There seems to be a recent rise in the request to understand more about the difference between MediShield and our Private Medical Plans.

The reason for that I do not really know but one thing for sure, there are still many who do not understand the “As-Charged” features and its no link to the Deductible and Co-Insurance.

What Does As Charged Mean? Does It Also Mean That My Hospital Bill Is 100% Covered?

If you have read my previous post, you would have understood what does As Charged mean and the answer to the second question is a no as the claimable bill is still subjected to Deductible and Co-insurance.

And if you are looking for something extra to take care of either the Deductible and/or Co-insurance, you would need to get a Rider on top of the Main Medical Plan. More about that later.

A deeper understanding if you need for the As-Charged features would be that there is no longer a limit placed on the amount that can be claimed each day for hospital stay, surgery and medical procedures. What this means is that hospitalisation expenses will be paid according to what is billed. 

No split bills from each individual hospital items to worry about here but only the Deductible and Co-insurance on the final claimable amount.

In another simpler explanation would be that, as long as you are staying within your Ward Entitlement (e.g. entitled to Ward A1 and receiving the treatment entitled to that type of ward), every bit of your hospital treatment will be 100% covered. It’s only at the end of the hospitalization – the final total claimable amount is subjected to Deductible and Co-insurance.

Still unclear?

In number sense, and you are warded to Ward A and your medical plan entitle you to that, example:

• Room and Board and its related Medical Services – $500 (fully covered)
• Surgicial Procedure – $5000 (fully covered)

Final Bill – $500 + $5000 = $5,500 is the final claimable amount billed to you.

Your Medical Plan with Deductible of $3000 for Ward A and Co-insurance of 10% would mean:

• Out of the $5,500, you have to take care of $3,000, leaving the remainder of $2,500, you will then take into account co-insurance 10% of the $2,500 giving you an amount of $250
• So the total you have to take care from the $5,500 bill will be $3,250. The remaining $2,250 will be taken care of by the Medical Plan.
• As you only need to pay the Deductible once in a policy year, if there’s any more hospitalization under the same Ward Type, you’ll just need to take care 10% of the final claimable amount for the rest of the policy year, subjected to the maximum claimable amount under your Medical Plan.

In brief, Deductible is the minimum amount that you would need to pay for your hospital/medical bill when you make a claim. It applies to the claimable amount rather than the incurred hospital bill. You only need to pay the deductible once in a policy year.

Co-insurance is the amount which is not covered by the policy and which you need to pay after the deductible (see below) is met. It is usually expressed as a percentage of the expenses.

Take Up A Rider To Take Care Of The Deductible And Co-insurance

A rider is usually available when you take up a Private Medical Plan. The premium for the Rider is usually paid for by cash mode only. Some of the benefits offered under each Private Insurers would be different therefore it would be good to do your own studies before you make a commitment as a Medical Plan is meant to be taken in the long term.

The Use Of The Rider

The rider is taken up to take care of the Deductible and Co-insurance. Before the rider, it would mean to most people that any small bills are not claimable in the first instances and big bills will still need a certain level of burden.

Therefore with a Rider, you can use it to make small bills claimable and take real good care of big bills (either 100% or subjected to a cap) or be given a daily cash benefit should you decide to downgrade to a lower Ward Type.

Do note that the premiums of the Rider is not guaranteed and subjected to claim experience. Based on my personal experiences with many clients these few years, a Rider that takes care 100% of the medical bill will have the highest chances of premium being increased (easily 20-30%) in a short few years period.

For most people with the longest healthy status would be quite affected by this as the increment is passed on to the whole cohort (irregardless of any claim experience).

Pro-Ration

Another thing to note if you are taking up a Rider under a lower Medical Plan (e.g. Maximum Ward Entitlement is only Restructured Hospital – Ward A, this would mean that you are not entitled to any Private Medical Institutions or Hospital). What this mean is that there’ll be a Pro-ration (a certain % that you need to take care if being given a higher class treatment).

