18 Special Conditions In Critical Illness Plans: What Are They?

18 special conditions in critical illness plans

[10 min read]

Critical illness plans are plans that provide a lump sum payout whenever you contract one of the 37 critical illnesses defined by the Life Association of Singapore. In addition, some insurance companies provide benefits for additional 18 special conditions in critical illness plans. These conditions range from the usual, e.g., diabetes, to the obscure, e.g., Wilson’s disease. We here at fundMyLife are biologists at heart, and the human body is a ceaseless source of wonders (and nightmares). In this article, fundMyLife lists all 18 special conditions in critical illness plans and details what they are.

Disclaimer

We’ve taken the definitions of the conditions that qualifies the consumer for special benefits from insurance company brochures. These definitions are presented in block quotes. We will also provide interesting facts about these conditions. However, bear in mind that this is NOT a definitive guide, since each insurance companies have slightly different definition of the special conditions in their respective terms and conditions. Make sure you look closely at your own policy’s disease definitions!

#1 Insulin Dependent Diabetes Mellitus

Diabetes mellitus is chronic hyperglycemia, caused by defective insulin secretion. IDDM is characterised by the continuous dependence on exogenous insulin for the preservation of life as diagnosed by an endocrinologist and such dependence must persist for not less than six (6) months

Diabetes, a condition that 1 in 9 Singaporeans face. It is a dreadful lifestyle disease that is due to obesity and a lack of exercise. Over time, your pancreas is unable to produce enough insulin, the chemical required to control glucose release in the liver. Your cells are also resistant to insulin, which prevents them from taking blood glucose into them for energy usage. The excess sugar thus circulates in the body and over time cause damage to your blood vessels all over the body.

#2 Diabetic Complications

Diabetic Complications including Diabetic Retinopathy, Diabetic Nephropathy or Amputation of Part of Limb due to Gangrene:

  • Diabetic Retinopathy with the need to undergo laser treatment certified to be absolutely necessary by an ophthalmologist with support of a Fluorescent Fundus Angiography report and vision is measured at 6/18 or worse in the better eye using a Snellen eye chart.
  • A definite diagnosis of diabetic nephropathy by a specialist and is evident by eGFR less than 30 ml/min/1.73 m2 with ongoing proteinuria greater than 300mg/24 hours.
  • The actual undergoing of amputation of a foot / toe / hand / finger to treat gangrene that has occurred because of a complication of diabetes.

Diabetes, when uncontrolled, leads to many complications. High blood sugar levels cause blood vessel damage over a long period of time, and poor oxygen flow. This special condition covers three main complications that arise – diabetic retinopathy, diabetic nephropathy, and amputation due to gangrene.

Diabetic retinopathy refers to the damage to the blood vessels in the eye due to high blood sugar level. Retinopathy causes vision loss and eventually blindness, if not addressed immediately.

Diabetic nephropathy refers to kidney disease that arises from diabetes. The kidneys become leaky, allowing protein to leak into the blood stream. The filtration capabilities weaken as well, and eventually fail – you’ll need dialysis at this stage.

As mentioned, high blood sugar level cause blood vessel and nerve damage. These leads to a devastating combination of a lack of circulation to your extremities, i.e. foot, and you may unwittingly injure your foot and let the wound fester due to a lack of sensation. Minor toe injuries in diabetic patients, for example, can lead to gangrene because the injury does not heal quickly and is thus more likely to get infected. Once the infection is uncontrollable, you may have to amputate the foot to stop the spread of infection.

#3 Angioplasty & Other Invasive Treatment for Coronary Artery

The actual undergoing of balloon angioplasty or similar intra-arterial catheter procedure to correct a narrowing of minimum sixty percent (60%) stenosis, of one or more major coronary arteries as shown by angiographic evidence. The revascularisation must be considered medically necessary by a consultant cardiologist.

Coronary arteries herein refer to left main stem, left anterior descending, circumflex and right coronary artery.

Diagnostic angiography is excluded.

Angioplasty is a medical procedure where the doctor inserts a catheter containing deflated balloon into your narrowed or obstructed arteries or veins, and inflates it to widen them.

Angioplasty 101
What happens during an angioplasty. Source: Total Vascular Wellness.

The inflated balloon forces expansion of the vessel, allowing normal blood circulation again. A doctor may use angiography for diagnotic purposes but that does not qualify you for the special condition benefit.

#4 Osteoporosis with Fractures

Osteoporosis is a degenerative bone disease that results in loss of bone. The diagnosis must be supported by a bone density reading which satisfies the World Health Organisation (WHO) definition of osteoporosis with a bone density reading T-score of less than –2.5. There must also be a history of three (3) or more osteoporotic fractures involving either femur, wrist or vertebrae. These fractures must directly cause the Life Assured’s inability to perform (whether aided or unaided) at least one (1) of the following six (6) “Activities of Daily Living” for a continuous period of at least six (6) months.

Activities of Daily Living:

  • Washing- the ability to wash in the bath or shower (including getting
    into and out of the bath or shower) or wash satisfactorily by other
    means;
  • Dressing- the ability to put on, take off, secure and unfasten all
    garments and, as appropriate, any braces, artificial limbs or other
    surgical appliances;
  • Transferring- the ability to move from a bed to an upright chair or
    wheelchair and vice versa;
  • Mobility- the ability to move indoors from room to room on level
    surfaces;
  • Toileting- the ability to use the lavatory or otherwise manage bowel
    and bladder functions so as to maintain a satisfactory level of
    personal hygiene;
  • Feeding- the ability to feed oneself once food has been prepared
    and made available.

For the purpose of this definition, “aided” shall mean with the aid of special equipment, device and/or apparatus and not pertaining to human aid.

Osteoporosis (Greek for porous bone)  is a disease where you have higher bone weakness, increasing your chances of breaking your bones. It commonly affects older folks, and in women. Risk factors include advanced age, estrogen deficiency after menopause, removal of ovaries, decrease in testosterone, not having enough calcium, etc. Drink your milk folks!

Note: this is a very narrow definition of disease, especially when it has to satisfy WHO’s definition of osteoporosis and have more than 3 fractures in very specific parts of your body. On top of that, you must be unable to do one of the six basic activities for six months.

#5 Osteogenesis Imperfecta

This is a genetic disorder characterised by brittle, osteoporotic, easily fractured bones. The Life Assured must be diagnosed as a type III Osteogenesis Imperfecta confirmed by the occurrence of all of the following conditions:

  • the result of physical examination indicating growth retardation and
    hearing impairment; and
  • the result of X-ray studies reveals multiple fracture of bones and
    progressive kyphoscoliosis; and
  • positive result of skin biopsy.

Diagnosis of Osteogenesis Imperfecta must be confirmed by a pediatrician.

Osteogenesis imperfecta is also known as brittle bone disease, where symptoms include bones that break easily, blue tinted eyes, short stature, hearing loss, and loose joints. It is hereditary, and has no cure. There are at least nine different types of osteogenesis imperfecta – Type I to Type IX. Type I is the most common and mildest, whereas Type III is progressive and gets worse over time from birth.

#6 Severe Rheumatoid Arthritis

Widespread joint destruction with major clinical deformity of three (3) or more of the following joint areas: hands, wrists, elbows, spine, knees, ankles, feet. The diagnosis must be supported by all of the following:

  1. Morning stiffness
  2. Symmetric arthritis
  3. Presence of rheumatoid nodules
  4. Elevated titres of rheumatoid factors
  5. Radiographic evidence of severe involvement

The diagnosis must be confirmed by a consultant rheumatologist.

