All About The New Careshield Life (Enhanced Eldershield)

The Ministry of Health just announced last Sunday that there will be another compulsory healthcare scheme which all Singaporeans and PR from the age of 30 to 40 will be automatically enrolled in starting from 2020. In future, everyone who reach 30 years old will be compulsory enrolled in this scheme as well.

Currently, all Singaporeans and PR are also insured under the Medishield life scheme which covers for some basic hospitalisation bills. This is also a compulsory scheme.


What is Careshield life all about?

Careshield life is renamed from Eldershield and is an enhanced version of it. Careshield life will provide monthly income for those who become severely disabled and cannot perform 3 out of the 6 daily living activities.

It will be compulsory for those age 30 to 40 in year 2020 and also future cohorts of those who turn 30 years old. This means that it is compulsory for everyone who is born on or after 1980. For those born in 1979 or earlier, you can still remain on your current Eldershield or opt in to the new Careshield life if you are not disabled. It is reported that this can be done from 2021 onwards.

The best news for this Careshield life is for those who are born on or after 1980 and have disabilities currently, they will still be auto enrolled in this scheme and get the payout immediately. They just have to pay a 1 year premium and get the monthly payout of $600 for the rest of their lives. This will lessen the burden of the caregivers who are taking care of these young persons who are mostly their parents.


How much premiums do I have to pay?

One question we will all have is how much do we have to pay for this? This is definitely another expense which is in a way forced even if we don't want to pay for it. Fortunately, this can be paid using our Medisave, similar to the premiums we pay for our Medishield life.

Premiums to be paid by each individual at different age will be different. Males and Females will pay different premiums also with females paying higher premiums as statistics shows that women live longer than men. The premiums payable is expected to go up by 2% for the first 5 years and continue to go up as needed. There will be a council set up to review the premiums thereafter.

A 30 year old male will have to pay premiums of $206/year starting from 2020. If you are age 40 in 2020, the premiums payable will be $295/year. The premiums will increase by 2% every year for 5 years so a 30 year old male in year 2020 will be paying premiums of $223/year in 2025.  For a 40 year old male in 2020, the premiums would go up to $320/year in 2025. For females, the premiums would be higher but i do not have the exact information on it yet. The premiums will be paid until age 67 but coverage will still continue for life.

Indicative premiums table before any subsidies for males:

Age upon scheme launch	Year 1	Year 2	Year 3	Year 4	Year 5
30	206	210	214	218	223
35	244	248	253	259	264
40	295	301	307	313	320

All in all, the total premiums paid will be around $10,000 or more for 37 years. The thing I do not like about the increasing premiums is that there is no certainty of how much premiums I have to pay say 20 years from now. Don't forget we still need to pay for Medishield life premiums and adding up this Careshield life, it can be quite significant in the future and most of us would not have much left in our Medisave account.

The premiums for Careshield life as compared to Eldershield definitely increased and without certainty also. For the current Eldershield, a male person at age 41 only needs to pay a fixed premium of $295/year up to age 65 years old and still get the same $600 lifetime payout coverage. For Careshield life it is $295/year at age 40 with increased premiums every year. Fortunately, there is permanent means test subsidies of up to 30% for the lower to middle income Singapore residents. There is also transitional subsidies of up to $250 for the first 5 years for all future cohorts of Singapore Citizens. 

Permanent Means-tested Subsidies for Singapore Residents:

Monthly Per Capita Household Income (PCHI)	Monthly PCHI $1,100 or less	Monthly PCHI $1,101 - $1,800	Monthly PCHI $1,801 - $2,6002
Subsidy rates for Singapore Citizens	30%	25%	20%

The good thing is there is increased coverage also so we might be looking at around $1200/month payout in our 60s. This brings me to my next point on how much payout will we receive in the event of disability?


How much payout will I receive in the event of disability?

In the event if a person becomes severely disabled and cannot perform 3 out of 6 daily living activities, he or she will receive $600 per month from 2020. This payout is expected to increase 2% for the next 5 years. So for example if a person is enrolled into the scheme in 2020 and becomes severely disabled in 2025, he or she should get about $660 per month for their whole life.

I think this is fair since the premiums are increasing also. The plan is to have a payout of $1200/month at age 67 for those who are age 30 in year 2020.

Estimated Monthly Payouts for CareShield Life:

Year from launch of CareShield Life	CareShield Life Monthly Payouts
2020	$600
2021	$612
2022	$624
2023	$637
2024	$649
2025	$662

Why make it compulsory?

I think many people will wonder why does this scheme have to be compulsory? Another thing which will be on most people's mind will be that I don't need this disability coverage at age 30 since I am still young.

