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Is An Integrated Shield Plan All You Need?

With so many Singaporeans having integrated shield plans, are other forms of health insurance kind of redundant?


This article was written by Jonathon Han and first appeared on fundMyLife, the platform that connects financial planning questions to the right advisers.

It is a very Singaporean thing to be “kiasu” not wanting to spend more than we have to. This also applies to Singaporeans’ attitudes regarding insurance. One of the most common questions that I am often asked is: Is just buying an integrated shield plan (ISP) all I need?

In other words, is it safe to presume that as long as we have an integrated shield plan that takes care of our hefty hospital bills, we should be fine?

Read Also: 5 Questions To Ask Yourself Before You Upgrade Your MediShield Life To An Integrated Shield Plan

Let’s think about what happens when we get really sick. It is true that hospital bills are usually the biggest cash outlay we see, we need to factor in other unseen costs, which are often overlooked.

Seen Cost: We get hospitalised and require medical treatment (Covered by an ISP)

Hospital bills will be covered by an ISP, which are designed to cover catastrophic hospital bills and costs of post-hospital treatment. Your medical bills and post-hospital treatment will be covered in according to the plan you purchased. This is valuable and gives peace of mind.

Unseen Cost #1: Immediate loss of income when we lose our ability to work (During treatment and recovery)

When we get sick, we might get hospitalised or need to take an extended period of time away from work for regular medical treatment. We might also require a significant amount of time-off from work to recuperate, beyond the basic annual medical leave allowances that companies usually grant. Based on experience, the time patients need range between 3 to 6 months early Critical Illnesses, and up to 6 to 24 months for advanced Critical Illnesses.

So while ISPs take care of our medical bills, income replacement is important to take care of our other living costs and bills as we stay at home to mend our bodies. A critical illness plan gives a lump sum payout upon diagnosis of early critical illness or advanced critical illness. This money can be used as income replacement while we recover.

Unseen Cost #2: Post-illness, we might need to work at a different pace (Potential income loss)

After recovering from a serious illness, we might not be able to work at the same breakneck pace as before. A medical emergency might also spur us to re-evaluate our lives and choose work that allows us to spend time more time with our loved ones.

This usually translates to committing short hours to work or changing jobs to something less intense. Most of the time, this will result in a drop in our income. Since a critical illness plan pays out a lump sum upon diagnosis of critical illness, the funds can be used to offset some of the potential loss of income as we adjust to a new lifestyle.

Unseen Cost #3: Cost of eating healthy, with supplements and organic food (Nutrition and supplement)

After recovering from an illness, you might have more stringent dietary requirements or become more health conscious as a whole. Some of us might decide to switch to organic foods or increase our supplement intake. While making healthier food choices or takings supplement might not be as expensive as we may think, depending on your specific diet, it might be more expensive than before. The lump sum payout from a critical illness payout might come in handy at such times.

Managing These “Additional” Costs

After knowing all these hidden bills, what is the most cost-effective way to resolve it? We could consider whole life insurance with critical illness and early critical illness coverage. These policies works alongside and complements your existing ISP.

Your ISP is designed to cover hospitalization and medical cost, while critical illness plans are designed to pay out a lump sum to offset your unseen costs like immediate loss of income, reduction of income, as well as costs of nutrition and supplement.

I would suggest avoid using term insurance to cover against critical illness and early critical illness as the total outlay from term insurance often will be more expensive in the long run.

If you have any questions to ask me, I’m happy to answer them over at fundMyLife!

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