Rheumatoid athritis is a long-term autoimmune disease, where your immune system attacks the joints. This causes constant inflammation and constant pain. The requirements for the payout are severe, as it involves arthritis so bad that your joint areas are deformed, and has to fulfill all five conditions.

#7 Severe Juvenile Rheumatoid Arthritis (Still’s Disease)

A form of juvenile chronic arthritis characterised by high fever and signs of systemic illness that can exist for months before the onset of arthritis. The condition must be characterised by cardinal manifestations which include high spiking, daily (quotidian) fevers, evanescent rash, arthritis, splenomegaly, lymphadenopathy, serositis, weight loss, neutrophilic leucocytosis, increased acute phase proteins and sero-negative tests for Antinuclear Antibodies (ANA) and Rheumatoid Factor (RF). A claim for this benefit will be admitted only if the diagnosis is confirmed by a paediatric rheumatologist and the condition has to be documented for at least six (6) months.

Think only old people can get arthritis? Think again! Children suffer from a form of rhematoid arthritis kmown as Still’s Disease as well. Similar to adult arthritis, juvenile arthritis is an auto-immune disease that attacks your joints. It results in growth retardation. Left untreated, children develop joint deformities which eventually lead to irrecoverable loss of function.

#8 Rheumatic Fever with Valvular Impairment

A confirmed diagnosis by a consultant cardiologist of acute rheumatic fever according to the revised Jones criteria for its diagnosis. There must be involvement of one (1) or more heart valves and at least mild valve incompetence attributable to rheumatic fever as confirmed by quantitative investigations of the valve function by a consultant cardiologist.

Rheumatic fever is an inflammatory disease that occurs after an infection. The infection is so bad that it creates heart valvular infection that creates abnormal antibodies that destroy valvular tissues. Symptoms include breathlessness, irregular heart beats, fatigue.

#9 Dengue Haemorrhagic Fever

It covers Dengue Haemorrhagic Fever Stage 3 or Stage 4, based on the World Health Organisation case definition, with unequivocal evidence of the Dengue Shock Syndrome and confirmation of dengue infection, with confirmatory serological testing of dengue; and as may be exemplified by the following findings:

  • history of continuous high fever (for two (2) or more days),
  • minor or major haemorrhagic manifestations,
  • thrombocytopenia (less than or equal to 100000 per mm3),
  • haemoconcentration (haemotocrit increased by 20% or more),
  • evidence of plasma leakage (i.e. pleural effusion, ascites or hypoproteinaemia, etc.), and
  • evidence of the Dengue Shock Syndrome (DSS), confirmed by a consultant physician, with the following criteria being met:
    • hypotension (less than 80 mm Hg) or narrow pulse pressure (20 mm Hg or less), and
    • evidence of tissue hypoperfusion such as cold, clammy skin, oliguria, or a metabolic acidosis.
Chances are that you might have encountered plenty of posters about this Aedes mosquito.

Dengue fever is a mosquito-borne illness that occurs in tropical and sub-tropical countries. Symptoms can be mild and typically include fever, rash, and muscle and joint pain. Spend a night or two in the hospital with a drip and you’re good as new. People rarely die from dengue fever. However, it can progress to a more serious form know as dengue haemorrhagic fever. This form involves internal bleeding, i.e. under the skin, vomiting, and abdominal pain.

The benefit covers stages 3 and 4, which are the most severe stages. At Stage 3, you experience circulatory failure and in stage 4 you experience profound shock where you have undetectable pulse and blood pressure.

#10 Severe Haemophilia

The Life Assured must be suffering from severe haemophilia A (VIII deficiency) or haemophilia B (IX deficiency) with factor VIII or factor IX activity levels less than one percent (1%). Diagnosis must be confirmed by a haematologist.

When you’re cut, you stop bleeding after a while because your blood clots. Blood clotting is a complex process that involves 20 proteins. We take blood clotting for granted, but individuals with haemophilia experience prolonged or even spontaneous bleeding. Severe haemophilia A and B happens when you have severely low levels of clotting factors – Factor VIII and Factor IX respectively.

#11 Mastectomy

Mastectomy means surgical removal of at least three quadrants of the tissue of a breast due to carcinoma-in-situ or a malignant condition. Proof of having undergone the breast reconstructive surgery is not required.

The definition more or less explains what mastectomy is – the total removal of breast tissue when there is cancerous tissue on the breasts. It is a dramatic form of treatment, and the 10-year survival rate for patients that undergo mastectomy is >80% for early breast cancer cases. There is no payout for the the alternative procedure – lumpectomy, where only the tumor and some surrounding tissue is removed.

#12 Hysterectomy due to Cancer

The removal of the uterus (at least the corpus and cervix or corpus only) with supporting evidence of carcinoma of the uterus, fallopian tube, ovary, vagina or endometrium, advanced cervical carcinoma, or hydatidiform mole.

Hysterectomy is the surgical removal of a part, or the entire uterus. It is done in cases where cancerous tissue is found on the uterus itself, cervix, or ovaries.

#13 Chronic Adrenal Insufficiency (Addison’s Disease)

An autoimmune disorder causing a gradual destruction of the adrenal gland resulting in the need for life long glucocorticoid and mineral corticoid replacement therapy. The disorder must be confirmed by a specialist in endocrinology through one of the following:

  • ACTH simulation tests;
  • insulin-induced hypoglycemia test;
  • plasma ACTH level measurement;
  • Plasma Renin Activity (PRA) level measurement.

Only autoimmune cause of primary adrenal insufficiency is included. All other causes of adrenal insufficiency are excluded.

Addison’s Disease is a long-term endocrine disorder, where your adrenal glands do not produce enough steroid hormones. Without the right amount of hormones, you will experience low blood pressure, darkening of skin, lethargy, fever, and a whole host of other physical discomforts. Replacement hormonal therapy will bring the steroid hormone levels back to normal.

#14 Chronic Relapsing Pancreatitis

More than three (3) attacks of pancreatitis resulting in pancreatic dysfunction causing malabsorption needing enzyme replacement therapy.

The diagnosis must be made by a consultant gastroenterologist and confirmed by Endoscopic Retrograde CholangioPancreatography (ERCP).

Chronic Relapsing Pancreatitis caused by alcohol use is excluded.

Chronic relapsing pancreatitis is a long-term damage or inflammation of your pancreas, impairing its function. Besides pain and nausea, you’d suffer from malnutrition since the pancreas secretes enzymes that aid digestion. The body does not absorb fats properly, leading to oily stool. Alcohol use is one of the factors for pancreatitis, but is an exclusion criteria for the benefits to kick in.

#15 Wilson’s Disease

A potentially fatal disorder of copper toxicity characterised by progressive liver disease and/or neurologic deterioration due to copper deposit. The diagnosis must be confirmed by a hepatologist and the treatment with a chelating agent must be documented for at least six (6) months.

Wilson’s Disease is a genetic disease in which copper builds up in your body, due to a mutation in a protein that transports copper that you consume into bile for excretion. The copper accumulates in the liver and brain, leading to liver disease and neurological and psychiatric problems. Symptoms of Wilson’s Disease appear between ages 5 to 35. For treatment, a doctor administers chelating agent – a compound that binds to metals – to remove the copper in the body for you.

