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Protecting family as cost of healthcare rises — Tan Hak Leh

MARCH 3 — As Singaporeans, we are all about family. Compared with other Asia-Pacific countries, Singaporeans are more motivated to keep themselves healthy for family-related reasons, according to the results of AIA’s healthy living index survey last year.

Singaporeans attach a high importance to reasons such as “not relying on others” and a desire to “take care of my family longer” for leading healthy lives. Up to 62 per cent of respondents also indicated that good family relationships are an important driver of their health.

While many Singaporeans rightly want to keep healthy for their families, some tend to overlook the importance of ensuring that they have adequate protection for themselves and their family members in the event of a serious illness, injury or disability. Many remain concerned about costs, with 84 per cent of Singaporeans saying they would go for more frequent health checks if they were made more affordable.

Given the rising costs of medical care, it has become increasingly crucial to secure adequate health coverage at all stages of life to avoid situations of tapping into one’s savings or burdening our loved ones.

Know your basic insurance needs

There are three main categories of basic insurance needs that everyone should meet:

1. Being adequately protected to finance your hospitalisation/medical expenses via reimbursements from your health insurance plans.

2. Being adequately protected to cope with expenses associated with critical illnesses such as stroke and cancer and disability due to illness or injury.

3. Being adequately protected to cope with loss of income associated with critical illnesses such as stroke and cancer and disability due to illness or injury.

Health insurance

At a time when Singaporeans are concerned with the increasing cost of living, it is easy to push insurance down the list of spending priorities. However, health insurance is a matter of necessity and should not be overlooked.

Here are a few things to consider and look out for when buying health insurance:

Know the difference between a critical illness plan and a life insurance plan

A critical illness plan allows you to cope with expenses, such as medical treatments if you are diagnosed with a critical illness. A life insurance plan provides a payout upon the death of the policyholder, allowing beneficiaries to cope financially after the insured person’s demise. Ensure that you are adequately protected on both fronts.

Buy a plan while healthy and working

Your company’s health insurance may not be portable when you move from one company to another. Also, it is advisable to buy a plan when one is healthy because loading charges and exclusions may be imposed or your application may even be declined if your health deteriorates as you age. Buying insurance early, especially when gainfully employed, also means you will have the financial means to pay the premium and have less risk of the policy lapsing.

Consider upgrading your coverage to prepare for the unexpected in the event of hospitalisation or critical illness

The average hospital bill in Singapore has nearly doubled between 2006 and 2010. While the government picked up 51 per cent of hospitalisation costs in the form of subsidies and Medisave, MediShield and Medifund paid for almost one-quarter of the total cost of hospital stays in 2009, employers and patients were still responsible for the remaining 27 per cent.

You may also consider buying a Medisave-approved private Integrated Shield plan, which can be paid through your Medisave account up to S$800 (RM1,920) per year. Compared with basic MediShield, Integrated Shield plans provide additional benefits and coverage if you opt for B1 or higher ward classes in restructured hospitals or private hospitalisation. You may also opt for a cash-paid rider to close your deductible and co-insurance protection gap.

Work closely with your insurance adviser to identify, understand and address your health and life insurance needs

Health insurance is anything but a one-size-fits-all product and different schemes and products offer unique benefits to people of diverse financial and protection needs.

For instance, an accelerated critical illness rider is generally cheaper than an additional payout critical illness rider and will provide for the pre-payment of a portion or the full sum assured of the basic policy to which it is attached. The remaining balance of the sum assured plus bonus (if any) will be paid upon death, terminal illness or total permanent disability. On the other hand, an additional payout critical illness rider will pay the sum assured for critical illness without reducing the basic policy sum assured.

Ensure that your entire family is insured according to each member’s specific needs

The right plan for an individual depends on factors such as gender, stage of life, income and dependents. For example, a fresh graduate who has just started work may not have substantial savings and may want to consider a basic plan offering affordable long-term protection against medical bills. — Today

* Tan Hak Leh is the chief executive officer of AIA Singapore.

* This is the personal opinion of the writer or publication. The Malaysian Insider does not endorse the view unless specified.

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