You should have an Integrated Shield Plan
InterestGuru.sg strongly encourage you to have an Integrated Shield Plan and Integrated Shield Plan rider. Taking care of your hospitalisation and medical bills are extremely important. Furthermore, this upgrade of your MediShield LIFE can be done with MediSave fund.
That being said, just an Integrated Shield Plan alone is not entirely sufficient for all your medical and hospitalisation needs. There is still a Co-Insurance and deductible charges that have to come out from MediSave or Cash.
Accessed the updated FAQs on Integrated Shield Plan and Integrated Shield Plan riders.
We break down the 4 things you should take note of even after having an Integrated Shield Plan:
Cash is required if there is no rider purchased
If you purchase an Integrated Shield Plan without a rider, you will be covered about 70% of your hospitalisation bills. You will still need to pay for Deductibles and Co-Insurance.
- Deductible – This is a fixed amount payable by the insured before the insurer pay for the remaining expenses. The deductible is capped at S$3,000 each policy year.
- Co-Insurance – A percentage of the claimable amount (up to 10%) have to be paid on top of the deductible.
To fully cover your hospitalisation cost, you will need an Integrated Shield Plan rider that covers 100% of deductibles and co-insurance. We strongly recommend taking up an Integrated Shield Plan rider.
Read about: 5 Reasons why an Integrated Shield Plan is your first priority *New*
There is a waiting period
Integrated Shield Plan has a waiting period (usually 90 days) after it is accepted by your insurer. This means that benefits offered by the ISP will not be paid during this period if you are hospitalised. This prevents abuses from people buying the ISP when they are aware of a change in health condition and making a claim immediately.
The rationale: If the cost of insuring goes up due to claim made, the premium for the coverage will have to increase. This will be unfair to those which get coverage while they are healthy, only to have premium increased heavily over the years due to claims from people abusing it.
Note: It is also important to declare your health condition truthfully when taking up an Integrated Shield Plan. This prevents future rejection of claims by the insurer in the event of a dispute.
The insurance premiums are not levelled
Integrated Shield Plan and its rider premiums increase with age. The older you get, the higher the premium you have to pay for continual coverage. ISP is relatively cheap or cashless for anyone below age 40 and should be taken up when you are still healthy. Depending on the choice of coverage taken, the cash layout can go into the thousands in your late 60’s.
Insurer are know to have exclusion clause for a pre-existing condition. ISP rider applications are usually rejected outright if one has pre-existing conditions. Hence, get covered while you are still healthy.
No lump sum cash payment for illness
Lifestyle and health conditions may not be the same during or after recovery from a major illness. While an Integrated Shield Plan and rider can take care of medical and hospital bills, there might be irreversible changes to daily living and income.
Other insurance policies such as Whole Life Policy or Investment Linked Policy are designed to address this issue. Such policies offer lifetime assurances by having a lump sum paid out when a major illness strikes. If everything goes well, the policy will continue to accumulate a lump sum of cash for withdrawal in the later stages of life.
This allows individuals to enjoy the effects of compounding returns over a long time horizon while paying a premium for a fixed number of years.
Alternatively, a Term Insurance allows for a cheap boost to health and protection coverage at the cost of having no cash value. This means that if there are no claims made while the policy is valid, the premium paid is not recoverable. The premium for Term Insurance is paid on a yearly and may not be practical due to increasing cost at an older age.
The Final say
Have your Insurance portfolio work out when you are younger and set aside a budget for it. Take advantage of small regular contribution, instead of forking out a huge sum in your later years.
Remember: Don’t leave setting aside a budget for financial planning until you need to make a claim, it would be too late.
Related article: 3 Best Integrated Shield Plan (and riders) in Singapore for Insurance Coverage (2020 Edition)
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