#16 Kawasaki Disease

This is acute, febrile and multisystem disease of children, characterised by non-suppurative cervical adenitis, skin and mucous membrane lesions. Diagnosis must be confirmed by a pediatrician and there must be echocardiograph evidence of cardiac involvement manifested by dilatation or aneurysm formation in the coronary arteries which persists for at least six (6) months after the initial acute episode.

Kawasaki Disease is a rare disease that affects children. It is an autoimmune disease, causing inflammation in your blood vessels throughout the body.

Clinical manifestations of Kawasaki Disease over a period of time.
Clinical manifestations of Kawasaki Disease over a period of time. Source: Wikipedia.

There are three stages of the disease, with various clinical manifestations. The most important aspect of Kawasaki Disease is the heart complications – coronary aneurysms (weak blood vessels) form after the initial stage, which may lead to myocardial infarctions. In other words, juvenile heart attacks.

#17 Glomerulonephritis with Nephrotic Syndrome

A confirmed diagnosis of glomerulonephritis with nephrotic syndrome by a nephrologist and who should confirm that a treatment regimen appropriate to the clinical presentation has been followed throughout the period to which syndrome relates. The syndrome must have continued for a period of at least six (6) months with or without intervening periods of remission.

Glomerulonephritis is a disorder of glomeruli (clusters of microscopic blood vessels in the kidneys with small pores through that filters blood). The condition involves body tissue swelling (edema), high blood pressure, and the presence of red blood cells in the urine.

#18 Type I Juvenile Spinal Amyotrophy

Degenerative diseases of the anterior horn cells in the spinal cord and motor nuclei of the brainstem characterised by profound proximal muscular weakness and wasting, primarily in the legs, followed by distal muscle involvement. The damage must result independently of all other causes and directly in the Life Assured’s permanent inability to perform (whether aided or unaided) at least three (3) of the “Activities of Daily Living” (ADLs) for a continuous period of six (6) months. The diagnosis must be made by a neurologist with appropriate neuromuscular testing such as Electromyogram (EMG).

Only Life Assured whose Age is between six (6) and seventeen (17) years on first diagnosis is eligible to receive a benefit under this illness.

Activities of Daily Living:

  • Washing- the ability to wash in the bath or shower (including getting into and out of the bath or shower) or wash satisfactorily by other means;
  • Dressing- the ability to put on, take off, secure and unfasten all garments and, as appropriate, any braces, artificial limbs or other surgical appliances;
  • Transferring- the ability to move from a bed to an upright chair or wheelchair and vice versa;
  • Mobility- the ability to move indoors from room to room on level surfaces;
  • Toileting- the ability to use the lavatory or otherwise manage bowel and bladder functions so as to maintain a satisfactory level of personal hygiene;
  • Feeding- the ability to feed oneself once food has been prepared and made available.

For the purpose of this definition, “aided” shall mean with the aid of special equipment, device and/or apparatus and not pertaining to human aid.

Type I juvenile spinal amyotrophy is a condition where your motor neurons degenerate, leading to muscle atrophy over time. It stabilizes after two to five years, where the condition neither improves or worses. It is common to males aged 20 to 50. Unfortunately, it is untreatable.

Connect with fundMyLife financial advisers today!

We hope you found this lengthy guide informative. There’s a lot of information to take it, but one thing’s for sure – living is scary.

As such, it’s important to get yourself protected. Haven’t found a good financial adviser? Worry not – fundMyLife has your back. You can connect with our panel of experienced and awesome financial advisers, curated by us. Head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

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.

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.

fML Reviews: Manulife Ready CompleteCare

Manulife Ready CompleteCare review

Critical illness plans are plans that pay out a lump sum when the doctor diagnoses you with one of the 37 critical illnesses. The lump sum is meant to help you cope with the period when you cannot work and require rest. One disadvantage of critical illness plans is that it will pay out only once, and it terminates after. This exposes you to risks such as recurrent cancer later in your life, but you can no longer purchase critical illness plans. In response to such risks, insurance companies have come up with multi-pay critical illness plans, which provide multiple payouts during the duration of one’s life. In this article, fundMyLife reviews the Manulife Ready CompleteCare and discusses its features. Note: the information is accurate as of September 2018.

What is it?

Manulife Ready CompleteCare is a critical illness plan that provides multiple payouts. The plan provides up to $250,000 for early stage critical illnesses, up to $350,000 for intermediate state, and 100% of coverage for advanced stage critical illnesses. There is also an optional ‘cover me again’ feature, which provides additional benefits such as multi-claim resets.

Notable features

Cover me again

The most widely promoted feature of this plan provides additional benefits. As its name suggests, ‘cover me again’ gives you the opportunity to restore the basic sum assured back to 100%, 12 months after your claim. This reset is available up to five times.

The list of major critical illness benefits that provides 200% of sum assured, once.

It also comes with additional major critical illness benefit, where you get twice the amount of your sum assured (200%) for six major critical illnesses in advanced stages, as seen in the table above.

There is also a recurring cancer benefit, where you can claim 100% of your sum assured if/when your cancer relapses after the first cancer, after a waiting period of two years or longer. This particular benefit kicks in when you 1) get cancer a second time in an organ different from the original cancer location, or 2) have cancer that happens in the same organ of the first cancer, or 3) get the metastatic form of the earlier cancer that you claimed for, after a remission.

Free health check-up

…for every two years. It is also transferable to your loved ones. Presumably, the free health check encourages you to screen early and often to catch illnesses in their early stages. This is a win-win since Manulife pays out less in the case of early stage critical illness, and you have a higher chance of surviving the illness.

Premium refund upon death

In the event of death, all of the premiums you paid are refunded, less whatever claim payout that you claimed. This also means that if you did not claim anything, you would get all of your premiums paid back.

Child cover

There is free coverage for your child up to 18 years old, without compromising anything in your sum assured. You get a lump sum of $10,000 if your child gets a critical illness, without affecting your sum insured. It’s a good feature for those with children. However, don’t bank on the $10,000 and consider a proper critical illness plan for your child instead.

Special benefits for 18 conditions

Manulife Ready CompleteCare special conditions table
The 18 conditions that provide additional benefits. Source: Manulife.

You can claim, up to a maximum of 6 times, when you have a condition that falls under the 18 conditions in the table above. You can claim 20% of the sum assured, for a maximum of $25,000 per life per condition. Good thing is that payout from this benefit does not reduce your sum assured.

fundMyLife Review

The Manulife Ready CompleteCare is full of features, and more so if you add in the ‘cover me again’ add-on. It is also conscious of your family, providing things like free checkup for either yourself or loved ones, and free child cover. It has a broad cover of diseases, even though the coverage of 106 conditions is just variations of the same diseases in different stages (such is marketing). The premium refund is a nice touch, but again you should consider life insurance for better and more substantial death benefits.

However, we observe that there is one huge caveat. Given the complexity of the conditions set by Manulife, it is very crucial that you fully understand these said conditions under which you will get a payout. Make sure you are aware of the T&Cs completely before committing to this plan, as it is a relatively recent product in the market.

You should also be refreshing your memory on how you qualify for payouts – don’t just leave this your financial adviser to handle.

Connect with fundMyLife financial advisers today!

Interested to know whether the Manulife Ready CompleteCare, or other multi-pay plans are suitable for you? You should ask your financial adviser. Haven’t found a good financial adviser? Worry not – fundMyLife has your back. You can connect with our panel of experienced and awesome financial advisers, curated by us. Head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

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.

