In a previous article, we discussed how much an Integrated Shield Plan could cost Singaporeans during their retirement. As we discussed, Singaporeans should not only think about how much their Shield Plan costs today, but also what it could cost them over the long term if they continue holding it during retirement, when the likelihood of falling ill is higher.
Unfortunately, rising insurance premiums are also an inevitable reality that existing Integrated Shield Plan policyholders have to contend with. This is largely driven by two factors.
The first is age. As we grow older, the probability of falling ill generally increases. A 30-year-old is less likely to suffer from a chronic illness or require major surgery and treatment compared to someone who is 80. Since insurers expect older policyholders to make more claims and incur higher medical costs, premiums naturally increase with age.
The second factor is medical inflation. Medical inflation does not arise only because of general inflation, but also because of advances in medical technology. As healthcare improves, treatments that were previously unavailable or impractical may become possible. These treatments can improve patient outcomes, but they can also be expensive.
Together, these factors contribute to the rising cost of Integrated Shield Plan premiums as we grow older. This means it should not come as a surprise that policyholders who are on shield plan that covers them for private hospital eventually consider downgrading their Shield Plan.
However, downgrading an Integrated Shield Plan is not simply a matter of paying a lower premium for lower coverage.
Downgrading Your Integrated Shield Plan Does Not Mean Your Past Premiums Were Wasted
Before we even look at the factors to consider, it is worth addressing what I think is a frequent misconception about insurance: Just because you don’t claim on it doesn’t mean the premiums you paid were wasted.
This is a sentiment I sometimes hear from individuals who downgrade their plans with the regret that they didn’t manage to claim anything on it and thus have wasted the premiums they paid for it.
In my view, the best outcome when buying insurance is to secure the level of coverage that you need or want, can afford over the long term, and then never have to make a claim on it. Good health and not needing medical treatment is ultimately a better outcome than receiving an insurance payout.
A simple way to think about this is travel insurance. Suppose you buy an annual travel insurance policy for your family and take four overseas trips during the year. The best possible outcome is not that you manage to make several successful claims. Rather, it is that all four trips go smoothly and you never need to claim at all. I believe most people would rather have smooth holidays than to have claimed multiple times for delay flights, lost luggage or getting into an accident overseas.
But just because you are fortunate to have smooth holidays all the time doesn’t mean that buying the travel insurance was a waste of money. The policy still served an important purpose by protecting you against potentially high and unexpected costs, and at the very least, gave you peace of mind throughout your travels.
I believe the same principle applies to our private Integrated Shield Plan coverage. Paying for coverage and never falling seriously ill during the coverage period to require us to claim on hospitalisation bills should be seen as a good outcome.
Downgrade To Government Hospital Or Discontinue Private Integrated Shield Plan Completely?
Generally speaking, there are two ways to downgrade from a private Integrated Shield Plan.
The first is to move from a plan that gives you coverage for private hospital coverage to a plan that covers you for just Class A or B1 wards in public hospitals.
The second is to discontinue the private insurance component and rely solely on MediShield Life.
What You Give Up When Downgrading From Private Hospital Coverage
Singapore’s public healthcare system is widely regarded as one of the best in the world. However, that does not mean it has no limitations, or that private hospital coverage provides no additional value beyond just better comfort and service.
One of the main advantages of having private hospital insurance coverage is access to a wider choice of doctors and specialists. If you develop a condition that needs diagnosis and possibly treatment, such as surgery, going to a doctor in a private hospital may allow you to see a specific specialist you prefer, and possibly receive your diagnosis and treatment sooner.
For some people, that greater choice and possibly shorter waiting time is precisely what they are paying higher premiums for. This can be especially important while you are still of working age. If faster diagnosis or treatment helps you return to work sooner, the benefit is not just medical but can also support your career.
It is also worth noting that even having an Integrated Shield Plan covering Class A or B1 wards in public hospitals does not guarantee that you will always get your preferred ward. Public hospitals can be heavily utilised, so ward availability ultimately depends on capacity at the time of admission.
What You Give Up When You Do Not Have A Private Integrated Shield Plan
If you do not have a private Integrated Shield Plan, you will generally rely on MediShield Life for hospitalisation coverage. MediShield Life is Singapore’s basic national health insurance scheme. It covers all Singapore Citizens and Permanent Residents for life, including those with pre-existing conditions, and is designed mainly around subsidised treatment in Class B2 and C wards in public hospitals.
The important point is that Singapore’s public healthcare system remains capable of providing access to essential hospital treatment when needed. In an emergency, patients are prioritised based on medical urgency rather than whether they have private insurance.
What you may give up, however, is choice and convenience. If you want to choose a specific doctor or specialist, or prefer shorter waiting times for consultations and treatment because you are a working professional juggling responsibilities at work and at home, relying solely on the public healthcare system may offer less flexibility.
Your Health, Age & Budget Matter On Whether You Should Downgrade
If you already have a pre-existing condition, chronic illness, or have undergone surgery for a medical condition, downgrading your Integrated Shield Plan requires extra consideration.
In such a situation, downgrading can become a one-way decision. Your insurer may allow you to move to a lower-tier plan, but upgrading again in future could require fresh medical underwriting. By then, existing health conditions may be excluded, subjected to additional terms, or make it difficult to regain the same level of coverage you previously had.
Your stage of life matters too. If you are a working professional with young children, paying more for private coverage may still be worthwhile if faster access to specialists and treatment is important to you.
On the other hand, someone who is retired and no longer earning an income may find private hospital coverage increasingly difficult to justify. Premiums typically rise with age, while retirement income is often fixed or more limited. In that situation, accepting a lower level of coverage in exchange for more manageable premiums can be a reasonable trade-off.
There is no one-size-fit-all correct answer. Ultimately, whether it makes sense to downgrade or retain your private insurance coverage depends largely on your existing health, current age and budget. It’s worth speaking to a trusted adviser to understand more about the implications of downgrading before making any decision.
Photo Credit: iStock/tang90246
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