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What Type Of Insurances Do I Need In Singapore When I First Start Working?

We share some common health insurance policies that your agent may try to sell to you and whether you would really need them.

Have you just started working? Most financial planners will tell you that the insurance requirements for each person is different, depending on your personal needs. If you are lucky enough to find a good financial planner, he (or she) will help customise insurance plans relevant to your needs.  The not-so-good-ones, on the other hand, may just use it as an opportunity to propose some type of high premium policies which may not be suitable for you.

In this article we seek to provide you with some guides on the different type of health insurances that you can consider.

Remember, we are talking only about health insurances, not life insurances, investment-linked policies or other types of general insurances.


I Just Started Working

 This is probably the stage where you receive the most amounts of cold calls from ex-classmates or army friends whom you never have had any meaningful conversation with. These people will call you to pitch their financial planning services, under the guise of catching up.

This is normal because you and your peers have just started working – and they have joined the insurance industry. The first thing insurance companies teach new agents is how to build up their client base. This is usually done through reaching out to friends who have just started working, and are therefore less likely to already have a financial planner or insurance agent working with them.

What you need at this point in time is to hedge yourself against the risk of accumulating a huge hospital bill due to some unfortunate incident. A private integrated shield plan is essential for that purpose. The plan uses a small portion of your Medisave contribution to pay for an insurance coverage that helps offset any potential hospitalization bill that you may incur.

Having personally known people who have suffered injuries due to sports (e.g. a crunching tackle in Sunday football), we strongly recommend that you talk to an agent for more information on this if you don’t already have a policy. There are other add-ons (such as a Rider) that you can add to your policy, but we will not go into further details because that is the job of your insurance agent.


Should I Get Other Health Insurance Policies That My Agent Said Is Important?  

An agent may try to pitch to you some other policies that he hopes to sell. Part of the reason for that is because a private shield plan doesn’t bring in much income for the agent.


Critical Illness:

One such plan you are likely to hear about is the “Critical Illness” (CI) Policy. CI basically pays a sum of money (could be lump-sum or in stages) upon policyholders being diagnosed with one of 30 selected illness or surgical procedure. Again, check with your agent on what these illnesses are.

The idea behind a CI policy is that it provide you with some money which may be required to pay for costly treatments. If you have dependents that require taking care of should you be unable to recover from these illnesses, a separate life insurance policy is required as your CI payout is generally insufficient to support their future needs.

CI is good to have, but it does come with a price tag. Also, bear in mind that there is a limit to the payout after which the policy will cease. In other words, should someone suffer an illness in their 30s and receive the full payout by the time they turn 40, he will no longer be entitled to any further payout should he suffer another illness in the future.

The premium for CI can easily amount to about $1000 a year. Therefore, you need to decide for yourself if the coverage is worth the premium. Remember, you make the decision, not your insurance agent.


Hospitalization Cash:

Hospitalization Cash is a policy that provides payout in the case that the policyholder gets hospitalized and is unable to work. A minimum length of stay is usually required before a policyholder is able to make claims.

This policy is usually relevant for self-employed individuals only (e.g. those who work on a freelance basis and are thus unable to earn income while hospitalized). For those of us who are gainfully employed by a company, it is likely that our salary will continue to be paid to us during our stay in the hospital.

If your company makes a big deal out of having to pay you when you are hospitalized, it is likely that the company itself has not taken the right steps to get the right corporate insurance policies. Send this article to your HR department so that they can learn something new.


Disability Income:

If you are unable to work for a period of time due to an accident or illness, the disability income provides a monthly payout to compensate for it.  In some countries, this is an entitlement. In Singapore, it is not. Hence, you need to make your own arrangements.

Disability Income provides you with monthly provision of income in times of need. By no mean does it negates the need for cash savings to help pay for costly treatments or other expensive arrangements you may need to make. That’s what CI is for.

Bear in mind that your definition of being ‘unable to work’ may differ from that of the insurance company. While you may consider not being able to do the work the same as being unable to perform the same high paying job that you used to have, the insurance company may deem you perfectly capable of taking on a lower paying job.

You may read more on the various types of health insurance policies and it’s fine prints here.


Each To Their Own

It is difficult to protect yourself against every possible health risks out there. Even if that was possible, it is going to cost you a lot. The most important thing you can do for yourself is to understand the basic options out there so that you can ask your insurance agents the right questions to ensure that their interests is aligned to yours.


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