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.

fML Reviews: Aviva MultiPay Plan III

Aviva MultiPay Plan III review

Critical illness plan is a form of insurance that provides a lump sum payout whenever you’re diagnosed with one of the 37 critical illnesses, defined by the Life Insurance Association of Singapore. The lump sum is to help the person during the recovery period, when he/she cannot work. In our previous article, we discussed the differences between single-pay and multi-pay critical illness plans. One plan that we mentioned in the article was the Aviva MultiPay Plan III. Where is Aviva MultiPay Plan I and II? That’s a question that we’re unable to answer. However, we can answer something else instead. In this article, fundMyLife reviews the Aviva MultiPay Plan III and explores their features. Note: this information is accurate as of September 2018.

What is it?

Aviva MultiPay Plan III, as its name suggests, is a critical illness plan that provides multiple payouts. More specifically, it provides up to five payouts across early, intermediate, and severe stage critical illnesses. This also includes payouts if/when your cancer reoccurs. It is available as both a standalone plan or a rider to your existing policies.

Notable features

No waiting period between illnesses of different groups

While multi-pay critical illness plans from other companies have a waiting period, the Aviva MultiPay Plan III is notable because it has no waiting periods between Layer 1 disease groups. Early and intermediate critical illnesses form the first layer. Bear in mind, it’s a maximum of two claims in the first layer.

Aviva MultiPay Plan III Payout structure
Aviva MultiPay Plan III payout structure. Source: Aviva.

For example, if the doctor diagnoses you with Stage I breast cancer and you had a heart attack, you would obtain payout for both conditions. Statistically, it is not likely to happen, i.e. getting multiple critical illnesses from different baskets at the same time, but it’s a good thing to have.

If you take a closer look at the brochure, it says that Aviva will pay 300% of the sum assured less any claim paid from Layer 1. This means that if you suffer from a severe critical illness from the get-go without any claims on early/intermediate critical illness, you’d get the full 300% of sum assured. For example, your payout would be $300,000 if your sum insured was $100,000. However, if you claimed once or twice for early stage, you’d get 200% ($200,000) and 100% ($100,000) respectively instead.

Premium waiver after severe critical illness

This is different from the usual critical illness plan since the plan terminates after you get the payout. There are two advantages with this, as it means you are still protected and you do not have to carry the burden of premium payment during and after recovery.

Special benefit from certain illnesses

If you are diagnosed with one of the 18 conditions set out by Aviva, you will get an additional 20% increase for your sum insured, for a maximum of $25,000 per life per condition. These are the 18 conditions:

The list of special conditions that give additional sum assured for Aviva MultiPay Plan III.
The list of special conditions that give additional sum assured for Aviva MultiPay Plan III. Source: Aviva.

Several of the special conditions listed are children’s diseases, but there are conditions which are relatively regular such as diabetic complications and mastectomy.

Death benefit

Considering that critical illness plans are for the living, and not for the dead, the Aviva MultiPay Plan III has a death benefit component. Even so, the $5,000 death benefit is a paltry sum compared to most of the regular critical illness plans out there. Better than nothing, but you’d have better cover getting a regular life insurance for death benefit.

fundMyLife Review

The plan is a recent entrant in the critical illness market, and it stands on its own among the emerging multi-pay critical illness plans in the market. The lack of waiting period between early to intermediate stage critical illnesses is a nice feature. The waiting period between a cancer occurrence and a recurrent is two years, which is biologically and statistically sensible.

However, conditions that qualify for special benefits are a mixed bag. The inclusion of juvenile conditions is a push towards getting this plan for your children. However, it is good to note that there are other conditions that you’d get when you’re older, e.g., diabetes complications and osteoporosis with fractures. Breast cancer survivors who opt for mastectomy – a common procedure – can sigh a breath of relief from this feature as well.

As mentioned, with the relatively low amount of death benefit, you should get a proper life insurance as well.

Connect with fundMyLife financial advisers today!

Interested to know whether this plan, or other multi-pay plans are suitable for you? You should ask your financial adviser. Haven’t found a good financial adviser? Worry not – fundMyLife has your back. You can connect with our panel of experienced and awesome financial advisers, curated by us. Head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

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.

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.

Single-Pay Vs Multi-Pay Critical Illness Plans – What’s The Difference?

The differences between single-pay and multi-pay critical illness plans

Critical illness plans are plans that pay a lump sum of money whenever you’re critically ill. The payout is supposed to help you cope during the recovery period that you cannot work. Apart from the basic and early critical illness plans, insurance companies recently introduced multi-pay critical illness plans. What are they, and how are they different? In this article, fundMyLife examines the differences between single-pay and multi-pay critical illness plans.

#1 Number of times you get payouts

Let’s get the most obvious difference out of the way – the number of times you get payouts.

Typically, the usual critical illness plans provide a single payout when you contract one of the 37 diseases, in a relatively late stage. For example, you’re only eligible for the payout when you contract stage III or stage IV lung cancer. It also means that if you’re diagnosed at stage I, you do not get any payouts.

To cover that gap, early critical illness plans provide the payout if the doctor diagnoses you with diseases in the earlier stages. For example, a stage I and stage II cancer qualifies you for a payout. If you wanted protection for all stages, you would have to purchase both plans. The disadvantage is that once you get your payout, the plan terminates and that’s the end. On top of that, it will be very hard to purchase (almost impossible) a new critical illness plan since you have pre-existing conditions. This is disadvantageous because some diseases do reoccur during the course of one’s life, e.g., cancer.

In response to the demand for total coverage for critical illnesses and the possibility of recurring critical illnesses in a different stage, insurance companies are providing a multi-pay plan, a plan that covers the functions of both regular and early critical illness plans. Under multi-pay plans, in general you can get payouts when you contract critical illnesses, without a plan termination.

#2 Terms and conditions

On the surface, it seems simple. For single-pay critical illness plan, you get paid once in a lump sum, and that’s it. For multi-pay critical illness plan however, you get paid several times over the course of your life. The former is simple, as it involves only getting sick with one of the 37 critical illnesses once. However, for you to enjoy the multiple payments under the multi-pay plan, you’d have to go through the terms and conditions closer.

In general, the critical illnesses are lumped into categories, called layers. For example, the table below shows the layers defined by Aviva My Multipay Critical Illness Plan.

Aviva My MultiPay Critical Illness Plan benefit summary, one of the many multi-pay critical illness plans out there
Aviva My MultiPay Critical Illness Plan. and the different buckets of critical illnesses. Source: Aviva.

For Aviva, within Layer 1, there are three groups of diseases. For that, there’s no waiting period for claims between early critical illnesse in different groups of diseases. However, it might not be the case for multi-pay critical illness plans from other companies. Disclaimer: we’re using Aviva as an example for illustration purposes, not because we think it’s better or anything (that’s a story for another time).

To reemphasize, when you choose to take these multi-pay critical illness plans up, you MUST look up the terms and conditions to know what you can and cannot claim for after you contract a critical illness. Make sure you and your financial adviser are 100% sure of the terms and conditions for the plan to work in your favor.

You do not want to be in a situation where you have multiple critical illnesses but are unable to claim for some of them because you did not take the fine print into account.

#3 Premiums

According to our research, multi-pay critical illness plans are slightly more expensive than combining both standalone critical illness and early critical illness plans. The main reason, we speculate, is due to the fact that multi-pay critical illness plans have multiple payouts.

