Protection 101: a quick breakdown of insurance
You know you ought to get insurance coverage, but there are just so many different plans covering a variety of needs. What are they, what do they mean, and when should you buy them? Read this guide to figure out the different protection plans on the market.
Just as there are two sides to a coin, here are what the sceptics and supporters say.
When you land your first job
Congratulations on your budding career! As you celebrate every promotion and bonus, don’t forget to consider insurance that can cover you for medical expenses and personal accidents.
They typically cover your hospital and surgical expenses. Some even give you cash for the days when you’re hospitalised. When buying these plans, consider if:
- You’d want treatment at a restructured or private hospital; and
- What type of ward would you want to stay in
You may have insurance coverage from your company but those policies may not cover you when you change jobs or when you retire.
It is a good practice to buy insurance when you are young as premiums may increase with age. Insurers also tend to exclude covering pre-existing health conditions. It is therefore important to establish your fundamental coverage for the long term while you are still young and healthy.
To bump up the coverage you already have, consider getting one for critical illness. Treatment for such illnesses can put a dent in your pocket and, sometimes, work and income may be affected. To protect oneself from such situations, some buy into critical illness insurance. This typically pays a lump sum upon diagnosis of a critical illness, or after undergoing a surgery covered by the policy. Critical illness plans usually cover most major illnesses and types of surgery including but not limited to:
- Major cancers
- Heart attacks
- Coronary artery bypass surgery
- Kidney failure
When you get a home
You meet your life partner and buy a home. It is all you’ve ever wanted, decked out in industrial or Scandinavian fittings. This home is bought with a loan. What if one of you falls ill and mortgage repayment becomes impossible? Consider getting mortgage protection so your home loan will still be paid off even if the breadwinner gets diagnosed with a terminal disease or dies so your loved ones will not lose their home. Property protection also insures your home against disasters such as fires and explosions, vandalism and impact damage by vehicles or aircrafts.
When you have dependents
There are people who depend on you. At this point, your income isn’t just meant for savings and leisure – there are people whom you love and who rely on you for all their needs. You can consider disability insurance. This pays you a fixed sum if you were to lose the ability to work because of an accident or an illness. These policies may pay up to 80% of your income so you and your family can continue with your lives even though you’ve had a loss of income.
Do clarify with your insurer how disability is defined in the policy. Some define disability as not being able to perform your usual work; others define it as not being able to work at all.
As you get older
In old age, will you need care? Does receiving care mean living in a nursing home or employing a live-in caregiver? Long-term care insurance covers this need by paying a fixed monthly amount that goes towards expenses for long-term nursing treatment. Such insurance starts paying out when you cannot perform a minimum number of the six Activities of Daily Living independently. These include washing, dressing, feeding, toileting, moving around, or transferring from bed to chair or wheelchair.
The government also has an insurance scheme called ElderShield with monthly cash pay-outs for those with severe disabilities. If you are unable to perform at least three out of the six Activities of Daily Living. Singapore Citizens and Permanent Residents with Medisave accounts are automatically enrolled in ElderShield at the age of 40.
Ready to start?
To find out more, talk to our Wealth Planning Managers