The Valley of Risks

30 Oct 2017 

​By Soh Chin Heng


Mr Soh Chin Heng is the Deputy Chief Executive (Services) of the Central Provident Fund Board Singapore and a non-practising certified financial planner. He gives talks and writes regularly on CPF and financial security.


Alan was approached by his ex-army mate, James, to buy life insurance one day.  Alan had just joined the workforce and knew nothing about insurance. He was attracted by the protection plan James proposed, which included a critical illness rider and daily hospitalisation benefits. Based on his budget, he bought a plan from James and paid about $50 in premiums monthly.


After a few years, Alan got to understand insurance better. He realised that his policy’s sum assured of $30,000 was insufficient. With the same amount of premiums paid, he could have been insured for eight to ten times more if he had opted for a term life insurance.  Although the surrender value of the policy was less than the premiums he had paid, he decided to terminate it and bought a term life insurance policy instead.


Life insurance is important if you have others who depend on you for their livelihood. Whether a whole life policy or a term life policy works better for you depends on your individual circumstances. Regardless, you should understand the insurance you are buying before committing to it. And it is more important to start with considering how much coverage you need, rather than how much premium you can afford to pay.


Hospitalisation insurance is also important. We do not know when we would fall sick and need to be hospitalised. We do not know what treatments are needed and how much the bills would come up to be. It is better to have insurance against such risks.


Since November 2015, all Singaporeans are covered by Medishield Life. Medishield Life is a basic health insurance plan which helps to pay for large hospital bills and selected costly outpatient treatments, such as dialysis and chemotherapy. It replaced its predecessor Medishield which operated on an opt-out basis. My colleagues and I at the CPF Board were part of the national effort to set up the scheme, and we were proud to be involved in it. It has widespread support of Singaporeans, and gives peace of mind to them and their family members. 


Medishield Life is sized for subsidised treatment in a Class B2 or C ward in public hospitals, with medical attention from a team of doctors. If you want additional coverage for Class A or B1 wards of public hospitals or in private hospitals and/or a choice of doctor, you can consider buying an integrated shield plan from an insurance company. 


There are many other types of insurance available in the market. Do not think that more is necessarily better. The more insurance you purchase, the more premiums you would be paying and the less you would have in your savings and other spending. Buy what you need.​


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