For the more price-conscious folks out there, there are alternatives to consider. Instead of forking out more on standalone critical illness plans, be it single-pay or multi-pay, you can consider taking on critical illness riders on your existing plans as well.

Want to know the specifics? Our pool of curated advisers can give you a better rundown on what you need. Or you can ask your own financial adviser. No pressure.

Connect with fundMyLife financial advisers today!

No matter the differences between these two types of critical illness plan, it’s definitely a good idea to have critical illness protection. With increasing lifespan over the years, it is all the more important we have things to fall back on in the case of critical illnesses. Best speak to your financial adviser about it.

Haven’t found a good financial adviser? Worry not – fundMyLife has your back. You can connect with our panel of experienced and awesome financial advisers, curated by us. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

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.

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.

6 Avoidable Mistakes When Saving Money

Here are some common mistakes when saving money

There’s a saying that goes like this, “save your money today and it will save you tomorrow”. It sounds easy right? Just two simple steps: 1) put money somewhere, like an account, 2) repeat step 1. While simple in theory, saving effectively is monumentally hard. More so when there are so many things to pay for, like bills, leisure, travel, etc. In this article, fundMyLife shares avoidable mistakes when saving money, and how you can avoid them.

#1 Not having a goal and a plan

One of the most common mistakes when saving money is you do it without a goal and a plan. It’s one thing to know that you must save, but it’s another to know what you are saving for.

The goal is a destination, whereas the plan will help you to get there. For example, you want a car that costs $100,000 in 10 years. We know it’s not that cheap, but bear with us. Not counting inflation, you will need to save $10,000/year, and $833.33/month. To put it simply, the goal is getting the car, getting it there by saving $833.33 is your plan. By the way, this is for illustration’s sake – typically you’d take a loan for your car anyways.

Without a goal to work towards to, you’ll eventually question why you’re saving in the first place. Without that motivation, you will soon fritter away that money. Saving towards retirement is a good goal, as is saving towards a possession that you wish to have. The important thing is to have a goal to work towards to, and a plan to help you get there.

As Friedrich Nietzche would say, “he who has a why to live can bear almost any how”.

#2 Lacking the discipline to save

Now that you have a goal to work towards to, it’s time to put it into action. If you don’t summon the discipline to start, you will never get anywhere despite the best of plans. In addition, if you don’t summon the discipline to regularly save after starting, it is hard to maintain it over a long period of time.

Make it a habit to save regularly. Habits can be a powerful thing – as the saying goes, “we first make our habits, and then our habits make us.

#3 Not tracking your expenditure

Tangential, but equally important. To have enough to save every month, you’d need to be aware of what you’re spending on. Imagine, if your spending is uncontrolled, you’d be unable to have enough at the end for savings.

There are apps available to help you track your expenses so that you have enough for savings. We highly recommend the Seedly app – it’s been around for a while, together with strong community support online on their website.

#4 You spend as soon as you see a pile of money

After a while, you’ll soon see a pool of money in your account. Delighted, you think it’s okay just to take a little bit for some expenditure. Say, a vacation to reward yourself for that good job accumulating your money. While we advocate living life well, being able to take a little means you are also able to take a lot out of the account. Soon, you might find yourself in square one.

There are two ways people save in general. Firstly, spend first then save. Secondly, save first then spend. The former allows you to get your expenses settled, whereas the latter way lets you meet your saving goals first. To avoid finding yourself in square one, regardless of how your save, make sure you split your money further into different pots. Instead of just two pots, i.e. expenses and savings, you can split your savings category further into travel, retirement, etc. That way, you keep your savings pots separate and do not risk overspending.

#5 …or you are just really terrible at saving

What if, despite all of the methods described above to avoid the mistakes when saving money, you still have trouble with it? When you’re terrible at saving money, it’s time to consider savings plan, or an endowment. The tenure period of an endowment fund means you won’t be able to touch any of the money that you put. However, it’s important to not lock up ALL your money in there, lest you need the money for unforeseen emergencies in the future. This requires the help of a good financial adviser.

Alternatively, you can consider a fixed deposit – the fixed deposit usually has a decent interest rate, depending on how long you decide to lock up your money. In addition, the account penalizes you for prematurely taking the money out by removing the interest rate. This forces you to think long and hard before withdrawing from your fixed deposit.

#6 Forgetting that inflation exists

Last but not least of the many mistakes when saving money, people often forget that inflation exists. In fact, it is one of the deadliest mistakes when saving money. At best, if the interest rate of your savings account is the same as the inflation rate, you’re just keeping up and not growing your money. On the other hand, if you happen to pick a low interest rate savings account, the real value of your money will decrease over time. Imagine saving up money that decreases in value over time due to the difference in interest rate and inflation.

To avoid this, you will need to save additional money just to adjust for inflation. Alternatively, you’ll have no choice but to invest a portion of your money so that it grows.

Connect with fundMyLife financial advisers today!

Hopefully, you are more acquainted with the most common mistakes when saving money. A lot of these problems can be avoided if you have a good financial adviser. He/she can serve as a sounding board and a friend as you travel in your journey to achieve sound finances.

Haven’t found a good financial adviser? Worry not – fundMyLife has your back. You can connect with our panel of experienced and awesome financial advisers, curated by us. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

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.

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.

3 Kinds Of People Who Should Use Credit Cards (And 2 That Shouldn’t)

People who should use credit cards and not

Credit cards can seem like a godsend. One swipe for your purchases, and you won’t have to worry about paying it until the end of the month. Being a credit card user, it allows you to delay your payments made usually up to 52 days of the interest-free period. Having a credit card also significantly reduces the amount of cash you carry in your wallet. While it is definitely useful, all it takes is a mistake in handling your purchases before it becomes ab-useful. Hurhurhur, get it? Not everyone should use it, to be honest. In this article, fundMyLife describes three kinds of people who should use credit cards, and two kinds that definitely shouldn’t.

People who should use credit cards

#1 You make expensive purchases

One advantage of having a credit card is that you don’t need to lug huge wads of cash whenever you make expensive purchases. If you find yourself living the Crazy Rich Asian lifestyle, you’d definitely need a card to handle your purchases. However, there’s also another reason why you should consider credit cards for your big ticket purchases – 0% installment plans. It lets you spread out your large purchases over a period of time, assuming you’ve the discipline to repay them regularly.

Caveats to note: no points or cashback (usually), upfront processing fees, penalties for card cancellation and early repayment, reduction in monthly credit limit during installments. So be sure to read the fine-print and ask a lot of questions.

#2 You buy lots of things for your friends

Are you the one friend who buys a lot of things for your friends? You’re probably the go-to person, whom your friends rely on. When it comes to group purchases, you’re the first point of contact. With cashback and/or points, you’ll benefit the most from helping your friends purchase things. After your friends repay you, you still get the benefits of the extra cashback and points. It’s a win-win situation for both parties. You’d definitely be one of those people who should use credit cards.

#3 You travel a lot

Find yourself travelling often? You wouldn’t go too wrongly with a travel credit card with no foreign transaction fees. On top of the convenience, there’s also the security factor as well. Instead of lugging wads of cash when you go overseas, carrying a travel credit card makes your life simpler. Of course, it doesn’t mean you should eschew cold hard cash completely. You can bring less of it if you bring your travel credit card as well.

