Insurance & Costs of having and raising a child

[Muck]

1. Eligibility age: Adults from 18 to 60 years (renewal will be up to 65 years);
 

IMHO, renewal up to 65 only is a red flag to me. According to MOH stats, the hospital admission rate in 2010 for those aged 55-59 is 115 per thousand, 60-64 is 148 per thousand, 65-69 is 210 per thousand, and 70 & above is 406 per thousand. I'd want to be covered when I need it most.

http://www.moh.gov.sg/content/moh_web/ho..._2010.html

[CityFarmer]

1. Eligibility age: Adults from 18 to 60 years (renewal will be up to 65 years);
 

IMHO, renewal up to 65 only is a red flag to me. According to MOH stats, the hospital admission rate in 2010 for those aged 55-59 is 115 per thousand, 60-64 is 148 per thousand, 65-69 is 210 per thousand, and 70 & above is 406 per thousand. I'd want to be covered when I need it most.

http://www.moh.gov.sg/content/moh_web/ho..._2010.html

Maximum coverage age is always an important feature for medical insurance IMO. Most medical insurances have life time coverage IIRC. The life time coverage is a must for me in medical insurance.

[Musicwhiz]

An ST article on insurance.

The Straits Times
www.straitstimes.com
Published on Jan 06, 2013
Are your insurance plans still watertight?
The beginning of the year is an excellent time to take stock of your coverage needs

By magdalen ng

Most of us use the New Year break to take stock of how our lives have fared over the last 12 months and to make resolutions for the time ahead. So why not for our financial situation as well?

This is essential for any plan but especially true for insurance coverage, given the policy changes on the way and how our needs evolve as we go through life.

In March, annual premiums for MediShield, a basic insurance plan that protects against unexpected medical costs, will increase by between $17 and $251, depending on a person's age.

This is part of a move to enhance the plan with higher payouts and extending coverage.

The Government has announced one-off Medisave top-ups of $50 to $400 to help offset the premium increases.

However, AIA Singapore noted that, while the Government picks up 51 per cent of the cost of hospitalisation in the form of subsidies and Medisave, and about one-quarter of hospitalisation costs are paid for by MediShield and Medifund, individuals are still responsible for the remaining 27 per cent.

An AIA Singapore spokesman said: "We recommend that Singaporeans obtain personal health insurance plans while they are still healthy and working, and upgrade their health insurance coverage to cover potential hospitalisation costs."

Insurance needs should also be reassessed to ensure they meet your changing needs, such as any addition to the family, income changes, career switches and property purchases.

Mr Daniel Lum, director of product and marketing at Aviva Singapore, said: "Ideally, you should review your portfolio at least once a year since any change in your life, be it your income or number of dependants, means that the level of protection you require will change."

Insurers also try to cater to their clients' evolving needs by developing new products.

The Sunday Times looks at some that have been launched in the past year and how they might fit in with your financial plan for 2013.

For those without insurance coverage

Mr Peter Siong, vice-president and head of the sales division at NTUC Income, said: "Many Singaporeans, despite knowing the importance of insurance, have not accorded it priority.

"As a result, there remains a significant protection gap. More can be done, especially in getting more people in Singapore to insure themselves early and when they are young and healthy."

The NTUC Income Value Pack Enhanced Incomeshield plan provides "as-charged" coverage against hospitalisation and surgery costs in a Singapore restructured hospital for B2 and C class wards. Existing medical conditions will not be covered.

Term insurance plans for this target group of lower-income households are priced at 30 to 40 per cent below NTUC Income's usual term insurance. The sum assured ranges from $10,000 to $50,000. The plans are offered to those living in three-room Housing Board flats or smaller, those residing in households with a monthly income of less than $3,500 and people with no existing life insurance policy.

Great Eastern's Supreme Protect plan provides guaranteed insurability against death, total and permanent disability and critical illnesses.

It offers a 200 per cent payout upon the diagnosis of an advanced stage critical illness, as it is important to have more cash for treatment and recovery, according to a spokesman.

For those seeking extra protection cover

An AIA survey in 2011 found that, while about 60 per cent of Singaporeans polled said that they have a clear idea of how much they need to set aside for their dependants in the event of their death or permanent disability, only 14 per cent were adequately insured.

This assessment was based on the industry's recommendation of total coverage of approximately 10 times a person's annual salary, to protect against the loss of income.

AIA Singapore has developed the Premier Disability Cover.

It offers a guaranteed benefit payout regardless of any future changes to income or payouts from other disability income policies. The payouts are made regardless of employment status at the time of claim.

Prudential launched an early- stage crisis waiver last year. This waives the future premiums of covered benefits upon the diagnosis of an early stage or intermediate stage medical condition.

The premiums will be waived for five years for an early-stage condition, and 10 years for an intermediate-stage diagnosis.

For those planning for retirement

Aviva's Mr Lum noted that over the past few years, there has been a noticeable trend of Singaporeans becoming less reliant on the Government for their retirement needs.

"With this in mind, in order to meet any shortfall in their retirement savings, Singaporeans should begin thinking of complementary solutions on top of their existing CPF savings and other assets," he added.

In response to customer feedback for flexibility in terms of retirement age, preferred payment term and payout mode, Aviva Singapore rolled out MyRetirement, a regular premium retirement plan.

It is capital-guaranteed and offers a guaranteed return of up to 2.38 per cent per year and monthly retirement income for 10 years. The premiums are also guaranteed throughout the chosen payment term.

Mr Brandon Lam, senior vice-president and head of investment and treasury products at DBS Bank, said: "Consider plans that allow you to save regularly and ensure a guaranteed retirement income for a period of time after your chosen retirement age. The initial years post-retirement are crucial as individuals adjust to a different standard of living from a sudden drop of income."

There is also the ManuRetire Secure, a Singdollar-denominated investment-linked plan (ILP), jointly launched by Manulife Singapore and Citibank Singapore.

It is a single-premium plan and the first ILP to guarantee the client's investment at 80 per cent of the highest historical unit price of the underlying fund.

There is a minimum investment of $30,000 for a minimum of 10 years. It is a single premium product, so payment is one-time.

The money is invested in the Manulife Octave Singdollar Tracking Fund that tracks the performance of the Citi Octave Singdollar Index, which comprises equities and cash-like instruments.

NTUC Income also has a VivoSave plan, where policyholders can choose between a 10-year and a 15-year premium payment term.

Once the premiums are fully paid up at the end of this term, they will begin receiving annual cash payouts which increase over time until they turn 85.

At the end of the premium payment term, the plan pays out guaranteed cash benefits amounting to 3 per cent of the sum assured every year for a decade.

For those who want a savings element in their policy

AIA's Guaranteed Protect plan targets those who want to save a sum of cash while enjoying some form of protection.

The premium payments can last for 15 or 20 years but the insurance benefits are for a lifetime.

songyuan@sph.com.sg

[NTL]

After reading this article, I still having one question which I always want to know the answer.

For someone who had achieved Financial Independence, and not considering any estate or tax planning, if there is any, do he/she still need to get life insurance? Understandably, medical insurance still needed, but how about life insurance (pay upon death or TPD) or disability income (income replacement)? How should the insurance be planned?

And if my family needs $5k per month, and my passive income is $2k per month, should I only need to get insurance to cover the difference, which is $3k per month? And should the insurance reduce each year while the passive income grows?

Any opinions will be useful. Thanks.

[Bibi]

An ST article on insurance.

The Straits Times
www.straitstimes.com
Published on Jan 06, 2013
Are your insurance plans still watertight?
The beginning of the year is an excellent time to take stock of your coverage needs

An AIA survey in 2011 found that, while about 60 per cent of Singaporeans polled said that they have a clear idea of how much they need to set aside for their dependants in the event of their death or permanent disability, only 14 per cent were adequately insured.

This assessment was based on the industry's recommendation of total coverage of approximately 10 times a person's annual salary, to protect against the loss of income.
songyuan@sph.com.sg

I think the 14 per cent are not adequately insured. I think they are over insured. Why must it be 10 times annual salary and not 10 times annual expenditure?

[NTL]

An ST article on insurance.

The Straits Times
www.straitstimes.com
Published on Jan 06, 2013
Are your insurance plans still watertight?
The beginning of the year is an excellent time to take stock of your coverage needs

An AIA survey in 2011 found that, while about 60 per cent of Singaporeans polled said that they have a clear idea of how much they need to set aside for their dependants in the event of their death or permanent disability, only 14 per cent were adequately insured.

This assessment was based on the industry's recommendation of total coverage of approximately 10 times a person's annual salary, to protect against the loss of income.
songyuan@sph.com.sg

I think the 14 per cent are not adequately insured. I think they are over insured. Why must it be 10 times annual salary and not 10 times annual expenditure?

Hi Bibi,

Back to my question again. If based on expenditure, shouldn't passive income be deducted? Since whether I am alive or not, the passive income will continue to flow, as long as my other half know how to manage it.

[Bibi]

After reading this article, I still having one question which I always want to know the answer.

For someone who had achieved Financial Independence, and not considering any estate or tax planning, if there is any, do he/she still need to get life insurance? Understandably, medical insurance still needed, but how about life insurance (pay upon death or TPD) or disability income (income replacement)? How should the insurance be planned?

And if my family needs $5k per month, and my passive income is $2k per month, should I only need to get insurance to cover the difference, which is $3k per month? And should the insurance reduce each year while the passive income grows?

Any opinions will be useful. Thanks.

There are 3 scenarios that can happen to a person. Death, CI, Disabled. The person need to plan for the worst case of the 3. If he is considered to have achieved financial independence, i believe that means his cash inflow is sufficient to cover his liabilities. His liabilities should include in the event a CI strike him. Does he have the upfront payment for the CI treatment and still sufficient to cover his other liabilities? More liabilities will be incurred in the event he became disabled. E.g: need to hire a maid to take care of him etc.. If he has sufficient cash and cash inflow which can meet the CI and disability needs, then he does not need any insurance. (Pls take inflation into account hor.)

My insurance needs is reduced each year while my passive income grows. I did this by purchasing a decreasing term insurance.

[corydorus]

I just did some Math on amount impacted with small monthly premium. And my conclusion align to my thought that Insurance should be just for Insurance which should only be allowed to use small amount of your expense.

The non-guarantee portion can be a big disappointment but by the the time you find out maybe after 20 years when you try to surrender.

Another thing is the saving elements suck up your cash so much over the years with low returns and if you have actually save them up to invest and get much better returns the delta can be quite huge.

Cory

[choozm]

Hi,

I would like to hear your opinion about early stage critical illness plan and CI plan. In post #45 (page 5) of this thread, d.o.g. explained the different types of insurance and their priority as follow:
1. H&S
2. Disability income
3. Term life (if there are liabilties that need to be paid)
4. Critical illness (optional)

In recent years, insurance companies started to introduce early stage critical illness plans that cover critical illness in early and intermediate stages.
So, is early stage critical illness plan necessary? What is the priority you would put for this kind of plan?


About my own coverage, currently, I have a death/TPD/CI term plan of $136,000, a shield plan with rider, and a disability income plan. Is $136,000 of CI coverage enough? What is the rule of thumb for CI coverage?

About myself:
Male, non-smoker, age 37, single. No dependent.

Thank you!

[yeokiwi]

Maybe you would like put some personal info of yourself first?
like no. of dependents, age of dependents etc.

http://www.moh.gov.sg/content/moh_web/ho...ables.html

The above gives the average bill size of patients.
For SGH class C ward(Surgical Specialties), the total bill size at 95th percentile is $7,829.
For mount E, the price is $33,949.

You probably can factor 3 surgical operations before you finally bite the dust. For SGH Class C, it will probably be less than $30k. For Mount E, you will need $100k easily.

Assuming you take one year to die and one year of medication equivalent to the surgical cost, then the total sum for medical cost for class C ward is around $60k at most.

And.. part of the above amount is covered by medishield.
And.. the above scenario is quite extreme since it is taken at the 95th percentile of the total bill.

Normally, I think(no proof) most patients cannot survive beyond 1 year after they are diagnosed with critical illness.