Three Things You May Not Realise About Your Insurance Policies

05 May 2014 
SOURCE: Yong Hui
Recently I have been helping many people in their 30s and 40s to review their insurance portfolios.

Many of them are responsible parents, who understand the importance of protecting their family and value insurance coverage. Some have actually bought several insurance policies for each member in the family and are paying the premiums diligently.

However, because many of the plans were purchased at different points in time, sometimes from different companies, they all seem to be piece meal. Many people were not really sure if they are adequately covered in spite of all the plans, because they didn’t have a complete picture of how everything comes together. Some even questioned if they were over-insured with so many policies.

That’s when a holistic review of one’s policies comes in useful. Through a detailed and holistic review of their insurance portfolios, people get better clarity of what they actually have and greater peace of mind.

In today’s article I will share some insights on three areas that are often overlooked and worth taking note of.
3 Common Observations about Insurance Portfolios

1) Lopsided coverage

Some people may have many insurance policies or pay a lot in premiums each year and think that they are well covered. However, having many policies doesn’t necessarily translate into having comprehensive protection.

I recall a case where a gentleman told me he has many critical illness policies and should be well covered in terms of medical protection. When I reviewed his portfolio, it turned out that he did have several whole life and critical illness plans with reasonable sum assured.

However, what he didn’t realised was that his portfolio was missing the most basic medical coverage – hospitalisation protection. He was only covered with basic Medishield which did not provide him with comprehensive coverage for private hospitals which was important to him. I advised him to upgrade to an integrated shield plan that provides him as-charged coverage in private hospitals so he can get more peace of mind. And he was pleasantly surprised that the cost of doing that was significantly lower than what he had expected to fork out and he could even use Medisave to pay for the premiums.

2) Plans that are payable beyond retirement age or for life

It’s quite common to see whole life plans where the premiums have to be paid til one is in their 80s or even for the whole of life. This is especially so for plans that were bought many years back when limited payment whole life plans were not popular or available.

This may not be much of a problem when we are still working and able to pay for the premiums. However if you think about it, would we still want to continue paying the premiums after we stop working or would we rather have most of our plans paid for by the time we retire and reduce our expenses?

3) Overlapping or duplicate coverage

This relates more to medical or hospitalisation plans which usually operates on a reimbursement basis. Such plans will reimburse the amount incurred on medical expenses, but you will not be able to claim more than what was incurred.

Some older policies have attached riders that provide limited levels of medical reimbursement e.g for surgery or room and board charges. And some people may have been paying for these riders years without even realising they have such coverage.

However did you know if you already have another comprehensive medical insurance plan that covers your medical bill in full e.g an integrated private shield plan with the deductibles and co-insurance riders, then such riders may be unnecessary? This is because you cannot claim for more than the amount of your medical bill.

So in this case, you may actually be able to save some premiums on the duplicate coverage. One exception is if the riders provide you with hospital cash, which is paid out above and on top of what you incurred. Even then there may also be other cost effective options that can be explored.
What other things can you discover from your insurance portfolio?

Maybe it has been some years since you last did a review of your insurance portfolio and there has been significant changes in our life like having a new child or purchasing a new property. Or maybe you always had a nagging thought at the back of your mind, wondering if your plans are really helping you to achieve your goals..

If this sounds like you, then I encourage you to do a review of your insurance portfolio to get more clarity, peace of mind and maybe even some cost savings.

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