I acquired a shock upon receiving my invoice for my Built-in Protect plan (IP) final 12 months. Regardless that I’m nonetheless in my 30s, it got here as much as virtually S$2,000.
My IP premiums had been rising quicker than I had anticipated. I couldn’t think about what it’ll be like if I’ve to proceed paying at this growing price for the subsequent few a long time simply to take care of my protection.
Upon consulting my insurance coverage agent, she suggested me to retain my plan because it was because it gave the “highest protection” and got here with a “20% no-claims low cost”.
In actual fact, if it wasn’t for the 20% low cost, my invoice would have been over S$2,300. In order that acquired me pondering — am I preserving this plan only for the financial savings, reasonably than checking if the protection actually fits my wants and finances?
As somebody within the sandwiched technology, my husband and I typically really feel the load of elevating two younger children and supporting our aged dad and mom. Our finances must be cut up for the whole family — with our youngsters and oldsters too – and this isn’t straightforward once we’re those paying for everybody’s a number of insurance coverage. Whereas we had beforehand purchased non-public protection for the entire household for an added peace of thoughts, we additionally wanted to be sensible: what’s deemed a necessity vs a need, particularly with healthcare prices rising?
How a lot safety is an excessive amount of?
We begin by taking a look at what we have already got as Singaporeans/PRs:
- MediShield Life: designed to cowl 9 in 10 subsidised payments, with deductibles and co-insurance payable by MediSave
- CareShield Life/ElderShield: present long-term care payouts if we develop extreme incapacity.
If we wish extra protection:
- Built-in Protect Plans (IP) – covers even bigger hospital payments, particularly if we go for remedy at non-public hospitals
- Rider – reduces potential out-of-pocket bills reminiscent of deductibles and co-insurance
I discovered myself weighing the choices. On one hand, public hospitals with Class B2 or C wards already include authorities subsidies, and the payments will be coated by MediShield Life, with premiums payable by MediSave — so perhaps paying additional for an IP isn’t important.
Moreover, premiums for personal protection may climb dramatically as we age. On condition that our non-public medical insurance coverage premiums could possibly be as much as 5 occasions of our MediShield Life premiums once we hit our 70s or 80s, may we realistically sustain with the prices then, particularly if we’re now not working?
I additionally fear about passing these bills on to our youngsters — the very last thing we wish is to burden them with our excessive insurance coverage or medical payments.
Again in our early 20s when my husband and I signed up (individually) for optimum protection, we didn’t suppose that far forward about how premiums would rise as we acquired older. We each assumed the prices would keep roughly the identical, and I didn’t realise how my future duties — from elevating children to supporting aged dad and mom — would add on to my complete finances.
Once I spoke with my associates, I realised that I used to be not the one one; most of us have a tendency to purchase non-public hospital IPs and riders once we’re younger. It’s only pure that we need to get the very best protection attainable for ourselves whereas we’re nonetheless younger and wholesome, to be ready simply in case one thing surprising occurs. And in our 20s, the money outlay isn’t excessive so it’s no marvel we hardly really feel the pressure on our finances.
However as we acquired older, we watched our premiums rise and the out-of-pocket money portion get larger. That’s how we went from not feeling it in our 20s, to struggling to pay extra now. That is particularly once we’re simply 2 individuals paying for the mixed prices of protection for 7 folks in our family i.e. for two adults, 3 aged and a pair of younger children.
That was once we realised, simply because we signed up for the very best plan doesn’t imply we have now to keep it up without end.
Seeing our premiums rise sharply through the years made me realise that persevering with to pay the identical charges (just because we had already invested within the plan) didn’t make sense. That’s a sunk price fallacy.
Which was why with the most recent important improve, my husband and I made a decision to downgrade our non-public hospital IP plan to a Class A IP plan — one which we felt was a extra sensible selection for long-term affordability.
Once I noticed that the federal government had launched the Well being Insurance coverage Planner — a web based software designed to (i) assist Singaporeans evaluate medical insurance premiums and plans throughout totally different suppliers, and (ii) higher perceive the long-term MediSave and money bills essential to help their protection – I assumed if solely the planner existed once we had been reviewing our plans manually! It will have saved us a lot time.
Prior to creating the choice to downgrade, the shortage of readability in the case of future premiums and its impression on our future bills was not one thing that was straightforward to determine. It took a number of conferences with a number of brokers from totally different insurers for us to assemble quotes and evaluate our choices. This course of dragged on for a number of months earlier than we lastly had sufficient data to determine.
In distinction, we arrived at this readability inside minutes on the Well being Insurance coverage Planner.
After attempting the planner, it confirmed our resolution to downgrade our IP was certainly sound. Right here’s what it confirmed me.
My outcomes from the Well being Insurance coverage Planner (HIP)
I used to be prompted to supply 4 knowledge factors:
From there, it then confirmed me the estimated premium projections I’ll be paying over time:
Based mostly on the planner’s present projections, it estimates that by the point I’m 60, I’ll need to pay not less than $11,200 in money yearly for healthcare insurance coverage:
Contemplating that I’m concentrating on $5,000 in month-to-month bills throughout retirement, which means virtually 20% of my finances would go in direction of insurance coverage alone!