The politically correct answer which the government had gave is that they want to create an inclusive society where everyone chip in a bit to take care of one another. While this sounds good, I think it is human nature to ask what is in it for me? I've already saw many feedback and from conversations with my friends, most of us would think disability won't really hit us at least for now. Who will want to be disabled at a young age anyway? Its not just about money but also not being able to have the quality of life and do what we like if we do get disabled at a young age.

It has always been the government's way to risk pool everyone together. The CPF life works in this way too where the younger people contribute to the CPF pool of funds to support the payout of older people. The fund is always invested to generate interest income to support those who are drawing down from it. Medishield life was implemented also to cover even those with pre-existing illness.

For this new Careshield life, those who have pre-existing disabilities are also covered but only for those born on or after 1980. This means that for those who have pre-existing disabilities but are born in 1979 or earlier and do not have Eldershield, they will not be included in this scheme at all. I found out from MOH that they did consider covering everyone with pre-existing disabilities but the premiums will be too high for most to afford so this plan was put aside. However, MOH did say that they are also concurrently reviewing the other long term healthcare schemes in order to support this group of people who are left behind. It may take some time for more information to be available.

I do not have the statistics for disability trends in Singapore but from MOH's data, it is 1 in 2 healthy Singaporeans aged 65 could become severely disabled in their lifetime. How true this is, is anybody's guess. What I do know is that if we really do have family member's who become disabled, the financial strain can be quite difficult to cope coupled with emotional stress. I have seen this happen to a few of my relatives due to accident or illnesses. It is more common than we think. This Careshield life is the first step to provide support in the event if really disability happens.

For more information on Careshield life, you can refer to MOH's website here.

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Beware Of Mortgage Reducing Term Insurance From Private Insurers

When we buy an insurance policy, we hope that we can activate the policy and make claims when situation arises. However, there are times when we realise that actually the insurance we buy cannot be claimed as fast as we hope for or could not be claimed totally at all because of some terms and conditions which were not made known to us when we had bought the policy.

It has been brought to my attention that the reducing term insurance from AIA is not easily claimable in the event of total permanent disability (TPD) or even terminal illness. I'm not sure if this is the case for other private insurers but in this post, I will focus on the reducing term insurance from AIA and its limitations. This is shared based on my own experience claiming for the benefits of this policy and the policy contract which I have managed to obtained. 

If you're using CPF to pay for your HDB flat currently, it is compulsory to be insured under the home protection scheme (HPS). You can opt out of the HPS if you have other term insurance from private insurers to cover your mortgage in the event if something happens. The HPS is a mortgage reducing term insurance to cover your outstanding mortgage on your HDB flat in the event of death, TPD or terminal illness. 

This mortgage insurance takes 2 years to payout for TPD

Some people would buy a private term insurance and opt out of the HPS as premiums are normally cheaper for private insurers. However, it is important to note the fine prints as it can be difficult to claim. I will take the AIA reducing term insurance as an example and have reproduced the policy summary of the product benefits below:

AIA reducing term insurance contract in 2017

The first image is the old contract from AIA for its decreasing term insurance which was bought back in 2003. The second image shows the new contract which is obtained in 2017. If you notice, the contract terms are the same. The red box in the image above shows the total and permanent disability benefit. If you notice, 10% will be pay out on the first policy anniversary and the policy can only pay out the full insured amount at the second policy anniversary as indicated by the green line. This means that if you are claiming for this policy due to TPD, you have to wait as long as 2 years before you can get the payout. 

The problem is if you have an outstanding mortgage which cost thousands of dollars a month and you had some illness or accident that caused disability, most likely you will not be able to work and lose your income. Your family remembered you had this mortgage reducing term insurance but only to find out that they have to struggle to continue paying for the outstanding mortgage for another 2 years before they can claim from this policy. This is going to cause a lot of problems later. 

Is HPS a better choice if you own a HDB?

For the HPS, which is a mortgage reducing term insurance administered under CPF board, it might be a better choice for HDB flat owners. If you own a private property, you'll have to get a term insurance from a private insurer so make sure you check the terms and fine prints before you purchase one. The term insurance I bought from Aviva doesn't need to wait for the second policy anniversary to payout for TPD. It just need a standard 6 months continuous TPD to claim for the benefit and the assured sum will be paid out in one lump sum. 

Back to those who own a HDB, the HPS protects us and our families against losing our HDB flat in the event of death, terminal illness or total permanent disability. The HPS does not payout in cash like how private term insurance does. The HPS will offset whatever outstanding mortgage loans instead. The claim criteria has also widened where CPF members with terminal illness and total permanent disability but are still able to work will qualify for claims under the Home Protection Scheme (HPS) and Dependants’ Protection Scheme (DPS), after Parliament passed changes to the definition of “incapacity” under the CPF Act on 29 February 2016. This was also reiterated by Mr Lim Swee Say, Minister of Manpower, on 8 May 2017 in a written reply to a question in parliament. 

No matter what, having a mortgage term insurance which can only payout in full in 2 years is really a long time. Most TPD benefits just require 6 months of continuous permanent disability to claim the benefit. I am disappointed that the AIA reducing term insurance can only payout fully on the second policy anniversary. If you're considering to get a mortgage insurance for your property, do take note of the contract policy. If you already have a mortgage insurance, you might want to take a look at the contract terms too.

*Disclaimer: I am not recommending or advising on any insurance from any companies. This post is only a sharing of my personal experience and the facts which I manage to find

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The Shocking Case of An Insurance Policy

Just last week, there was a shocking case of an insurance policy which went viral. Apparently, this person's dad bought an endowment policy from prudential in 1994 where the maturity payout of the policy is suppose to be $42,000. He got a shock when his dad got a cheque of only $20,000+ just recently when it matured.

My dad bought this prudential savings plan twenty years back and he was supposed to get 40k+ this year during March. However, they've only sent my dad a cheque for 20k+ (the initial investment is 30k+). 

My family went up to the prudential office to lodge a complain and to enquire as to why the company isn't giving the full sum as promised on the contract. The company dismissed my dad with a convenient bullshit excuse " our company isn't earning much so that's the sum you'll have ". 

Is this ethically right? What's the point for anyone to save with prudential if you're going to make a loss in the end after 20 years? That money could've been many times more if my dad invested in other financial instruments and inflation. 

Is there any case if we were to sue them? My parents are just Hawkers, I don't understand why you've to make the old generation suffer so much

I have reposted the original post on Facebook above. Insurance is always a complicated topic. Buying insurance is definitely a long term commitment as we will have to continue paying the premiums for at least 20 years and more. If we surrender early, we will lose a lot of money.

What happened to the shocking case?

Throughout the past few years, I've reviewed my own insurance policies, both which I bought when I was still a student and those which my parents bought. I've took actions to eliminate the unnecessary premiums which I've been paying and make sure I have enough insurance coverage also. For the case above, it was an unfortunate case where the maturity payout was less than what was expected. For us to know what happened, we must first understand how an endowment policy works.

Insurance, as the name implies, should cover us for some sort of misfortune such as death, critical illness and disability. All insurance policies will cover us for some of those mentioned but most of us would have bought policies with savings and investment elements also. Whole life plans, endowment and investment link policies all have the savings and investment elements in it.

Breakdown of the insurance policy

1. Guaranteed and Non-Guaranteed 

If we take a closer look at our insurance policies, we will always see a guaranteed and non guaranteed portion in the policy illustration which is prepared for us by the insurance agent. The policy illustration is only applicable for plans which have insurance and savings/investment elements in it. For plans which are only for insurance coverage, such as term plans and personal accident, there is no such illustration needed as the premiums paid are only for insurance coverage.

The guaranteed portion is the amount which we will definitely be able to get at the time of the illustration. If you look at this portion in your benefit illustration, it is very low. The amount you get back just on the guaranteed portion alone will 100% be lesser than the premiums you paid.

Then, there is the non guaranteed portion which seems like a lot of money. This non guaranteed, as its name implies, is not guaranteed to you. The amount is based on the projected investment return which your insurance agent put in when he/she did the benefit illustration. This is the tricky part. Some agents put in projected investment return so high that is it really quite impossible to achieve. Many people who bought insurance policies many years ago back in the 1980s and 1990s, have very high non guarantee amounts because the projected investment return was put in much higher in the past. It is understandable as interest rates were so high back then and we can easily get 5% just putting money in the bank. This doesn't apply to now at all.

Therefore, if we really want to know the value of our policy, we can actually get a revised policy illustration or check the actual value of the policy with the insurance agent of the company directly. This will ensure we do not get a shock when the time comes for us to cash out.


2. Not all Premiums are put into the policy value

The premiums we pay on the whole life, endowment and investment link policies are not all part of the policy value.

Let's breakdown the premiums into a few portions:

• Insurance coverage
• Critical illness rider
• Disability rider
• Life fund

As we can see above, the premiums we pay can go into different portions. Take note that the premiums we pay for the insurance coverage, the critical illness and disability riders are not part of the savings. These amount will never be given back to us. 

The rest of the premiums are put into a life fund to generate some investment returns. The amount we can receive back depends entirely on the fund performance. 

Managing our expenses on Insurance

Depending on your insurance policies for retirement may not be a good choice as the amount you will get back at maturity is really not in your control. It can be much lower than what you expected. For myself, I try to limit the money I spend on insurance to 10% of my income. In this way, I can save up more and plan for my own retirement which I have more control over. 

It is important to review the policies we have and see what we can do to get enough coverage while limit the premiums we pay. To get the most coverage, we can consider term insurance which is really simply just insurance in itself without any savings or investment elements in it. 

