s all.

Secondly, if you do an excel table, you will quickly find that the actual returns shown in your benefit illustration does not tally with the 3.25% or 4.75% returns.

The table below shows the returns you should be getting if you put in $12,053 per year for a period of 5 years, and then hold on to the policy for another 5 years.

Table 1

Table 2 shows the actual return you will get if the fund achieves a 4.75% return in its portfolio.

Table 2

As you can see, the actual returns from this particular policy only gives an actual return of 1.8% per annum back to its policyholder, even though the portfolio gave a return of 4.75%. This is due to the “Effects Of Deduction”.

We won’t go into details of that today. The main thing you need to know is that the portfolio return does not equate to your actual returns, which are usually much lower.

Endowment Plan As Insurance…

Endowment plans may sometimes have an insurance component included. These plans would have a sum assured tag to the policy. This provides a payout in the event of death or permanent disability to the policyholder.

Due to the fact that endowment plans are mainly for the purpose of long-term savings, relying on them to provide coverage would usually be a costly option.

As with all insurance policies, cost of coverage will differ depending on the age, gender and health related issues of a policyholder.

DollarsAndSense.sg is a personal finance website that aim to help Singaporeans make better financial decision.

fundMyLife is a platform that aims to empower Singaporeans to make financial decisions confidently. We also connect consumers to the right financial planners in a private and anonymous manner, based on their financial planning questions.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

Critical Illness Plans: 5 Things You Didn’t Know Were Excluded From Traditional CI Plans

This article first appeared on DollarsAndSense.sg

Critical illness plans are one of the most common types of health insurance policies that agents typically sell. It’s also an important health insurance policy that many consumers will purchase, either as a stand-alone plan, or as a rider tagged to a life insurance plan.

A critical illness (CI) plan provides a lump sum pay-out to policyholders in the event they are diagnosed with an illness covered under the policy. In Singapore, most traditional CI plans will cover 37 common types of critical illnesses.

However, not many people would know that policyholders have to meet the common definition of these critical illnesses before they are eligible to receive a pay-out. These are as defined by the Life Insurance Association (LIA) and it includes some exclusions. Here are 5 important definitions and exclusions that you should take careful note of.

# 1 Kidney Failure, Failure Of One Kidney

Kidney failure is defined as the irreversible failure of both kidneys, which requires either permanent renal dialysis or kidney transplantation. That means if only one kidney has failed, it does not constitute a critical illness (yet).

# 2 Coma, Drug & Alcohol Abuse

A coma that persists for at least 96 hours, and as a result, brain damage which causes permanent neurological deficit assessed at least 30 days after the onset of coma is considered a critical illness.

However, it’s important to note that coma resulting directly from alcohol and drug abuse are excluded from coverage.

# 3 Major Cancer, Early Stage

Many people don’t realise that early and intermediate stage of major cancers are excluded from coverage in traditional CI plans. Traditional CI plans only cover cancer during the critical stage, also sometimes known as late-stage cancer.

# 4 HIV, Consensual Sex

HIV is covered under CI plans but it’s only restricted to infection as a result of blood transfusion and occupationally-acquired HIV. In other words, HIV infections resulting from consensual sexual activity are excluded.

# 5 Liver Failure, Drug and Alcohol Abuse

Liver failure which comes as a result of drug or alcohol abuse are excluded from CI coverage.

Early-Stage Critical Illness Provides Wider Scope of Coverage, But Many Exclusions Still Stand

If you purchase an early-stage critical illness plan, you will enjoy a wider scope of coverage provided by the insurer. For example, unlike traditional CI plans that only provides a pay-out when an illness has reached “critical stage”, early-stage critical illness plan provides a pay-out during the “early stage” and “intermediate stage” of an illness.

Based on our observations, however, any illness that is a direct result of living in an irresponsible manner such as drug abuse, alcohol abuse and consensual sexual activity would still be excluded, even for early-stage critical illness plans.

