What type of insurance do you actually need ?

The question of what insurance to buy is not easy to answer, because everyone is different and has different needs. Yet most people always assumes that everyone has the same needs. Think a 80 year old man and a 25 year old graduate, will they have the same financial needs? The example may be extreme but it captures the essence of what i'm trying to say. Many other factors also affects the choice, number of dependents, age, financial status, investment portfolio, savings, inheritance, hobby and so on. This is why agents need to meet their clients to assess the situation before they can make a recommendation, if not it would be mis-selling and people would start complaining to MAS

BUT

IF you were to point a gun to my head to list down some insurance products that generally everyone should have, it will be these few. 

Hospitalization Plan

This is very straight forward, hospital bills are expensive, so why not get a hospitalization plan to cover ourselves if we ever need to be hospitalized for a long period of time?  Integrated shield plans can be paid using MEDISAVE, which the whole purpose is to cover hospitalization expense. 

Accident Plan

Another straight forward plan, accidents happens everyday. Accident plans covers accidental death as well, this is really good for younger people as most pass away due to accidents. It also covers hospital expenses due to accident. Most NSFs will be covered under an accident plan for 2 years during active service if they do not opt out of the plan. 

 Life Insurance

There are many types of life insurance to cater to different needs. Generally, if you have any dependents, you need life insurance. Without you, your dependents'  standard of living would drop and they may be forced to change their lifestyle. Many family tragedies occur because the sole bread winner refuses to be covered for death, sure you may die and heck care everything, but your family members would ultimately be the ones suffering. Whenever, i see a family tragedy occur in the news and the so called "victims" claimed that they were not wealthy enough to buy insurance, i feel indignant. EVEN IF you save $1 a day you CAN afford insurance.  One example is the taxi driver involved in the Ferrari crash, his family claimed that they cant afford insurance. Really now?

Medishield Life

Medishield Life is basically a hospitalisation insurance plan that would be implemented next year (2015) to all citizens of Singapore. The main thing that we are interested in is how is it different or better? I'll try to list the changes and explain based on what i know.

1. The premium.

It is obvious that better products come with higher premium. The first difference is that the premium Singaporeans pay would be higher. How much higher you ask? It depends on your age group, but it is roughly twice of what you are paying now. 

(Image from Channel News Asia)

My friends, there is no free lunch in the world. Even with subsidy, you are likely paying more than the previous Medishield from your Medisave. It is also uncertain how long will the subsidy last, 1-5 years maybe. The older generation, the pioneer generation, would not be affected too greatly as the government would be topping up their Medisave account to pay for this increase in insurance premium.

However, I believe that the plan in general is beneficial to most Singaporeans and especially those with pre-existing conditions that are unable to purchase their own insurance. 

2. The Coverage.

Firstly, MediShield Life as its name suggests is for life, you are under the scheme for as long as you continue to pay premium and stay alive.

Benefit Parameter	MediShield	MediShield Life
Daily Limits	$450 / $900 (Normal / ICU Ward)	$700 / $1200 (Normal / ICU Ward)
Surgical Limits	$150 - $1,100	$200 - $2,000
Community Hospital Limit	$250 per day	$350 per day
Outpatient Cancer Treament Claim Limits	Chemo: $1,240 per 21/28 day cycle Radio: $80 - $160 per session	Chemo: $3,000 per month Radio: $140 - $500 per session
Deductibles ( B2 / C )	80 and below: $2,000 / $1,500 Above 80: $3,000 / $2,000	No change
Co-Insurance	Inpatient: 10 - 20% Outpatient: 20%	Inpatient: 3* - 10% Outpatient: 10%
Annual Limit	$70,000	$100,000
Lifetime Limit	$300,000	Removed

- See more at: http://www.moh.gov.sg/content/moh_web/medishield-life/benefits.html#sthash.n64b588N.dpuf

I think the table is pretty straight forward, in a nutshell, you will pay less for Hospital Bills. 

The biggest change would be that the life time limit is removed, good news for those with illnesses requiring long term treatment.

The Co-Insurance also decreased by a decent percentage, resulting in a lower medical bill for big illnesses.

I would say that the changes are reasonable given that we have to pay almost twice as much for the additional coverage. Although it remains to be seen how private integrated shield plans from private insurers would be affected. Does this mean you should wait until Medishield Life is out before you make any decision to purchase integrated shield? I don't think so. If you want to do that, pray hard nothing happens to you within the year. Anyways, integrated shield can be renewed once every year and can be canceled if you feel you don't need it.

Start of new Blog

Well, lets get started on this blog. So why did i create this blog ???

I hope to share my honest opinions on insurance products and educate people along the way. So, before i did a course about the industry, i was like many others.
Hear the word "Insurance" - ZAO ah SCAM MONEY !! DON'T YOU TRY SELL ME
But is that really what the industry is all about? Scamming innocent citizens off their retirement savings?? 

Ignorance is often not a good thing, i believe there is no harm in finding out more. Do you want to be ignorant and continue to think that the earth is flat? Sure go ahead, be careful not to fall off the edge.

Of course, there must be a reason why people are afraid of the word insurance right?
My guess is that insurance is often associated with death. If you buy insurance, you are admitting that you are vulnerable and could die at anytime. People simply don't like to feel vulnerable,but the cruel reality is that we are just feeble human beings.

Another reason is that people don't like to be sold things. They feel that if they need to be convinced to buy something, it probably mean that they don't really need that product since they've been fine and dandy even without the product. People don't see it as an immediate need, like food and drink. Humans are supposed to be smart and plan ahead, if you fail to plan, then you plan to fail.

Finally, i must admit that misselling  has a huge part to play as well. The industry is commission based and many planners chasing the $$$ will anyhow sell to any clients. This is less prevalent now as the industry is better regulated. But if these clients were educated, misselling would not have occurred. Knowledge is power my friends. Or if you lazy, ask for referrals from friends for a honest financial planner. Best if you personally know a life planner or have a relative working as one, that way they have your best interest at heart.