Ensuring you have sufficient protection in the event of a health scare is a key aspect of financial security, but how do you know what you really need? Here's a crash course on the 4 common types of health insurance, and what they cover.
If you are looking for protection from large hospitalisation bills and costly outpatient treatments, health insurance is what you need. Depending on the level of coverage, it helps to reduce the amount of cash you need to fork out for hospital and surgical expenses.
An example is MediShield Life, a basic health insurance plan that protects all Singapore Citizens and PRs against large hospitalisation bills and selected costly outpatient treatments such as dialysis and chemotherapy for cancer regardless of age and pre-existing conditions. MediShield Life coverage is sized for subsidised bills incurred in B2/C wards at public hospitals, and its premiums can be fully paid for by MediSave. Additionally, the Government provides substantial premium subsidies and support for all Singaporeans, and no one will lose their MediShield Life coverage because they are unable to pay for their premiums.
If you would like to have higher coverage when you stay in A/B1 type wards in public hospitals or private hospitals, you can consider buying an Integrated Shield Plan. However, note that premiums for Integrated Shield Plans will cost more than MediShield Life, and may not be fully payable by MediSave.
Critical illness insurance
Treatments for major illnesses, such as cancer, often cost a significant amount of money. If you want to receive a lump sum to help you to pay for such expenses in the event you are diagnosed with these major illnesses, you should get yourself a critical illness policy.
One important point to note is that insurers may have different definitions of critical illness, so you will need to examine your policy thoroughly to be certain of what is covered.
Disability income insurance
An accident or sudden onset of an illness could result in disability and leave you unable to work. If you want to ease the financial impact from the loss of income in such an event, you may wish to consider disability income insurance.
This type of insurance may be more applicable for sole breadwinners or major contributors to their household income. It usually pays a fixed amount each month, for up to 5 or 10 years or until you are 60 or 65 years old.
Long-term care insurance
Singaporeans are living longer. While this comes as good news, it also comes with the increased risk of becoming disabled and needing long-term care, especially towards the end of life. As such, it’s important to plan for our future long-term care needs, so we can avoid putting unnecessary burden on our families and caregivers in the future.
If you were born in 1979 or earlier, you will be auto-enrolled in ElderShield, a basic long-term care insurance scheme targeted at severe disability, at age 40. The scheme currently provides cash payouts of $300 or $400 per month, for up to five or six years.
CareShield Life, to be launched in mid-2020, is an enhancement of the current ElderShield scheme. It provides higher payouts with no cap on payout duration, to provide better protection against the uncertainty of long-term care costs if you become severely disabled. Starting at $600 per month, the monthly payouts increase over time until the age of 67, or when you make claims, whichever is earlier. CareShield Life premiums can be paid by MediSave. Similar to MediShield Life, the Government will provide premium support for those who have financial difficulty. No one will lose coverage if they cannot pay the premiums.
If you were born in 1980 or later, you will be enrolled in CareShield Life from mid-2020, either upon the launch of the scheme, or when you turn 30. If you were born in 1979 or earlier, you can choose to join CareShield Life from mid-2021, if you are not severely disabled.
Information accurate as at 15/11/2019