Life is full of uncertainties and we need to always be prepared for the untoward. Doing all you can to keep your family and yourself away from financial hardship is very important. Once you have set aside an emergency fund of three to six months of living expenses, you should be seriously thinking of taking care of your protection needs. Here are the 5 types of protection we need for comprehensive insurance cover.
1. Hospital & Surgical (H&S)
If an unexpected illness or accident happens, the first costs that you will have to take care of are your hospital & surgical bills. A major illness or injury can wipe out all our Medisave funds and even our life savings. One of the most dreadful things when you are ill is deciding which assets you have to liquidate to pay the medical bills. With escalating healthcare costs in Singapore, hospital & surgical insurance is undoubtedly the most essential type of protection for anyone.
2. Disability (Income Protection)
What is your most important financial asset? This is a question I often ask people and they may initially say things like the house they own, their car, or any other investments they have. Upon further prompting, they will realise that their greatest asset is in fact themselves. It is our ability to write, speak, read and commute to and from work that allows us to make a living. The effects of disability can range from a minor and temporary reduction in income to a catastrophic lifetime loss of income. The table below sums up the different types of disability which we should cover ourselves for as a form of income replacement:
|Rising in Severity (1 to 3)||Disability Type||Common Definitions|
|1||Own occupation||“Unable to perform material duties of own occupation”|
|2||Own or similar occupation||“Unable to perform any occupation which one is reasonably fitted by training, experience or education”|
|3||Any occupation||“Total and permanently disabled and unable to engage in any occupation”|
3. Critical Illness
This provides a lump sum pay-out when you are diagnosed with one of 37 specific illnesses such as invasive cancers at an advanced stage. Some people believe that critical illness (CI) cover is unnecessary if they are covered by their H&S plans. However, these Medisave-approved Integrated Plans which most Singaporeans rely on are insufficient to cover all expenses due to a major illness. Our shield plans reimburse only for inpatient expenses, costs for cancer treatment such as chemotherapy and radiotherapy, and kidney dialysis. A cancer patient is commonly not warded in a hospital unless surgery is required or life support is essential towards the terminal stage of the illness. Most of the medical expenses incurred on specialist consultation, medical examination, laboratory tests and specialised cancer drugs cannot be claimed in H&S plans.
Furthermore, for someone diagnosed with an advanced stage CI, in order to recover well he/she may have to take time off work for a prolonged period of time. For working adults, the income lost due to time away from work while undergoing treatment and rehabilitation will not be compensated.
Early stage CIs usually require a lower cost of treatment and chances of recovery will be higher than advanced stage CIs. However, if an early stage cancer patient is not warded in a hospital, it is still good to have a small amount of cover for expenses not covered by the hospitalisation plan. In addition, wouldn’t it be great if we can have the choice to stop work and rest, if we are diagnosed with an illness? We can never predict if our illness will worsen. Having an insurance pay-out allows us to take leave from work to rest and receive treatment when our illness is still at an early stage. This can enhance our chances of recovery.
Death cover provides a pool of funds to your spouse and dependents in the event of your untimely death, to make sure that the family that you so painstaking work for do not tumble when you are gone, and that they can continue to live life as well as they always have. Nothing can compensate the emotional loss of a loved one, but if the financial aspect is well taken care of, it makes things a little more bearable.