People who should NOT use credit cards

#1 You’re terrible at managing things on time

First things first – ask yourself if you’re a punctual person. For example, do you pay your bills on time? If you find yourself regularly not paying your bills, the odds are that you won’t be able to pay your credit cards debts on time. Interest rates of your credit card ranges between 18-28% per annum – that is very hefty. If you continuously forget to pay your credit card debt, it will snowball quickly leaving you deeper in debt.

#2 You’re already in debt

As mentioned, the interest rate of credit cards is very high. You should consider credit cards as a mode of payment, and not a line of credit. As such, you shouldn’t be getting a new credit card because you’re in debt. Furthermore, getting more cards to cope with expenses is dangerous. Psychologically, it’s not painful to have $100 across ten card, even though the total debt is $1,000. With each card having its own terms and conditions, you’d have a hard time keeping up with all of them.

Connect with fundMyLife financial advisers today!

We hope you belong to the groups of people who should use credit cards, and not the last two. Make sure your cashflow and lifestyle has a qualified second opinion by a financial adviser!

You can connect with our panel of experienced and awesome financial advisers, curated by us. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

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.

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 The Features Of The Home Protection Scheme

Features of the Home Protection Scheme

Underwritten by the CPF board, the Home Protection Scheme is a mortgage reducing insurance. While it sounds like a scheme that protects the home, e.g., in case of fire, it is actually a scheme for homeowners. It protects the members and their dependents from being unable to pay the HDB mortgage, when unforeseen circumstances happen, e.g., death, total disability, etc.

How does the Home Protection Scheme work?

It insures the parties who are paying for the mortgage, proportionate to the couples’ contributions. For example, John and Jane pay $1,000 per month for their monthly installment. For illustration’s sake, let’s assume John contributes $600 whereas Jane contributes $400, thus forming a 60% and 40% contribution respectively. John’s HPS cover matches the 60% of his contribution, similarly the HPS covers Jane’s 40%. If John dies one day, his 60% contribution of the home loan is fully covered by HPS. Jane will have to repay the loan by herself, i.e. the remaining 40% of the total mortgage. Both of them can opt for 100% coverage as well, so that if John dies one day, HPS will cover 100% of the mortgage and Jane does not need to pay any more.

It’s compulsory to take HPS up when you pay for your mortgage using CPF, unless you have policies that cover your outstanding house loans such as:

  1. Whole life
  2. Term life
  3. Endowments
  4. Life riders attached to main policies
  5. Mortgage Reducing Term Assurance (MRTA)/Decreasing term rider

While it is awesome, there are some things you must take note of when it comes to the HPS. In this article, fundMyLife discusses the features of the Home Protection Scheme.

Features of the Home Protection Scheme

#1 Payment via CPF

Being able to pay premiums via CPF is severely underrated and awesome. Wait, wait, before you pick up the pitchforks to stab us – hear us out here. Paying via CPF frees up cash for yourself to use. It does not eat into your cash since the deduction happens automatically, via your Ordinary Account (OA). This is even more useful if you choose to protect both you and your spouse, i.e. 100% coverage for both parties.

#2 Protection is not immediate

According to the CPF website, your HPS starts covering only when you fulfill four conditions. Firstly, you must be the legal owner of the flat. Secondly, you have to complete the loan application with HDB and are legally responsible for the loan. Thirdly, you have made your health declaration. Lastly, you have paid your first HPS premium. Fulfilling the four conditions will take some time, which means if something happens to you between application and receiving the keys, you won’t get a payout.

#3 Covers HDBs only

HPS does not cover private residential properties, such as executive condominiums (ECs) or privatised Housing and Urban Development Company (HUDC) flats. The HPS is strictly for HDBs, more specifically when you use CPF to pay mortgage. You will have to obtain mortgage insurance if you are buying housing other than HDB flats.

#4 Covers only death and TPD

HPS covers only death and total permanent disability. Under an incident of death or permanent disability, as mentioned above the payout is proportionate to the percentage of contribution of the person who died/have total permanent disability.

However, this also means that you’d have to pay your HDB loans even if you’re suffering from a critical illness, e.g., cancer. To make up for this, you’d have to purchase critical illness plans/riders from insurance companies.

#5 Tied to the flat

The HPS you take up is tied to the HDB that you’re paying loans for. The implication of that is that if you sell your HDB away and get a second one, you’d have to take HPS anew. At a presumably much later age, you’d have to fork out more premiums as well. On the other hand, mortgage insurance from regular insurance companies do not have that limitation. You might want to consider mortgage insurance if selling your HDB is in your future plans.

Connect with fundMyLife financial advisers today!

That’s it for the Home Protection Scheme. We hope you’re better acquainted with its features and possible shortcomings that requires addressing. Need more advice on protecting yourself and your mortgage but haven’t found a good financial adviser?

Worry not – fundMyLife has your back. You can connect with our panel of experienced and awesome financial advisers, curated by us. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

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.

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.

4 Things To Consider During Your Financial Review With Your Adviser

Think of these when doing your financial review

To ensure that you’re in the pink of health, you pay a visit to the doctor for a body checkup. The doctor makes a few notes, asks a few questions, and makes recommendations based on his/her observation. Analogously, a financial health checkup involves going to your financial adviser for a financial review. Financial reviews often get a bad rep for being an opportunity for financial advisers to sell more products. How would you know if you’re in the pink of financial health if you don’t do a checkup? In this article, fundMyLife proposes things to consider when you are doing your financial review with your financial adviser. Having these things in mind will help you maximize your session with your financial adviser.

#1 Updating your adviser on any short-term/long-term life changes

As cliched as it sounds, your financial needs do change over time. Typically, entering new life stages require a financial review because of cash-flow changes. For example, if you got into a relationship and are considering marriage, you will need to work with your adviser to come up with a plan for it. Another example is that you might want to start a business, which means your personal cash-flow will change. In short, as you proceed in life your goals will change as well. You are not the you from the year before – you’re wiser, smarter, and have more perspective than before.

It’s better to inform your financial adviser early, than to wait until it’s too late before informing him/her that you’re in financial trouble.

#2 What else do I need to watch out for/How can I do better?

Experienced financial advisers typically have clients who may experience the same life stage as you. As such, they are in the best position to prescribe not just financial advice, but life advice in general.

If you find yourself in want of more cash, a financial adviser can also sit down with you and examine how you’ve been spending. Furthermore, an outsider’s pair of eyes into your finances provides fresh perspective on how you’re spending your money. It’s hard to figure out where your money went, if you did not track it properly. You might also want to see if you’re on track to saving your emergency fund, for rainy days.

#3 How are my investments coming along?

If you’re a hands-off kind of person, it is all the more important that you ask about your investments when you are doing your financial review. Doing a regular financial review helps you keep a bird’s-eye view on whether your money is doing what it is supposed to be doing. If your returns are unsatisfactory, it’s a good time to get advice on where to allocate your money to next.

Note: for those who purchased investment-linked products, it is useful to look at your current sub-fund returns. If it’s performing well, all is good. However, if it isn’t, it might be time to choose another sub-fund. Another thing is to balance out your investment and protection components, since the protection component increases in cost over time. The worst thing about ILP is that sometimes you notice the signs too late and your returns have already disappeared.

#4 Am I on track to retirement?

In our previous article on retirement planning, we mentioned that the journey to retirement is fraught with many roadblocks. As such, it is important to identify existing roadblocks and anticipate future ones early. During your financial review, you should ask your financial adviser if you’re on track to retirement. You will probably need to review your current debts, e.g., credit card debts, loans, mortgage, etc, to identify any possible signs of danger.

Connect with fundMyLife financial advisers today!

We hope this article helped in setting a level of expectation when it comes to reviewing your finances with your financial adviser. And if all goes well, congratulations! Time to carry on for another year, and maintain your financial discipline.

What’s this? You don’t have a financial adviser yet?

Gosh, it’s time to connect with one! Worry not – fundMyLife has your back. You can connect with our panel of experienced and awesome financial advisers, curated by us. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

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.

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.

5 Expensive Mistakes People Make When Choosing A Financial Adviser

Mistakes people make when choosing a financial adviser

George is a kind man, who had many friends over the course of his life. Sometimes, they reappear suddenly to reconnect. And also enlighten him on the importance of financial planning. George, being the kind man that he is, supported them by purchasing products from these people, even though he didn’t need them. Over time, he realized he bought too many policies because each time he had a hard time saying no. Worse still, most of them eventually left the industry but he maintained his policies as he had spent a considerable sum on already. Those individuals are friends no longer, as George has come to resent them (but mostly himself). If this story sounds typical, it is. Engaging the right adviser is hard, and on the other hand engaging the wrong one is easy. In this article, fundMyLife reveals expensive mistakes people make when choosing a financial adviser.

#1 Choosing friends and family

One of the users of fundMyLife we spoke to admitted that he had bought over 5 insurance products to help a close relative to meet her targets. It’s quite a common phenomenon, to see someone purchase a plan just to help friends and/or family. While the intention to support them is understandable, bear in mind that these products that you purchase are long-term commitments. Sometimes, these commitments last longer than your relationship with these people. You should also purchase these products if and only if they benefit you in the long run, not the other way round.

On the flip side, because these people are your friends and family, you’re at a greater liberty to ask them really tough questions that you should be asking a potential adviser. For example, you are at a greater liberty to ask them what the commissions are, their plans to stay in this career, etc. We wrote a list of questions that you can ask your potential adviser. Choosing friends and family as an adviser because they are friends and family is one of the most common mistakes people make when choosing a financial adviser – do avoid that!

It is tough, but you must say no if the reasons for taking up a plan with them are not well-justified.

#2 Buying from a complete stranger

On the other spectrum of relationships, one of the common mistakes people make when choosing a financial adviser is engaging a stranger straightaway. Bear in mind, we’re not saying that buying from a complete stranger is bad. We’re saying buying from a complete stranger whom you do not have any information on is bad.

There are three usual ways to encounter a complete stranger that wants to sell you a financial product. Firstly, you may encounter one from roadshows in shopping malls and MRTs. Another way is to get messaged online randomly, be it via Facebook and Instagram. If you attend networking sessions often, you will also encounter advisers on the prowl to know more people/potential leads.

When you buy from a complete stranger, you will need time to ascertain whether the adviser is credible or otherwise. Ask this complete stranger for strong client referrals, or even better – the client’s contact. If he/she is doing a good job, the clients are more than willing to vouch for him/her.

Does it mean all strangers that you meet are bad? Not at all. We’ve seen amazing advisers opting for roadshows, as personal preference. It only means you should ask more questions when if you want to engage this particular adviser.

#3 Focusing too much on products

Products are but one half of the equation. Every company has its fair share of suitable and unsuitable products. As such, you should not be too fixated with getting a product over choosing a good adviser. Neither should any advisers that you engage. Be careful of advisers who are more interested to talk about their company’s products and features than understanding your finances, needs, and future goals.

Good advisers are knowledgeable about competing products, and can advise you accordingly based on your needs. The best ones may even recommend their friends in other companies, if you’re adamant about getting another company’s products.

#4 Letting their image of success blind you

One of the mistakes people make when choosing a financial adviser is choosing it based on their image of success
Standard starter pack for those who choose to flaunt their success on social media. Source: SGAG.

Scroll your social media, and you might see what the starter pack above is describing. Some advisers flaunt their success on social media in order to portray that they are successful. The idea behind that is that potential clients view an adviser’s success as a reflection of their expertise.

Chances are that an adviser you met talked about how he/she got into the Million Dollar Round Table (MDRT). Getting into the MDRT is a prestigious thing, but it only reflects the sales volume of him/her for the company. It does not indicate whether the adviser is good or otherwise for you. What you should be looking out for are industry certifications, such as Certified Financial Planner (CFP), estate planning certification, etc.

[HOT TIP] You might also want to ask about a different but often overlooked metric – persistency ratio. It’s a metric used to measure the performance of an adviser. It shows the total number of policies that an adviser retains during a period without the policies sold lapsing or losing the premium to other insurance companies. Good advisers have high persistency ratio (think >95%) because it means no clients cancel their policies, reflecting the quality of the advice that the adviser gives.

#5 Falling for sales tactics

Another one of the most common mistakes people make when choosing a financial adviser involves sales tactics. Giving free gifts to get a yes is an age-old tactic, where the adviser tries to get you to agree by dangling a carrot in front of you. It can be a voucher or a physical object. It is not worth saying yes to a product just because you’ll get a free gift from it. The mistake will cost way more than the voucher or gift you receive, in more ways than one.

Another tactic is the bait-and-switch tactic. The adviser piques your interest with a small, low-cost product at first. However, the conversation later switches to a different product altogether, one which is potentially more lucrative for him/her. Last tactic is one that involves talking repeatedly for a long period of time. Long talks will wear you down mentally and eventually you’d say yes when your willpower is low.

Financial planning begins with uncovering your needs, financial situation, and goals. Only with a clear understanding of where you are, and where you want to be in the future do products come into the picture, so falling for sales tactics is one of the worst mistakes you can make.

Connect with fundMyLife financial advisers today!

We hope this list of mistakes people make when choosing a financial adviser will help you avoid make the same mistakes again. It’s serious business, choosing the right financial advisers. You two are in it together for the long haul and as such it’s important to find the right adviser.

Where to find them? Worry not – fundMyLife has your back. You can connect with our panel of experienced and awesome financial advisers, curated by us. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

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.

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.

What Is A Retirement Plan (And What Can Derail Them)?

What is a retirement plan and what are the risks

Retirement – you hear it often and everywhere. In short, retirement is a period in your life where you stop working and withdraw from the workforce. In Singapore, that minimum retirement age is 62. You also want to maintain the same standards of living as you did while you’re working. To achieve this, you’d have to save up a sum of money during your working years, following a thing called a retirement plan.

According to a survey conducted by NTUC Income, slightly over half of young adults aged between 25-35 have started working towards retirement, and 84% are worried about their retirement. What exactly is a retirement plan and what does it entail? In this article, fundMyLife describes what a retirement plan is, and lists the various risks that threaten to derail it.

What is a retirement plan?

In Singapore, chances are that you have your CPF as your most basic safety net during your retirement years. Political discussions aside, it is a nifty instrument that provides you a monthly amount upon reaching retirement age. This money comes from deductions from your salary in addition to employer contributions during your working years. On a related note, we wrote an article about CPF not too long ago. However, there is only so much that CPF can provide, especially if you have been leading a particular lifestyle and would not want a change. You still need a proper retirement plan to last from your retirement age till your death. And not before, of course.

The anatomy of a retirement plan

When you engage a financial adviser, one of the first things he or she will run through with you is a retirement plan. At the risk of sounding like a Captain Obvious, a retirement plan is a plan you make to prepare for retirement and the years beyond. While it sounds simple at first, it answers a few deep questions:

  1. How much do I want to have by retirement age?
  2. How much do I want to live on during retirement?
  3. Will the money last me enough to do what I want, e.g., travel, start a retirement business, etc?
  4. How long do I want the money to last?
  5. How flexible can I be in the face of unexpected events?