DollarsAndSense.sg is a personal finance website that aim to help Singaporeans make better financial decision.

fundMyLife is a platform that aims to empower Singaporeans to make financial decisions confidently. We also connect consumers to the right financial planners in a private and anonymous manner, based on their financial planning questions.

Follow us on our fundMyLife Facebook page to get exciting updates and your dose of finance knowledge! Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

Guide To Understanding How Critical Illness Policy Works

This article first appeared on DollarsAndSense.sg

One of the most common types of insurance that people frequently talk about is Critical Illness (CI). You may have heard about it from your insurance agent, or from friends who have bought these policies. You may even know of one or more person who have claimed from it.

But what exactly does critical illness covers us for? More importantly, do all of us need to buy some form of critical illness overage? In this article, we aim to address both of these common questions.

What Is A Critical Illness Plan For?

As its name suggests, a Critical illness (CI) plan is a type of insurance that pays out a lump sum payment to a policyholder when he/she is diagnosed with an illness covered by the policy.

One important to note is that claim payout is only made when policyholders are diagnosed with a condition that meets the common definition of these critical illnesses. For example, the definition of a kidney failure would be a “chronic irreversible failure of both kidneys requiring either permanent renal dialysis or kidney transplantation”. These must be conditions diagnosed by a certified doctor or specialist. You can read up more about the common definition here.

Payments make do not depend on the policyholder incurring any medical costs or hospitalisation admission for the treatment. The money is simply given out once the condition is diagnosed.

Typically, the rationale to purchase a CI plan is to ensure that one received important financial support during this difficult phase of illness, where additional funds may be required for specialised treatment, homecare, and to replace for potential loss of income during recovery. How policyholders use their money is entirely up to them.

What Does Critical Illness Cover Me For?

To begin, it’s important to first understand that within Singapore, there is a standard list of 37 illnesses covered under traditional CI policies. Here’s the full list of them.

Source: Life Insurance Association

Some companies may also cover other illnesses beyond what is found on this list in their CI plan

** If you purchase an early-stage CI plan, you will be covered for a wider range of illnesses. If you have an existing early-stage CI plan, do check with your respective insurer on the extent of the coverage.

Premiums Payable

Similar to life insurance, the premiums that you pay for your CI policy is dependent on the sum assured, your age, gender and length of coverage. Here are some rules of thumbs to consider.

  • In general, females tend to pay more than male for CI policies
  • Older people will naturally pay higher premiums
  • The longer you want coverage for, the higher your annual premiums is likely to be
  • Generally, sum assured starts from $50,000
  • Early-stage critical illness will cost much more than traditional CI plan due to the fact that it provides for more extensive coverage

Do I Need Really Need To Buy A Critical Illness Plan?

First and foremost, it’s important to remember that a critical illness plan is a type of health insurance. It’s not an investment plan. Neither is it a savings plan. In other words, you only get a payout if something bad occurs. Nobody should be buying a CI plan hoping to get a payout.

A CI plan can help you and your loved ones offset the financial stress when an unfortunate illness occurs. This allow policyholders and their family members to focus on getting suitable treatment and recovering, without having to worry about their financial resources being stretched as a result of the illness.

Some CI policies can be bought as an add-on rider to a main life insurance plan. If you are already intending to buy a life insurance policy, you can check with your insurance agent if you can add-on a CI rider to your policy, instead of having to buy a stand-alone plan.

If you have a question about critical illness policies that you wish to ask, you can submit your questions on the fundMyLife website. fundMyLife will automatically connect your financial planning questions, to the right trusted advisers in its platform. Furthermore, your questions are private and anonymous, unless of course you intend to connect with the agents you want to for a further discussion.

You can also follow fundMyLife on their Facebook page to stay updated with insurance discussions and questions.

Alternatively, the Insurance Discussion SG Facebook group is a good place to discuss insurance-related topics with fellow Singaporeans.

DollarsAndSense.sg is a personal finance website that aim to help Singaporeans make better financial decision.