Now, we can even purchase insurance direct from insurance companies without going through an agent. You can check out MoneySense website on the direct purchase insurance here. Do note there are limitations on the coverage you can get which is at $400,000 currently. Any coverage above that, you'll still have to go through an agent. 

For the case on Facebook, it was unfortunate that the policy holder got back lesser than what was expected. For those of us who are still holding on to endowment or whole life policies, it is timely to review again if it serves our needs. 

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Getting Insurance Advice Without An Insurance Agent with Selfcheck

Have you heard that technological advancement will disrupt the financial advisory industry? We can now buy property without a property agent through an app. How about getting a Selfcheck on your insurance needs online? Now it is possible with a new digital “adviser” on DIYInsurance.

Insurance is a tricky maze where most people are confused on what they actually need. Who can we trust to give us the most unemotional advise without any sales talk or hard selling? Feeling pressured to buy any insurance is not the way to go. We have the right to really think about what we need without any hard selling.

With a digital "adviser", all the hard selling, and the pressure to buy are all gone. We can now assess our own insurance needs at the comfort of our homes, making decisions with a clear mind without any distractions.

How Selfcheck works?

I've tried out this selfcheck and I would say I'm quite impressed at how easy it is to use and the quality of the recommendations which are given. I don't even need to spend 1 hour of my time to listen to sales talk. All it takes is just 5-10 mins to key in my personal data and then the system calculates my insurance needs and recommends the best insurance plan comparing various companies in the market. If you did not know, DIYInsurance is also an insurance comparison web portal.

My Selfcheck results

I tried to key in my details and got some results which I'm quite happy about. Here's how simple it is to do a selfcheck and the results which I got:

First, they will ask for some personal details such as your name, date of birth and annual income

After which, there will be some questions on assessing our financial needs and health.

Thirdly, will be some basic questions on our employment status and expectations

And lastly, the results are generated out

For my protection needs, the digital adviser recommended 4 main insurance:

1. Death
2. Critical Illness
3. Disability Income
4. Healthcare

If you realise, all the recommendations are for insurance needs only. There are no savings plans, endowment or investment link policies involved. This is in line with what I believe that insurance should just be for insurance coverage and not be complicated with savings or investment. I don't have to pay high fees to save and invest when I can do it myself at very low fees. 

Honest advise and trusted service

Talking about fees, in case you did not know, DIYInsurance staff are not commission based which is very different from normal insurance advisers out there. They are all salaried base which means they do not get extra money from recommending any insurance plans you do not need. 

However, the quality of service still maintains the same. There is a dedicated adviser assigned to each person and in the event of a claim, they can approach their adviser to process it. They also have a Client Service Management team to help on any needs which you may have. 

Save on your insurance?

Because of the selfcheck digital adviser platform, processes become more efficient which allows DIYInsurance to pass on greater cost savings to their clients. They are increasing the rebate of agent’s commissions from 30% to 50% back to you. This is a straight 50% cost savings on the commissions which is paid to the company. As mentioned before, DIYInsurance staff are salaried so the commissions are actually paid to the company like a referral fee which all other insurance companies pay to their agent too.

As what I understand from them, the commission rebates are not just for 1 year, they are for as long as the insurer pays them (usually 3-6 years along). This is really a good initiative from them to pass cost savings to their clients.

DIYInsurance is MAS licensed since 2003 and is a trusted place to be insured. I've personally interacted with their staff before and know that they really want to serve people well. Try out the new selfcheck digital adviser and see for yourself the new era of financial advisory.


This article was written in collaboration with DIYInsurance. All views expressed in the article are the independent opinions of sgyounginvestment.blogspot.sg

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MINDEF & MHA Group Insurance

Many of us would have seen the news on the new subsidised insurance which MINDEF is providing to all personnel including regulars, NSF and NSmen. This also extends to your spouse and children. You can read the news here.

The purpose of this post is to uncover the protection provided and the premiums payable. From what I see so far, the coverage we get and the premiums payable is so much lesser than if we were to get from outside insurance agents. You'll be surprised it is about half the cost. This is one of the 30 recommendations by the Committee to Strengthen National Service (CSNS) to better recognise the contributions of national servicemen to national defence and security, and to strengthen our care for them.

If you've served national service, this will be of interest to you. If not, if your spouse has served national service, you can also get the insurance through him or her.

What is the MINDEF & MHA Group Insurance?

Under the MINDEF & MHA Group Insurance, there is group term life and personal accident insurance. Even if we do not buy any insurance, from 1 July 2016, we will automatically be provided with $150,000 group term life and $150,000 group personal accident insurance coverage during the period of our full-time NS and operationally-ready NS (ORNS) duties. The premiums are fully paid by MINDEF and MHA.


Group term life insurance

To get additional coverage, we can opt for the voluntary scheme. This scheme will only be available from 1 July 2016 for MHA personnel and 1 October 2016 for MINDEF personnel. We can get term life and personal accident insurance through this scheme. I will focus more on the MINDEF/SAF group. The premiums for the Group term life insurance is as below:

(Group Term Life Premiums)

As we can see, for a coverage of 1 Million, the premiums is only $41 per month. This covers 1 Million in the event of death or Total Permanent Disability only. If we compare to a term life insurance in the market using compare first website, the lowest will be $71 per month.


Critical Illness Rider

If we're thinking to just get insurance for death and total permanent disability, then it wouldn't be much of an issue. However, if we want to add in riders for critical illness, there are certain limitations for this scheme.

The limitations are:

1. Critical illness only cover maximum $350K
2. The premiums are not flat but increasing 

The critical illness rider under the Group term life insurance is called "living care". It covers against 37 common critical illness. Here are the premiums payable:

(Living care rider premiums)

As we can see, the premiums are in age bracket and not flat rate. This means we have to pay more per month as we hit the next age bracket. The problem is when we get pass 50 years old, the premiums can be quite a lot and even more when we are above age 60. If we are planning to add in this rider, there may be a problem in later parts of our life.


Disability Income Rider

There is also another optional rider called disability income. This coverage will replace your income in the event of disability. The annual coverage amount is based on 50% of your monthly basic salary multiplied by 12 times up to a maximum annual benefit of S$120,000. 

Here is the premiums table:

Similar to the living care rider, the disability income rider premiums are increasing. A point to note is the riders have to be bought together with the Group Term Life or Group Personal Accident insurance. We cannot buy the riders only without the main insurance.

Group Personal Accident insurance

For the personal accident insurance, it provides coverage in the event of an accident. We can cover up to $600,000 at cheap premiums.

Here's the premiums table:

(Personal Accident Premiums)

For personal accident, the premiums are on a flat rate and doesn't cost much. For the full list of items and conditions we can claim, you can refer to the brochure here.

List of resources

Lastly, I've complied the list of brochures from the website which I've wrote in this post. You can refer to the brochures for more information on the coverage and the premiums. I understand that to apply for the insurance, we cannot get through the public insurance agents channel and have to purchase direct from Aviva.

1. Group Term Life Product Summary
2. Group Personal Accident Product Summary
3. Living Care Product Summary
4. Disability Income Product Summary

For the full suite of insurance offered under the MINDEF & MHA Group Insurance, you can refer to the website here.

The above products are more for MINDEF personnel. For MHA personnel, you can refer here. It is quite similar from what I see.

I hope this post is useful for those who want to find out more on the new group insurance for people who served national service and played a part in contributing to national security. Don't forget this applies for your spouse and children as well so you can also buy for them through the voluntary scheme.

How To Pay Lesser For Insurance Premiums While Getting Higher Coverage?

Do you know that insurance is a big part of our lives? In one way or another, most likely we would have more than one insurance policy throughout our lives. Some policies were bought with a clear mind while others were not. We would have spent hundreds of dollars per month on insurance without knowing what exactly we have or will we benefit from it?

Instead of paying a hefty sum on insurance premiums, there are ways to pay lesser and still get a higher coverage. You would be surprised many of us are actually under-insured even when we are paying so much for insurance premiums. Let's look at how this happens:

Paying A Lot Of Premiums but under-insured

Case 1: Buying too much endowment policies

You may have heard of endowment policies or even have one of these, but what exactly are these policies and how much coverage you are getting?

Endowment policies are basically more of a savings plan. The death or critical illness coverage is very little as most of the premiums are put into a fund to earn about 2-4%. Basically, if you pay about $100/month for an endowment policy, the coverage you would be getting will be less than $50,000. For my own endowment policy which I bought many years ago while I was still a student, I pay $80/month and get only $12,000 death and critical illness coverage. This really isn't a lot of insurance coverage.

Case 2: Buying too much Whole Life Insurance policies 

Another popular insurance policy is whole life policy which many people have today. This policy is so popular because insurance agents push it out so much arguing that we need insurance coverage for life.

However, if you have this policy, chances are you would be paying a lot of premiums for this policy. A simple comparison on a local insurance comparison portal shows that for a $100,000 death and critical illness coverage, the premiums would be around $2300+ per year. This is about $150-$200 per month. $100,000 death coverage is really little so most likely we will be getting $200,000-$500,000 insurance coverage. How much will the premiums be?

For the $200,000 whole life insurance policy, the premiums will be about $4800+ per year.

For the $500,000 whole life insurance policy, the premiums will be about $14000+ per year.

If you're paying about $400-$500/month for whole life plans, the coverage you would be getting will only be around $200,000-$300,000. Is this enough for your dependants or your family if you pass on?


Mixing up insurance with investments

From the above examples, it is clear that the wrong policies bought will result in undermining the true purpose of insurance which is to insure us. There are so many policies in the market but which should we look into to get the most out of our insurance needs?

The problem with being under insured is mixing insurance with investments. Every $1 we pay for an endowment plan, only 10 cents may go into insurance while the rest of the 90 cents goes into a fund for investment. This is similar for whole life plans. This is the reason why the insurance coverage can be quite low even though the premiums we pay is higher.

If we want to get higher insurance coverage, we should look into term life plans instead. Term life plans are true insurance policies with the purpose for insurance only. There are no investment elements in it. We would get the highest coverage for every premium we pay.


The Attack On Term Life Plans

However, term life plans get attacked and branded "not a good plan" most of the time by insurance agents. There are good insurance agents around who advocate the best for their clients so I have to clarify this does not applies to all.

There is no one size fit all approach. Each of us will have different insurance needs and yes term plans may not cover for life so we can get additional minimum whole life insurance for life coverage.

Why term plans are not that popular for insurance agents to market out is simple because of the commission structure. For the first time, the commissions of insurance agents will be revealed in this post, credited to DIYInsurance for writing an e-book to defend term insurance. You can download the free e-book here on term vs whole life insurance.

In the e-book, various scenarios were listed out to compare the premiums and agent's first year commission. Here's a scenario for insurance plans to cover $500,000 death/TPD:

	Term Plans Premium	Traditional Whole Life Plans	Whole Life Hybrid Plans
Company A (Premium p.a.)	$1,922	$15,670	$7,410
Agent's First Year Commission	$748	$7,052	$3,335

As we can see, the premiums for terms plans are definitely much lower as compared to traditional whole life plans for the same amount of coverage. This also means the agent's commission will be much lower too.

In just one example, we would have seen why there is always selling pressure for whole life insurance as compare to term insurance. This article may get more attacks but I hope it benefits consumers as a whole. The next time you get your insurance, think of it solely for your insurance needs first. For investments, there are many other ways to invest like all the many articles I've written. For insurance, getting term insurance to cover most of our insurance needs seems more practical to me. Nevertheless, we can still get some whole life plans to complement if needed.

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Understanding Medishield Life and Integrated Shield Plans

There is a saying that you can afford to die but not afford to get sick in Singapore. This is true regardless if we are poor or rich. Unless you are extremely rich, hospital bills will be a problem for most of us here. Once we are diagnosed with some major illness such as cancer or other life threatening illnesses, it will probably wiped out most of our savings.

An important part of financial planning is insurance. In fact, getting insurance should come before starting any investments. One of the key insurance to get is healthcare insurance to cover our hospital bills as hospital bills can add up to quite a huge sum of money. In Singapore, we have social security schemes already in place such as Medisave, Medishield life, Medifund, Eldershield etc. These terms may be familiar to you but maybe most of us are not really sure what it really means and which scheme we have or to get? In this article, let me demystify the terms and break it down into easy to understand concepts.

What is Medisave?

Let's start off with Medisave. This is what all of us have as long as we are Singaporean or Singapore PR. The Medisave scheme is under the CPF. For our CPF, we generally have 3 main accounts:

1. Ordinary Account (OA)
2. Special Account (SA)
3. Medisave Account (MA)

Medisave account falls under part of the 3 main accounts in CPF. Every month, a portion of our salary going into the 3 accounts with Medisave being one of them. Our employer contributes additional to our Medisave account also. This is essentially our healthcare savings account which we can use to pay healthcare insurance premiums and also for some healthcare bills.

Medisave Scheme is a national healthcare savings scheme designed to help us pay hospitalisation expenses incurred in Class B2/C wards in restructured hospitals. Medisave savings can also be used to pay for certain outpatient treatments like chemotherapy, radiotherapy and dialysis. You can use Medisave savings to pay for your own or your immediate family members’ hospitalisation expenses, day surgery and selected outpatient treatments.

For the list of claims you can make using your Medisave, you can refer to MOH website here. 

What is Medishield and Medishield Life?

Medishield as its name suggests, is a shield plan which protects us from high hospital bills. The word shield will imply it is a insurance plan. Medishield covers basic hospitalisation bills in class B2 and C wards. Medishield has been enhanced with the new Medishield life which covers us for life. Medishield and Medisave are different. Medisave is our own savings money while Medishield life is an insurance plan. The claim limits and claimable items for Medishield life is as illustrated below:

Credit: https://www.moh.gov.sg/content/moh_web/medishield-life/about-medishield-life/medishield-life-benefits.html

Click image to enlarge

What are Integrated Shield Plans?

As we know from the above, Medishield Life does not cover all of our hospital bills. It is only a basic healthcare safety net. If we want to cover our hospital bills fully, there are ways to do it in Singapore. An integrated shield plan allows us to cover more or fully our hospital bills even for Private hospitals.

An integrated shield plan, in laymen terms, is the private insurance we get from all other private insurers such as AIA, NTUC Income, AXA, Aviva etc. Many of us may already have private insurance but some of us may not fully understand what coverage we are getting?

To understand more on the coverage of the integrated shield plan, let me explain a few simple terms. In an integrated shield plan, there are a few things we should look out for:

1. Is it covered "As charged" or only a percentage of the hospital bills?
2. What is the deductible?
3. What is the co-insurance?
4. Any riders we have?

The above terms may sound complicated but it can be easy to understand in the next 2 mins in this article. Let me explain further. 

As Charged

Covering "As Charged" is an important factor in the integrated shield plan. "As charged" means it will cover any hospital bills as it is charged. This means you can claim 100% of the bill as charged to you. 

Deductible and Co-insurance

Having an integrated shield plan with 'As charged' doesn't mean you can claim your hospital bills fully. In an integrated shield plan, there will always be a deductible and co-insurance portion which we need to take note. 

The deductible is the amount we need to deduct from our the hospital bills before we can make any claims. If the deductible is $3000, this means we have to deduct $3000 from our hospital bills before we can claim the remaining amount. Lets say if our hospital bill is $10,000 and deductible is $3000, the amount we can claim is only $7000 ($10,000-$3000). 

The co-insurance is the amount we have to co-pay before we can make any claims. Similarly to the deductible, we have to deduct this co-insurance portion before we can claim the remaining amount. Co-insurance is mostly in percentage so if our hospital bill is $10,000 and co-insurance is 10%, the amount we can claim is only $9000 ($10,000-$1000). The $1000 is the co-insurance which is 10% of the $10,000 hospital bill.

Riders 

Insurance terms can be confusing and it took me quite awhile to understand it as well. Riders as a word doesn't mean anything if we do not understand it for insurance purposes. To cover our hospital bills 100%, riders are the key to make it happen. As mentioned earlier, an integrated shield plan will always have a deductible and co-insurance portion. This is the portion we have to deduct from our hospital bills before we can claim the remaining amount.

Riders can override the deductible and co-insurance portion. By purchasing riders, we can remove the deductible and co-insurance portion from our plan and claim our hospital bills fully. 

How to know if my integrated shield plan covers my hospital bills fully?

The premiums of an integrated shield plan can be paid by Medisave. However, the premiums for the riders as mentioned above cannot be paid using Medisave. If you're only using Medisave to pay for your integrated shield plan, most likely you will not be able to claim your hospital bills fully. 

If you use both cash and Medisave to pay for your integrated shield plan premiums, then you may be able to claim your hospital bills fully. Check if you have a plan which covers 'As charged' and also riders to override the deductible and co-insurance. If you have all these, chances are you will be able to claim your hospital bills fully. 

Of course, there are always general exclusions in any insurance plans so check your plan properly before you incur any huge bills. Your financial adviser will be able to advise you on what your plan covers exactly and in the event of a claim, he or she will be the one helping you to process.

I hope this article demystifies some complex terms for the healthcare schemes we have in Singapore. Hospital bills can be scary if we're not prepared. If we're prepared, then we will have a peace of mind no matter what happens. Still, it is important to stay healthy and happy in life and prevent any illnesses in the first place.

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Term Insurance Or Whole Life Insurance? Which Is A Better Choice?

My Encounters with Insurance

For the longest period of time, whole life insurance and insurance savings plan (endowment plans) were the only thing I know which existed in the market. 9 years ago when I was at the age of 18, I had my first encounter with insurance. I was still a student back then and was approached by a financial consultant on the streets while I was going out. I'm sure many of you have been approached before too. I agreed to hear more about insurance and sat at a MacDonalds with this consultant for the next 1 hour plus listening to what insurance is all about. I was introduced a savings plan and was told the interest will certainly be more than a bank's interest. Besides that, this plan also has death, total permanent disability (TPD) and critical illness coverage. It kinda makes sense that I can put in money, get higher returns for my money and still get the coverage. It sounds so attractive that I signed up on the spot. To this day, I still have the policy which I've been paying for the past 9 years.

The policy which I had, although has a coverage for death, total permanent disability and critical illness, was only $10,000. It is certainly not enough should I have dependants or if I need to provide for my parents in the future. My next few encounters with financial consultants was on the topic of whole life insurance. This time round, I took my time to decide whether to take up an insurance policy as the premiums weren't cheap. Many times, I was recommended policies with $100,000-$200,000 coverage at premiums of $200 per month or $2400 a year. I only just started working back then and didn't have a high starting salary. Paying $2400 a year is still quite a big sum of money to me.

Fast forward to today, I didn't purchase the whole life insurance for only $100,000-$200,000 coverage for $2400 per year. Later on, I found out another insurance called term insurance which I could get One Million coverage for only about $1500 a year. The same $200,000 coverage would only cost $300 a year back then instead of the $2400 which I was recommended. Why is there such a big difference in the premiums?

*Disclaimer: Before I continue, this post is not a recommendation for any insurance policies as I'm not here to do that. I will only list down the facts of what term insurance or life insurance is and let you see for yourself which is a better choice. Let's start!

Term Insurance Or Whole Life Insurance?

During NTUC Income's 40th anniversary dinner, Senior Minister Goh Chok Tong supported the use of term insurances and even asked insurers to put more emphasis on it. Let's see the rationale behind term insurance and whole life insurance and find out which is a better choice?

Whole Life insurance premiums are definitely much more expensive than that of a term insurance for a similar coverage. A person at the age of 20 can get a $200,000 death and TPD coverage for just $300 a year with a term insurance as compared to $2000+ a year for a whole life insurance. For whole life insurance, you get something back when you terminate your policy but for a term insurance, you would get nothing back at all. This is the argument put forth which discourages term insurance.

However, let's understand why we would get something back for a whole life insurance and not for a term insurance? For a whole life insurance, every dollar you pay as premium for the whole life plan, a portion will go into paying the mortality charge that provides you the cover you need. The rest of it is invested into the insurance company’s life fund. The mortality charge portion is never returned back to you. The only reason why you get money back from a whole life plan is because you gave the insurance companies extra money to invest. When you buy a term plan, you are effectively paying only for the mortality charge; you are just buying pure protection.

Have you heard of the phrase buy term and invest the rest? This is saying we should buy term insurance and invest the rest of our money on our own. Instead of putting our money into the insurance company's life fund, we can invest our own money and manage our own fund. This is of course subjected to individual preference. Some may not know how to invest their money and would still be better off putting their money in the insurance life fund.

But, there is a problem with whole life plans. If let's say we want to get 1 Million insurance coverage, it becomes too expensive if we were to get a whole life insurance. A check on DIYInsurance's comparison portal shows that a $100,000 coverage for whole life insurance would cost between $1600-$1900 a year. How much would a One Million coverage cost for life insurance? It could easily be above $10K a year.

DIYInsurance has also launched a term insurance table to compare the premiums across insurance companies in Singapore. The following is a table adapted from DIYInsurance's website for your reference. This Term Insurance table is also updated monthly by them.

We consider the following example of a Male, Non-Smoker:

• Policy coverage till 65 years old (Eg. when children are independent)
• S$1million Death and Total Permanent Disability (TPD) Coverage

Annual premiums of insurers in Singapore (S$):

Age	Aviva	AXA Life	Etiqa	Great Eastern	HSBC Insurance	Manulife	NTUC Income	Prudential	Zurich Life	Apply for Cheapest
30	1087	1088	1990	1560	1339	1202	1810	1658	1304	Apply
40	1835	1871	3440	2690	2640	2016	2681	2567	2001	Apply
50	3379	3379	5330	4260	4494	3701	4702	4268	3549	Apply

For a Female, Non-Smoker,

Annual premiums of insurers in Singapore (S$):

Age	Aviva	AXA Life	Etiqa	Great Eastern	HSBC Insurance	Manulife	NTUC Income	Prudential	Zurich Life	Apply for Cheapest
30	868	791	1390	1070	1008	948	1350	1249	967	Apply
40	1390	1357	2370	1750	1980	1410	2107	1881	1506	Apply
50	2450	2078	3450	2600	3144	2276	3850	3049	2661	Apply

*With information from www.diyinsurance.com.sg and comparefirst. Figures are compiled on 5th November 2015.

** Prices reflected in the table reflect ongoing existing promotions and discounts which are in the knowledge of.

Term insurance or whole life insurance? You can make your decision base on the information provided above. There are many ways to compare insurance premiums now in this IT savvy world we live in. All of us can make better informed choices!

DIYInsurance by Providend Ltd

To compare and purchase insurance, DIYInsurance (Do It Your Way Insurance) is Singapore's First Life Insurance Comparison Web Portal by Providend Ltd. DIYInsurance aggregates products from various insurance companies and provides 30% commission rebates in addition to ongoing promotions.

Backed by key people with almost 2 decades of experience, all staff from DIYInsurance are salaried based and do not participate in sales-based compensation or incentives of any kind. Not being remunerated on a commission-basis means there is no hard-selling and over-selling. This is insurance based on no one's agenda except your own. Click here to request a Term Life Insurance quote through DIYInsurance.

*This post is written in collaboration with DIYInsurance. The opinions and expressions in this article are solely based on my own thoughts and experiences.