To be trustworthy, that hardly feels sustainable — particularly when the Financial Authority of Singapore’s primary monetary information recommends spending not more than 15% of your earnings on insurance coverage safety. The planner additionally highlighted that rider premiums will grow to be more and more expensive as I become older, making it tougher to proceed financing them comfortably.
Utilizing the planner, I used to be additionally in a position to evaluate my protection with different Built-in Protect Plans (IPs), and even see how the projected premiums of my present and different plans stack up. The software made it straightforward to see our protection clearly, and reassured me that switching to a Class A plan would nonetheless present ample safety whereas preserving our prices (immediately and sooner or later) extra manageable.
Because the software additionally generates projections of as much as 30 years or age 90 (whichever comes first) – rounded to the closest age decade — I used to be in a position to get a clearer view of how my prices may evolve over time.
Taking a look at these projections, there’s a very good probability I would even take into account dropping my rider sooner or later ought to it grow to be too tough for us to take care of the additional protection.
So in case your current IP premiums have additionally prompted you to consider your protection and finances shifting ahead, then it may be a very good time to check out the planner for your self.
And for these of you who’re contemplating whether or not to modify insurers, now you can evaluate your IP choices on the planner and see how the projected premiums of your present vs. different IPs stack up.
Then, if it’s essential, you may obtain a PDF copy of your report – with personalised projections and IP comparisons – and use to debate along with your insurance coverage agent that will help you make a extra knowledgeable resolution.
As a suggestion, you should use the outcomes of your Well being Insurance coverage Planner that will help you work out questions reminiscent of:
- Are we over-insuring ourselves for conditions that MediShield Life already covers?
- At what level do the premiums cease being definitely worth the trade-off towards different monetary targets?
Having a solution to those would possibly provide the confidence to see and determine how medical insurance matches into your general finances.
Healthcare planning isn’t merely about going for the very best or most costly plan. It is vital that we proceed to evaluate it as our wants and monetary duties change over time, particularly for the sandwiched technology like us who’re paying a number of IP premiums on the identical time.
Make it a behavior to repeatedly evaluate your IP and rider protection along with your advisor each few years, since premiums will rise and your care preferences could change as you age.
Check out the software out for your self right here to see what it reveals to you about your personal state of affairs!
Remaining ideas
Since I’ve simply downgraded my non-public hospital plan earlier this 12 months, I most likely received’t make one other change anytime quickly.
Nonetheless, utilizing the Well being Insurance coverage Planner helps me to higher visualise how rising premiums may impression us over a lifetime, and exhibits that sustaining our present protection could not match my finances as soon as I scale down work.
It additionally compelled me to suppose via the tougher questions: do I primarily intend to make use of public healthcare, the place MediShield Life already covers subsidised payments, or do I really want the additional insurance coverage? May that cash be higher used for different household wants or for retirement?
In my case, the planner made the impression of our premiums a lot simpler to visualise, and it helped me have a extra constructive dialogue with my husband about how a lot protection we really need – reasonably than simply assuming extra is all the time higher. Previously, his mindset was, “let’s simply preserve paying for peace of thoughts.” However after seeing the planner’s projections, he has now gained readability on how overspending on insurance coverage may go away us with much less money for different priorities — like our youngsters’ training, supporting our dad and mom, and even our personal retirement wants. Because of this, he has grow to be extra open to downgrading and even eradicating our rider sooner or later if we will now not afford to proceed financing it.
On the finish of the day, every of us must strike a stability between peace of thoughts and practicality, and never over-insuring simply because it feels ‘safer’.
So in case you’re questioning which IP works greatest for you, it’s price testing the Well being Insurance coverage Planner to know what the prices may appear like for you over time must you choose to take care of your present degree of protection.
Given the current traits in Singapore’s medical insurance scene, it’s turning into more and more essential that we:
- Plan for long-term affordability, not simply most protection.
- Select a protection that we will virtually decide to until our 70s or 80s.
Take observe that in case you select to stick with your present insurer however downgrade to a decrease ward class IP, there received’t be any new premium loading or exclusions. When you’re switching insurers, chances are you’ll must undergo new medical underwriting, so get that accredited first earlier than you terminate your current protection.
Check out the Well being Insurance coverage Planner immediately, and uncover extra useful instruments and sources right here.
You can even use Plan Life Ahead, Now! with CPF, a one-stop monetary steering platform that helps you make knowledgeable monetary selections as you navigate via life. Together with your PLAN with CPF dashboard, you may establish your monetary priorities and profit from a extra guided strategy to planning, supported by curated sources that will help you plan confidently for each stage of life.
Disclosure: This text is sponsored by the CPF Board. All opinions and outcomes from the Well being Insurance coverage Planner are that of my very own.Vital observe: Simply because I selected to downgrade my hospital plan doesn't essentially imply you must comply with swimsuit. This text shouldn't be misconstrued as monetary recommendation to downgrade, particularly as I do know nothing about your well being situation, dangers, finances or protection wants. As a substitute, please learn the article, check out the planner, and talk about with a trusted monetary advisor in addition to your family members to determine what's the greatest transfer for you.