Once you answer those questions, your financial adviser can then draft a plan for you to achieve those goals.

Retirement planning methods

#1 Savings/endowment plan

Endowment plans is a plan that has both savings and insurance components. Insurance companies promote them as forced savings, typically requiring you to pay a monthly sum over a period of time, usually between 20-30 years or so. During that period, the insurance company invests your money in a fund. At the end of the fixed period, you get your money back in a lump sum. This payout typically has a guaranteed and non-guaranteed sum. The former is the minimum amount that you will get. The non-guaranteed sum depends on how well the fund performed over the period of time.

Bear in mind, a retirement plan is different from a retirement policy, one of the many ways you can build your existing wealth. As such, make sure you clarify with whoever financial adviser you’re speaking to. He or she might think you’re interested in the latter but you should be more concerned about the former.

#2 CPF

Surprise surprise, there are several things you can do with your CPF. Channeling the money from your Ordinary Account (OA) to your Special Account (SA) is one such way. While OA is typically used for non-retirement uses such as housing, insurance, and investments, SA is used for retirement and retirement-related investments. As of the time of writing, OA has a lower interest rate compared to SA, up to 3.5% for the former and up to 5.0% for the latter. Generally, both accounts’ interest rates are higher than the average inflation rate in Singapore. The interest rates are reviewed quarterly so be sure to check regularly.

A second way you can use your CPF to prepare for retirement is using CPF Investment Scheme (CPFIS). This scheme gives you an option to invest the money in your OA and SA accounts in a variety of investments, such as unit trusts, bonds, shares, and even insurance products. If you’re interested, you must take the CPFIS Investment Scheme self-awareness questionnaire just to gauge your knowledge of investing. It’s compulsory to take if you want to give CPFIS a try. You can still invest if you fail the questionnaire, no problem.

#3 Investments

There are several ways you can invest your money, such as stocks, managed funds, and most of the time – index funds. Picking your own stocks will take time and knowledge. Managed funds involve fund managers who try to beat the market who active reallocate the assets in a fund to get you returns that are higher than the market average. An index fund buys shares in companies in proportions that match a market index such as the Straits Times Index (STI). Index funds are cheaper since they are passively managed unlike managed funds.

Great thing about investing is that you can go in or pull out at any moment, providing great liquidity.

If you want to invest in the stock market, here’s a great step-by-step guide from DollarsAndSense on stock investing in Singapore.

#4 Selling your place

There is the option of selling your place when you’re older. Besides, with an empty nest, you don’t need that much space eventually anyways. While the assumption is that your place will appreciate in value over time, there’s no 100% guarantee that it will happen.

Tread with caution with this one.

#5 Fixed deposit/Savings account

If you are truly risk averse, and do not want to park your money elsewhere, you can consider putting it in a bank. Fixed deposits, as its name suggests, is an account that holds a sum of money over a fixed period of time. Fixed deposits are good to have if you have a sum of money (above $10,000) and want to grow it a bit. The downside is that your money is locked up for a period of time, usually with a minimum of 12 months. You’ll be penalized with lower interest rates for withdrawing money from the account.

Recently, banks are getting competitive with novel kinds of savings account. Savings accounts such as DBS Multiplier Account and OCBC 360 Account nowadays have tiered interest rates, with the maximum rates quite comparable to other investment products. These interest rates are added on top of the base rates if you credit your salary to the account, purchase investment and insurance products, etc. The whole idea of these accounts is to influence you to stick to that one account for all financial matters. That’s the downside. The upside is that you can draw as much as you want/need without penalty unlike fixed deposit accounts.

Non-exhaustive list of risks to your retirement plan

A common misconception about retirement plan is that it’s a one-stop destination. While the figures on the retirement calculator looks sensible and solid, retirement is  not an exact science. It requires a lot of assumptions as well, which may However, along the way there are stumbling blocks that slow you down. This section highlights several risks that are very real and will happen to us at some point in our lives.

#1 Loss of a job

Contribution to your retirement plan requires constant flow of funds. This sustained contribution assumes continuous employment as well. A common stumbling block to your retirement plan is when you lose a job, be it due to retrenchment or health issues. In addition, as you age, you will face less employment options. This is an unfortunate fact in the workforce. To mitigate this risk, you may want to consider part time jobs to increase your savings while you are still able to work. Plus, better to work towards retirement than spending hours binging on TV shows.

#2 Living longer than before

This is one of the rare disadvantages of living longer than the previous generation. Advances in medical healthcare means people are living increasingly longer than ever. Longevity, while desired in general, is a risk for retirement planning. Living longer means you might run out of money past your retirement age. On top of that, there is an increased chance of contracting more diseases as you age.

#3 Healthcare costs

On top of increasing longevity, healthcare costs rise every year and are expected to increase indefinitely. With increased longevity, it also means you’ll be spending more on yourself over time.

#4 Market risks

There’s a risk that a market downturn can wreck havoc on your investments, be it stocks or an endowment fund. Market risks also affect you more drastically after retirement, when you’re utilizing money from your retirement fund.

To illustrate this in a simple manner, imagine if you had $100 in your investment portfolio one day, consisting only of one stock. Consider these two separate scenarios:

  1. The next day there was a 50% market drop, causing you to have only $50. You’re still working, so you don’t have to depend on money from this portfolio. The next day, the market bounced back by 50%, which means you now have $75.
  2. The next day there was a 50% market drop, causing you to have only $50. You’re retired, and you need the money so you draw $10 which leaves you with $40. The next day, the market bounced back by 50%, which means you know have $60.

Such a big difference, if you needed the money from your portfolio. As such, it’s important to account for market risks by diversifying your portfolio and not keep all your eggs in a single basket.

#5 Relationship risks

When you set a retirement plan, your financial adviser takes your partner and his/her into financial information in account. However, relationships sometimes go awry, necessitating separation and/or divorce. Under such situations, you two might have to divide your assets and other things like maintenance and child support comes into the picture. These unexpected things will throw a wrench into your plans.

#6 Financial adviser risks

This is a risk not many people discuss about – the financial adviser him/herself being a risk factor. If the financial adviser is bad at what he/she does, you’re stuck with an equally sub-par retirement plan. Imagine when you’re reaching retirement age, and you realize the plan that you purchased did not serve its need and was meant to be a high-commission product for the adviser.

How to discern whether the adviser is good or otherwise? Make sure you get strong referrals from your friends and family, or browse through a site that contains amazing advisers – coughfundMyLifecough.

Connect with fundMyLife financial advisers today!

Oh boy, that is a lot of different risks. It is not as depressing as it sounds. We hope this article did not scare you, but rather inspire you to plan for your future retirement plan ahead. You should have started saving towards your retirement 5 years ago, but the next best time is today.

Who to consult on such matters though? Worry not – fundMyLife has your back. We can’t help you mitigate all the risks above, but we can make sure that the last risk – financial adviser risk – is eliminated. You can connect with our panel of experienced and awesome financial advisers, curated by us. If you want to engage more financial advisers, or if you haven’t found the right one, why not consider advisers of fundMyLife? You can head on over to fundMyLife and ask our awesome financial advisers questions. Alternatively, you can check out our curated pool of individual advisers and ask them questions directly.

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.

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.