1 Oct 2024
SOURCE: CPF Board
Navigating health insurance can be overwhelming. How much health insurance coverage is enough? How do you determine what is too much or too little?
Staying well-informed about national insurance schemes like MediShield Life and optional plans like Integrated Shield Plans (IPs) can help you understand how to protect yourself from hefty medical bills.
By knowing your options, you can choose a plan that fits your needs and budget. This ensures that you are not caught off guard by unexpected costs. More importantly, it also gives you the confidence to make decisions about your healthcare options, without overstretching your finances, ensuring peace of mind for you and your loved ones.
Lifelong coverage with MediShield Life
MediShield Life is designed to provide lifelong coverage for all Singaporeans from birth. It’s a comprehensive safety net that includes coverage of any pre-existing conditions.
Benefits of MediShield Life:
- Protection from large bills: Helps cushion the blow of large healthcare bills, from day surgeries to community hospital stays.
- Covers selected outpatient treatments: Critical care, including expensive, recurring outpatient treatments like kidney dialysis, cancer drug treatment and radiotherapy, is within your reach.
- Fully payable through MediSave: Premiums are entirely payable using your MediSave, so you won’t have to worry about forking out cash.
Insurance supplement: Integrated Shield Plans (IPs)
An IP is an optional health insurance coverage provided by private insurance companies. IPs provide coverage on top of your MediShield Life, should you wish to stay in private hospitals or in higher-class wards (Class A/B1) in public hospitals. It also means paying additional premiums, on top of what you are already paying for MediShield Life.
When making a decision to buy an IP, evaluate your needs and be mindful of the long-term costs that increase significantly with age.
Always consider coverage and long-term affordability
Remember to always consider coverage and the long-term affordability of insurance plans. A good rule of thumb is to allocate no more than 15% of your take-home pay towards insurance protection.
Apart from medical insurance plans such as MediShield Life and IPs, you may also need income protection to help cover expenses and maintain your lifestyle if you become ill or disabled. Here’s a quick guide to help you:
- Death and Total Permanent Disability (TPD): Aim for coverage of 9x your annual income
- Critical Illnesses (CI): Look for a plan that covers 4x your annual income
Lastly, as your life circumstances change, so will your insurance needs. For example, you may want to be covered until your youngest child completes university or is financially self-reliant. Make it a point to regularly review your insurance policies to ensure you have adequate coverage.
This process will naturally guide you to explore options like term and whole life insurance, which provides financial security during emergencies when you pass on or become totally and permanently disabled.
Term insurance policies are a cost-effective way to ensure protection, especially when lower premiums are "locked-in" at a younger age. However, term insurance only covers a specific period.
Whole life insurance provides coverage for your entire lifetime, but is costlier because it includes a savings component, known as "cash value". Part of the premium you pay is invested to build up this cash value, which grows over time. Whether you opt for term or whole life insurance, ensure your choice aligns with your financial goals and provides financial assurance for you and your family.
By understanding the basics, you can ensure your healthcare coverage serves you in the long run, giving you the security and peace of mind that you deserve.
The information provided in this article is accurate as of the date of publication.