This Pro-ration factor will not take into account your Rider even if it take care 100% of the medical plan. As the rider clearly follows your maximum ward entitlement and its necessary medical treatment under it. Therefore if you go for a higher or better treatment, your medical bill is split and that amount is not claimable under your Rider.

How to resolve this? Get the Medical Plan with the ward entitlement in a Private Hospital. In this manner, you do not have to worry about being short-changed should you be asked to go for a Private Clinic Treatment even under a Restructured Hospital.

In Summary

Armed with bits of information from here, I do hope it will give you a better understanding of Private Medical Plan and the Rider. At least should there be any claims, you can be sure you have done your planning well and not being short-changed or burdened in the long term.

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This month is one of the few times in the year whereby some PolicyHolders get the letter from our company to notify that their Dependent Protection Scheme or DPS is due for renewal and that they should make sure that their CPF-Ordinary and/or Special account still has sufficient fund to pay for the premiums.

The Issue With People Whom Understand The Plan

Sometimes I feel that Ignorance is Bliss is a better choice because after most PolicyHolders know what is the Dependent Protection Scheme all about, most of them decide to opt-up for the plan… citing the two common reasons like:

• Premium paid is down the drain
• Nothing will happen to me before age 60

Without ever considering the positive side – a low premium for a high sum assured or how useful this lump sum of money is to the family in times of need.

What Is Dependent Protection Scheme All About Then?

As cited from the CPF Board website, the Dependent Protection Scheme (DPS) is an affordable term insurance scheme, as compared to those offered commercially, that provides insured members and their families with some money to get through the first few years should the insured members become permanently incapacitated or pass away.

What Does It Cover?

DPS is an optional term insurance (which is why most will choose to opt-out) which covers CPF members for a maximum sum assured of $46,000 (not really capped at this amount as bonus sum assured will be added in later years – please do confirm this with your insurance company) up to age 60.  The coverage is worldwide.  The DPS benefit will be paid out if the insured member passes away or becomes permanently incapacitated such that he or she can no longer work.

How Did You Get Into This Plan?

You can get into this Plan as early as 16 years old when you make your first CPF contribution and this process is usually automatic. Once you are in, you will get a welcome package that consists of a Welcome Letter, An Opt-Out Form and a Change Insurer Form. So the moment you get into this plan, you already have a choice to opt-out.

In Simple Terms, the benefits of having a Dependent Protection Scheme are:

• Cheap and Affordable for Most Singaporeans
• Premiums do not need to come from Cash
• In terms of insurance coverage, you are covered against Death and Permanent Incapacitated (which is not the same as Total and Permanent Disability)

Which Brings Me To This Interesting Benefit – Permanent Incapacitated…

Frankly speaking, I was like the majority of the PolicyHolders who do not really see the need of having that Plan as I thought that the plan only covers me against Death and Total and Permanent Disability (TPD).

My impression changed when my Senior explained to me that the plan is rather unique because of the Permanent Incapacitated benefit. According to the definition is that incapacitated means to be lying ill and helpless which is different from the definition of TPD.

This benefit to me would mean that in terms of being able to claim because I am unable to work because of a permanent illness is easier as compared to be permanent disabled! You see how good this plan is!

The Simply Unexpected!

Talk about life being simply unexpected! As mentioned earlier on that most people would feel that nothing will ever happen to them before the age of 60, truth is… that’s not true! I had this personal experience whereby earlier in the day, one PolicyHolder came to told me about nothing will ever happen and later in the day, a family member (not related to the previous PolicyHolder) came to make a death claim for DPS for the Father who is before the age of 60!

Should You Keep Your Dependent Protection Scheme Plan Then?

My answer is a simply yes! Given the low premium involved, no cash needed (where most people will feel that cash is king), the significant insurance coverage given (though not necessarily high) can help the family members in times of need.

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It’s good to notice the increased level of knowledge for insurance products (in this case – Hospitalization Plan and Critical Illness Plan) from Singaporeans. They are asking very good questions nowadays!

The Concern And The Questions

Singaporeans are starting to know the real importance of having both a Hospitalization Plan and A Critical Illness Plan as these two plans form the basis of financial planning.

But with the recent exposure in the media that one may find it hard to make a claim for cancer (during the initial stages or does not fit the definition of Major Cancers as listed in most Critical Illness Plan in the market) – Singaporeans are wondering if they should ever consider having a Critical Illness Plan in the first place!

That’s the question that they are asking themselves or me when I explain the importance of getting a Hospitalization Plan and a Critical Illness Plan together.

What You Can Learn From Actual Statistics (Ministry Of Health)

1. Top 10 Conditions of Hospitalization

Based on the statistics as shown on the site, Cancer, Stroke and Heart Disease form part of the top 10 conditions for being hospitalized in Singapore. And this has been the case since 2005.

2. Principal Causes of Death

Also based on the statistics as shown, the above mentioned conditions are part of the principal causes of death for Singaporean.

What Do This Statistics Mean In Terms Of Insurance Planning?

In simple terms, if ever there’s really a chance that you are hospitalized because of Cancer or any other form of serious illnesses, you will definitely need lots of medical attention and treatment, and just to name a few, e.g. Surgical Operations, Medication, Inpatient and Outpatient Consultations, Chemotherapy and Radiotherapy.

And most of these treatments and its related costs can be well taken care of by a good Hospitalization Plan.

Being down with a positive diagnosis of Critical Illness does not mean end of the road for you. With early detection, state-of-the-art treatments & therapy and a strong will to survive, the chances of surviving through this ordeal are definitely high!

But along the path of recovery, part of the financial burden that you’ll face with a Critical Illness would be:

• Expensive treatments and therapy you may need from external source (e.g. Engaging a Specialist from abroad to fly in to take care of you!)
• Lengthy medical care
• Increased cost of rehabilitation
• Other non-medical costs like:
  • Re-modeling your home to take care of your disability needs (e.g. Stroke)
  • Loss of income as you will be totally be absent from work during the cost of treatment
  • Difficulty in meeting loan repayments (credit cards and home loan) and monthly expenses
  • Hiring a maid or nurse to take care of your daily needs

Therefore the harsh reality is that unless you have enough savings to tide you through this, else you will definitely need a Critical Illness Plan that can give you a lump sum upon claim and also when you needed it the most.

You can also take a Critical Illness Plan as an Income Replacement Plan as the road to recovery does not take mere months but rather a few years and the common practice of any company is only to allow you to have 6 months of medical leave. Which, by then, as you can guess it, you will need to find a new job!

Putting The Two Insurance Plans Together

If there’s a diagnosis of an illness today and you need some form of long term medical treatment or operation in a hospital, you can depend on a Hospitalization Plan.

Should your condition get worse beyond a standard hospital care, you can depend on a Critical Illness to provide you with the necessary funds for advance medical care and also ensure that in terms of income, debts repayment or private care, you know you have the monetary ability.

Therefore do not think you only need a Hospital Plan or a Critical Illness Plan. You need both type of insurance plans!

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For the last few days, there have been quite a few Clients who have been asking me about the idea of getting a Private Health Insurance Plan and if it’s feasible to do so.

I appreciate their interest in getting a health insurance plan and as I have shared in my previous post on the basic fundamentals of Financial Planning – getting a health insurance plan is a must-must to take care of huge medical bills, on top of a Critical Illness Protection Plan.

Why Is A Health/Medical Insurance Scheme So Important?

To put in simple terms to understand, if there’s a hospital bill of $100,000 today right in front of you, would you

• Want to take care of this bill 100% on your own accord or
• Split this bill among your family members (in equal shares and hurt each other feelings…) or
• Have a Health Insurance Plan that require you to pay out only $12,700 (assuming $3,000 deductible and 10% co-insurance) and have the rest of $87,300 taken care of by the Plan?

If I am you, I would rather have a Health Insurance Plan to take care and even if I do have to split the $12,700 among my family members, it’s easier to do so now!

But Hey Hold On… Does This Medical Bill Of $100,000 Really Exist?

To put it bluntly, if you are keen in surviving (especially in areas like Cancer treatment), this medical bill of $100,000 is very real!

I do have Clients who have given me real time feedback on the actual cost of Cancer Treatment in a Private Hospital, and that figure can easily reach $200,000 to $600,000 just to keep the Patient alive today!

So, What’s The Differences Between The CPF’s MediShield That I Have And That Of A Private Insurers’?

As explained under the CPF Main Site, Medishield is supposed to help Singaporeans to pay for medical treatments at Class B2/C in restructured hospitals. Meaning that if you are keen to seek treatment at Class B1 or higher level, you have to get that coverage from a Private Insurer.

In terms of benefits wise, you’ll definitely be getting more coverage and benefits from a Private Insurer as you will be paying a higher premiums as compared to Medishield’s.

Some of the Benefits in terms of differences and worth mentioning will be:

• Higher Limit Per Policy Year (Medishield is covering only $50,000 per policy year)
• Higher Limit Per Lifetime (Medishield is covering only $200,000 per life time)
• Maximum Coverage Age (Medishield is only covering you till 85 – age next birthday)
• The “As Charged” features as compared to Limits under the benefits for Medishield
• Emergency Hospitalization Outside Singapore (for those who travel frequently)
• Pre-Hospitalization Specialist’s Consultation, Diagnostic & Laboratory Services that lead to hospitalization within 90 days and Post-Hospitalization Treatment (max. 90 days after discharge)
• Riders to help take care of the Deductible and Co-insurance.

Each Private Insurer also offer additional benefits for their Medical Plan, so it would be best to consult their Financial Advisors for more details and to get a plan that’s suitable for you.

Some Frequently Asked Questions That You Need To Know

1. What is Deductible? The deductible that you are seeing for each Ward Type would mean that if you are staying in that particular ward, should your final first bill (e.g. $800) fall below that stated amount (e.g. $1000 for a Ward C), you will not be able to get any claims from your plan. It will still be advisable to file that bill with your Private Insurer so should there be another bill that can be accumulated to be above the limit, you will be able to make a claim (please see Co-insurance).
2. What is Co-insurance? This is normally a set percentage for you to take care of the remaining bill after you have settled the Deductible. E.g. A deductible of $1000 for Class C and Co-insurance of 10% would mean that if your first bill is $1500, you will need to pay $1000 first and then 10% of the $500 ($1500 – $1000). So in total you will be paying for $1050 for that first bill. If you do have another bill in the same year like $1000 in the same ward, you will be only paying 10% of that $1000 now.
3. What does As-Charged mean? This would basically mean that there’s no claim limits to the benefits stated. As you need to understand is that there’s medical inflation and so charges will sure to go up. If there’s a limit in your plan e.g. $450 per day for a normal ward and if the charge is below that, you are safe but should that hospital decide to increase to $470, the difference of $20 will be coming out of your pocket.
4. Does As-Charged Mean That The Bill is 100% Taken Care Of? The answer is No. This would only mean that there’s no separate bills to personally take care of. If you need to have the bill taken care of with the least worries, the only method is to include a Rider in your Medical Plan.
5. Why Can’t I Pay My Main Plan’s Premium In Full With My Medisave Account? This is part of CPF’s regulation that you can only use up to a limit of $800 per person per calendar year. With effect from 01 December 2008, for insured person aged 80 and above, the Medisave Limit is increased to $1150.

In Conclusion

If you are worried about escalating healthcare costs and medical inflation and also about the burden when a certain illness is serious or prolonged, it’s always wise to have a Private Insurer’s Medical Plan on hand.

If you are worried that you are paying too much or that the money is down the drain if there’s no claim eventually which is really the monetary effects, you should consider if there’s a huge medical bill like $100,000 someday, would you be glad that you have gotten a private medical plan sooner?

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In the last post, I have written the type of loading and exclusion you may be getting if you have health issues like Weight Problem, High Blood Pressure and High Cholesterol Levels. I have also written some simple guide to help you to ace (sort of…) the medical checks so that you can get the insurance coverage you need.

How are you finding it? Good? Useful?

If you have not read it, this is the link again and hope that you will find it to your benefit >> You Are Unhealthy For Your Insurance… What Happen Now? Part 1 of 2

And in this concluding post, I will be giving you a few more scenarios and also a simple guide to help ace that medical check. Enjoy…

What Happen When You Are Unhealthy For Your Insurance (Part 2 of 2)

So if you are unhealthy because you are suffering from:

Just Had An Operation

• If you had an operation either from the head to the toe, high chances will be that your application for both your life and health insurance will be postponed till a few years later (around 5 years after your operation), and also preferably that you are fully discharged and have a good medical report to support your application.
• This may sound unfair but insurance companies do have the right to protect their interests in any case that you can have a relapse in the near future. Their stand: It’s better to be safe than to be sorry.
• If you need that insurance coverage badly, it would be wise to have a good medical report and personal note written by your doctor to certify your current health status and also to provide some assurance. Next step will depend on the negotiation skills of your Advisor and also on the coverage amount of your application. Too high sum assured = High Chances of Rejection.

Gout

• In our context, Gout is usually termed as a medical condition belonging to the Rich. Reason being that most of the time, those whom we have served and who have this are mostly clients who have certain level of wealth status, enjoy good and rich good (e.g. liver) and have the need to entertain others.
• To process your insurance application, you will be required to go for a full blood test to check on your Uric Acid Level. And from your Uric Acid Level, you can roughly access your current health status as to how serious your Gout is or even the potential health risk you may be facing like Diabetes.
• If the level is moderately high, be expected to get some loading (an average of 25% onwards) and/or some exclusion (normally to your coverage for Total and Permanent Disability). Chances of removing the loading are quite slim as there is a high percentage of getting it back.
• To ace the medical checks, I will normally recommend a week of strict healthy diet (free from those animal internal organs and beans), exercise and plenty of fluids to help detox the body.

Growth, Lumps or Cyst

• Do note that a normal growth, lump there and there or even a cyst can lead to some exclusion to your insurance application, e.g. exclusion of breast cancer under a Critical Illnesses if there’s any lumps or cyst (even if its benign at the moment).
• On a lighter note will be a loading if you can produce a good medical report.
• The practice is normal as insurance companies are worried that the growth can become cancerous anytime soon prior to any plans for removal or operation.

If Both Of Your Parents Have The Same Illness Before The Age 60

• Even if you are perfectly healthy at the point of application, there will be a high chance of having exclusion or loading to the same illness as what your parents are having. Reason being that, there’s a certain percentage that it can heredity.
• If your parents got the illnesses after the age of 60, insurance companies are willing to take it on the note that its due to old age.

I would like to go on with more scenarios but as you can guess it… as long as you are unhealthy, you will be either getting a loading or exclusion for your application.

And somehow, I guess at this juncture, you may be feeling that its not worthwhile to get any insurance coverage with so much limitations and exclusions. Do note that different insurance companies have different treatment against medical conditions as it depend on their risk experience.

But what I can assure you is that, as long as it’s not a direct rejection, having a certain insurance coverage approved would mean that having only to pay a rather low premium, you have an instant coverage of “many-times” of what you have just paid. It’s definitely better than having that money kept at the local bank.

Also an additional note is that if you have any intentions to not declare your health conditions (be it minor or major), you may run into risk of having your claims (if there’s any) rejected as long as the insurance company – so be Truthful!

Lastly, instead of worrying all this, how about getting your insurance coverage when you are healthy now and when you are young as well so as to save the premiums on a long term basis!

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Congratulations on making that “big” decision to purchase your life and health insurance (after much budgeting and persuasion)!

But… You have became unhealthy for the application so what may happen…

After 4 years of being in this industry, I have came across a wide range of clients who have such health issues, and as their servicing agent, sometimes, its my duty and obligation to help negotiate for better terms so that they can go ahead and get the coverage needed!

Anyway the purpose of this post is not to comment on the negotiations that I have gone through (if you like to know for your own purposes, you can comment here and I will put up on the next post) but to let you have a rough feel that if you have became unhealthy, what will normally happen to your life insurance application when you really need to get one.

And if there is a need to go for a medical check, I will be offering a short guide on how to ace (not really 100% effective) the checks.

What Happen When You Are Unhealthy For Your Insurance (Part 1 of 2)

To list out all the illnesses and its complications to your insurance can be exhaustive so for this moment I will be giving a general overview of the common illnesses and what you can expect.

So if you are unhealthy because you are suffering from:

Weight Issues

• To know your current BMI (body-mass-index), you can click here to use the calculator. If your BMI is around 25, this is a warning sign but not much of a worry for your application. But should it be higher around 27 and below 30, be expected to get a loading of a minimum 25%. This loading can go as high as to 125% so be careful! This loading is necessary as many healthcare professionals link obesity to many potential health risks (= potential insurance claims)
• Are there any ways to tackle the loading? Afraid not as every medical checks will need you to take your weight. Unless you are very sure you need to get an insurance soon, and you are willing to exercise and lose some weight before the check.
• My suggestion is that if you are “really” okay with the loading, just take it on and once you have lost some weight to the normal range, you can ask for a removal of the loading later.

High Cholesterol Levels

• Cholesterol levels are normally associated with your normal diet. If your diets are rather protein-rich, be expected to have elevated cholesterol levels. How the doctor will check for your cholesterol levels will be through a full blood test (which you may have to fast for at least 10 hours). If you have a chance to go through the readings of your cholesterol level, you can refer to this site (What Your Cholesterol Levels Mean) to see if you are healthy.
• The complication for your insurance application together with a high cholesterol level is usually a loading. And you can also remove this loading if you are able to show a normal cholesterol level after a year or so in your routine health check.
• To ace the blood test, I will normally suggest to my clients to go for a week-long detox diet and exercise. During this period, you have to control whatever you are eating: Less fatty meat, more green vegetables, less eggs, more fruits, ample sleep and do some exercises like brisk walking and such.

High Blood Pressure

• One of the common problems that many clients face and is also known as a silent killer. Why is that so? Till date, there are no known causes for this condition and it may just come knocking on your door when you decide to do a routine health check.
• If you have done a check recently, if your blood pressure is less than 120/80 mm Hg, it is generally considered ideal. Levels higher than this may increase your health risk for cardiovascular disease.
• Once you have it, chances are that you’ll be on long term medication to keep it under control and many healthcare professionals deem this condition as a potential risk for Stroke and Heart Attack.
• When it comes to life insurance application, there’ll be a definite loading (normally higher than that of high cholesterol levels) and chances of removing this loading are rather slim as well unless you can prove a clean bill of health (without the need of medication) for the next few years.
• When it comes to health insurance, there’ll a high chance that an exclusion (anything related to High Blood Pressure will not be claimable) will be imposed.

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When you buy any life insurance plan, the basic benefits are that you are covered against Death and Total and Permanent Disability. So do you what does this insurance term – Total and Permanent Disability – mean to you?

The General Definition of Total And Permanent Disability (TPD)

It would practically mean that the loss of a pair of limbs (inclusive of eye sight) and being unable to work continuously for six month and thereafter. This, of course, must be certified by a certified Medical Practitioner. If the definition here differs from what you should know, please do refer to the Product Summary of your life insurance and it’ll be explained there.

The General Exclusion For Total And Permanent Disability

Do you know that, in Singapore, the coverage for TPD will cease the moment you have reached 65 years old whereas the rest of the coverage like Death or against the 30 Critical Illnesses will still continue.

So Is Having The Coverage For TPD Important?

Life is full of uncertainty and you’ll never know when such an unforeseen circumstance like a stroke will hit you to be permanently disabled – you lose your job permanently, loss of income for your family, you are very much alive and there’ll be a definite financial difficulties as long as you are alive.

Therefore, having a coverage for TPD (some insurance companies will pay a lump sum whereas others may pay a certain limit per month or per year) is beneficial in making sure that you have enough financial assistance to take good care of yourself while you are down.

So Why Does Total And Permanent Disability Cease To Continue After Age 65?

This is a very good question that I, myself, do not have an accurate answer. In my personal opinion (I may be wrong) is that, the health risk for people to have Stroke or Alzheimer’s Disease (Total and Permanently Disabled) is tremendously high, which could have a serious financial impact on insurance companies to sustain this risk. Therefore they decide to have this general clause of having it till age 65.

Stroke And Alzheimer’s Disease Are On The Rise, So How Do I Get Myself Covered After Age 65?

The ElderShield Plan

If you are concerned about getting covered after the age of 65, there is an initiative taken by the CPF Board to help take care of Singaporeans in terms of severe disability, that is the Eldershield Plan, which is offered automatically to Singaporeans and PRs who are CPF members and have turned 40 years old.

The premium is made annually through your Medisave Account. You can also use also use your Medisave savings to pay the ElderShield premiums for your parents, spouse, grandparents and children.

What You Need To Know About The Premium Payment and Coverage Term?

Once you are into this plan at the age of 40 or before 56, you’ll just need to service the premium till the age of 65. The premium that you went in, according to your age at that time, will be locked in, which means that you will pay the same premium throughout, unless you choose to upgrade your plan.

If you go in after the age of 56, you will be servicing a 10 year premium term.

If you are interested to know the premium rates, you can click on to know more >> Eldershield

Once you have finished servicing the premiums, you will be covered for the rest of your life!

Under this plan, there are two choices of plan which you can get covered for:

• $300 per month for 60 months or
• $400 per month for 72 months

And you will entitled to the payout when you are unabled to meet at least 3 out of the 6 activities of your daily living like:

• Washing : The ability to wash yourself in the bath or shower (including getting into and out of the bath or shower) or wash by other means.
• Dressing : The ability to put on, take off, secure and unfasten your garments and, as appropriate, any braces, artificial limbs or other surgical or medical appliances.
• Feeding : The ability to feed yourself food after it has been prepared and made available.
• Toileting : The ability to use the lavatory or manage bowel and bladder function through the use of protective undergarments or surgical appliances if appropriate.
• Mobility : The ability to move yourself indoors from room to room on level surfaces.
• Transferring : The ability to move yourself from a bed to an upright chair or wheelchair, and vice versa.

Hey… Wait… It Seems Like It’s Quite Hard To Meet At Least 3 Out Of The 6

This is the most common concern that I get from the clients that I have met. It’s true in some sense as you need to be severely disabled in order to get the benefits. But on the other hand, if the benefits are so easily obtainable, will any insurance companies be willing to take on this risk? There has to be a balance somewhere. Do you agree?

The Positive Comment From A Client

As hard as it is to convince many others on the benefits of having the Eldershield Plan, it’s good to have a client who is very positive about the idea of having the ElderShield Plan and even upgrading the Plan by adding on the Eldershield Supplements.

Her positive comment is that:

“Life is unpredictable… You’ll never know what will happen. Life is so stressful nowadays. You can easily get stroke and alzheimer’s diseases nowadays (she gave me the idea to type this post). Once you get those, you will have loss of income and you will need people to take care of you for life… where to find the money to support that? Eldershield is a good plan as it offers a monthly benefit. Eldershield Supplements are good as they enhance additional payouts and even extend the payout term. I am all for it!”

Those words really touched me! I even asked her about the high premium rates that she’ll be going in. Her answers are simply that if something really happen, all these premiums are well paid. If not, at least she knows she is healthy all this while and all the premiums are paid for a good peace of mind.

Well said indeed!

So are you ready to be covered in Eldershield and be covered against Total and Permanent Disability after the age of 65?

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Do you know what’s Investment-Linked Plans (ILPs)?

Whatever the case is, this plan can either help you to make your money work real hard and make you smile or totally dry up your money (suffer a loss) and leave you cursing (at the company or the Advisor).

I am writing this post with great disheartening that there are many Advisors who are still selling this plan to Clients who are:

• totally non-risk takers (risk averse)
• short term savers
• ignorant of the sale charges of the plan and the advisory fees (commission)
• thinking that this kind of plan is a pure Savings plan and the funds that they put in (monthly or lump sum) are 100% capital guaranteed which means that they will still get back their sum invested if no bonuses are given or the funds are not performing at all!

So Do You Know Really What You Are Investing?

My Chat With A Client Who Cried

I was speaking to a Client (she’s a foreigner on a work permit and with plans to stay in Singapore for 3 years). She was approached by an Advisor at a road show and was given a very positive advice:

1. To set aside $300/month for the next 3 years and expect a higher return than bank savings
2. Into a “Savings” Plan and is Capital Guaranteed
3. She is buying into companies (equities) who will be making money and giving her part of the profits every year ( a sure-get!)
4. The commissions are very low – only $5 a month and there’s not much sales charges (wow!)!

She’s into her one-year-plus anniversary for the plan and she had the intention to put more money (more than 80% of her monthly income) into this “savings account” and was asking for a Bank Statement through one of the Customer Service Officer (CSO). This CSO is a bit stunned and I was asked to explain everything to her on the nature of the plan.

After doing a review for her, because on the declining economy and the investment funds, her $4500 savings is standing at a current value of $1500. After hearing this, she was stunned and loss of words! Next, tears fell like the pouring rain!

Understood from her (having to calm her down and lower her raising voice)… This money was meant for her only Daughter’s future education and with such current cash value, if she does need the money now… she will be having a very big loss! She also said that the Advisor had painted such a rosy picture of the plan that she cannot believe what I was saying.

She has only been told of the positive benefits whereas all the negative aspects are written in the Proposal Form which she cannot fault the Advisor (because she never read it as well)!

The Truth About Investment-Linked Plans (ILPs)

To help people to understand better about the real nature of Investment-Linked Plans and to prevent such incidents from happening (though not really 100%), I will be dedicating this post to help you understand the positive and negative benefits of ILPs.

Nature of ILPs

• You are usually buying into Unit Trust which may comprise of Equities-linked (potential high risk gives potential high returns) or Bonds-linked (generally linked to Government typed and is more secured). The typical nature of Equities and Bonds is like a See-Saw. If Equities do well, Bonds do not and vice-versa. This is usually the case but with current economy, we do see both Equities and Bonds behaving the same.
• You can go into ILPs either on a monthly mode (to enjoy dollar cost averaging) or a single lump sum mode (to enjoy buy at low and sell at high).
• You can always do a lump sum top-up (minimum sum required) or increase/decrease your monthly sum or stop totally to let the funds outpeform itself in long term (sales charges may apply).
• There is basically no lock-in investment period, e.g. sell everything or part of the units as long as you are comfortable with the profits.
• ILPs are very transparent in its transaction in terms of e.g. the sales charges, the mortality charges (how much of your premium is set aside for protection), the annual management charges, the bid-offer spread and advisory fee.
• ILPs give you freedom to do free switches (a certain amount) from funds to funds. This is especially good choice when your funds are not performing at all.
• ILPs do give a potential higher returns as compared to Endowment plans, Local Bank Saving Interest Rate and Fixed Deposits rate in a long run.
• Do understand that past performance is not indicative of the same performance in the future

What You Need To Know Before You Go Into A Investment-Linked Plan (ILP)

• Do a Risk Profile Test. This is required and a must-must. Do this test to really understand your appetite for risk. E.g. if you are a true risk-taker, by all means, go into a large percentage of Equities, coupled with a small percentage of Bonds (this mixture of Equities and Bonds is personally recommended, please consult your Advisor on this)
• Understand Your Commitments and Options. Please do so. Understand how long (the bare minimum) you really need to go into this plan to enjoy the benefits. If times are bad, what are your options (to switch or to top-up to cushion)?
• