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Lorna Tan Shares Some Simple & Practical Financial Tips On Health Cover!

Tips for Health Cover

Health insurance protects you from incurring a financial loss as a result of an illness, disability or accident. Getting the right health insurance plan can be tricky.

Take up health insurance early

It is a fallacy to think that you do not require health insurance until you are much older. It is advisable to buy health cover when you are still young and healthy as many health insurance products are not available to people over a certain age or to those with  an existing illness.

Recent figures show that one in four Singaporeans will suffer from a critical illness in his lifetime. When diagnosed with a critical illness, 58 per cent continue to live for 10 years and 41 per cent for another 20 years. These statistics support the need for appropriate health cover.

Seek plans providing lifetime cover

Buying a health insurance policy with lifetime coverage is essential because people are expected to live longer. By year 2050, Singaporeans are expected to live to their 90s, from the current life expectancy running in the low 80s.

“As charged” plans are better

Traditional plans come with specific sub-limits such as a specified dollar benefit for room and board. “As charged” policies do away with any sub-limits on medical benefits, although there is an annual limit. This means that hospitalisation expenses will be paid according to what has been billed, subject to the plan’s deductible and co-insurance. “As charged” plans are superior as they will absorb rising health-care costs.

Shield plans have deductible and co-insurance features

All Shield hospitalisation plans include a “deductible”, the first layer of charges that the policyholder has to bear. Depending on the type of plan, the deductible is typically about $2,000 to $3,000. The plans must also have a co-insurance feature, which means the policyholder shares part of the cost of the bill, usually 10 per cent over and above the deductible. For example, if an A-class ward bill is $5,000, the policyholder bears the first $3,000 as the deductible, and $200 as co-insurance (10 per cent of the remaining $2,000). The insurer pays the remaining $1,800. Insurers offer riders which waive the deductible and/or co-insurance, for a premium.

Pre-existing conditions are not covered

Pre-existing conditions refer to medical conditions, known or unknown to the policyholder, that existed before an application was made to buy a health plan. Under personal hospitalisation policies, these pre-existing conditions are typically spelt out by the insurer and excluded throughout the lifetime of the insurance plan.

Premiums rise as you age

If your plan involves paying regular premiums throughout the life of the policy, note that the premiums increase as you age. Ensure that you can afford the premiums over the long run. Most insurers reserve the right to change the premiums at any time by giving their policyholders written notice.

Opt for a plan with guaranteed renewal

A product that guarantees that your cover will stay in force as long as you pay the premiums on time is naturally better than one that gives insurers the right to cancel the cover by giving written notice before your plan is due for renewal. However, most insurers reserve the right to change premiums, benefits, and the terms and conditions of their plans when they are due for renewal.

New plans come with free-look policy

Policyholders are given 14 days to review their new policies. If you decide that the policy does not meet your needs, you can choose to cancel within 14 days and get a refund of all premiums, less any expenses.

Consider the geographical limits

Determine the geographical limits of your health cover and the circumstances of the coverage. For instance, some plans will cover emergency treatment anywhere in the world if you are travelling, but not if you are working overseas for an extended period.

No need for several hospitalisation plans

By Lorna Tan

The Sunday Times’ Invest Editor & Senior finance Correspondent with The Straits Times

www.LornaTan.com

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