Insurance for NSFs
The benefits of insurance are known to many but with so many types of insurance products available, how do you know which insurance products to get as a Full-time National Serviceman (NSF)?
After all, there is no one-size-fits-all solution available for insurance planning. Everyone has his or her own unique needs and financial situation.
To help you, these are insurance policies - in order of priority - that you can consider while serving your National Service (NS).
With rising medical and hospitalisation costs, you might want to opt for more comprehensive coverage for your medical expenses.
As a Full-Time National Serviceman (NSF), you are eligible for subsidised inpatient medical treatment at restructured hospitals for your eligible class of ward. The ward coverage is dependent on rank and the ward eligibility can vary from Class C for Recruits to Class B1 for Officer Cadets. SAF covers 80% of the ward and meal charges and 100% of treatment charges. This coverage expires upon the conclusion of your full-time service.
You might think that given the subsidies, you can put off getting your health insurance until after reaching your Operationally Ready Date (ORD). However, in the unfortunate event that you develop a health condition while serving NS, you may face exclusions or may be rejected when you apply for your individual policy later.
Premiums are more affordable when you are younger. While serving your NS, it is a good time to get your own medical coverage through an Integrated Shield Plan (IP) such as the Singlife Shield.
Critical Illness (CI) Insurance
CI insurance coverage provides a lumpsum payout upon diagnosis of a CI such as cancer, heart attack and stroke. It could provide coverage from early-stage CI to late-stage CI. Such coverage helps to provide a lumpsum payout that can be used for additional or alternative treatment needs in the event of a CI. CI coverage can also be used to replace income loss while you recuperate from the illness. The Life Insurance Association Singapore (LIA) recommends having a cover that is equivalent to 5 times of your annual income for late-stage CI coverage.
You could get insured with CI coverage through a standalone policy such as Critical SelectCare or eCriticalCare. There are some plans that cover cancer only such as CancerCare. Alternatively, you could also get CI coverage by adding this as a rider to a term life or whole life policy.
Having suitable medical and CI insurance coverage serve as the building blocks when building the foundation of your financial plan.
If the budget permits, here are some other coverage that you can consider depending on your needs:
Life insurance is essential if you have dependants who are financially dependent on you. In the event of premature death or terminal illness, the total sum assured of the plan will be paid out to your beneficiaries which could be used to replace your future lost earnings. As an NSF, you will receive $150,000 Group Term Life insurance coverage that is paid for by MINDEF/SAF.
The LIA recommends 9-10 times your annual income for death coverage. However, do note that this amount varies from person to person as it involves determining the amount your dependants require, your outstanding loans and the inheritance that you plan to leave behind.
There are two types of life insurance: term and whole life insurance.
Term life policies provide coverage for a fixed period (e.g up to the age of 65 or 70). As term life policies are pure insurance products, there is no savings element and hence no cash value. Term policies include ManuProtect Term (II) and TermProtect.
On the other hand, a whole life policy provides coverage for whole of life or up to age 99 or longer. Part of the premiums is contributed to the participating fund of the insurer. This builds up cash value in the policy. Due to the savings component and with a longer coverage period, the premiums are higher than term policies. Whole life policies include the LifeReady Plus (II).
As an NSF, consider starting with term life policies as you may have a smaller budget to work with.
Personal Accident (PA) Insurance
You could be involved in constant physical training while serving your National Service. This greatly increases your risk of being involved in injuries. The MINDEF/SAF covers you with $150,000 of Group Personal Accident insurance coverage.
While this comes in useful, do consider enhancing your personal accident coverage. PA policies like Easy Protect cover temporary disablements, physiotherapy, Traditional Chinese Medicine (TCM) and even illnesses such as dengue fever, food poisoning and hand, foot and mouth disease (HFMD).
Having personal accident coverage helps you reduce your medical expenses further and pay for mobility aids if required.
Get the right insurance
When deciding on your insurance coverage, there are many factors to consider such as your planned retirement age, life expectancy, outstanding liabilities, and your dependants.
As an NSF, it can be overwhelming. Be insured with the higher priorities of coverage first and do not go overboard. Being overly protected isn’t a good thing either and could lead to unwanted financial stress if you cannot afford them.
If you have a limited budget, other than traditional insurance policies, you may want to consider microinsurance products. Microinsurance is bite-size insurance that is more affordable and convenient to apply. Learn more about them here and the ProtectFirst plan that takes only $5/month to get started.
Still unsure what insurance you need and need someone to speak to? Reach out and consult a wealth planning manager. Getting insurance coverage is a long-term commitment, by planning it right while serving your NS, you would have a good head-start in building a strong foundation in your financial plan.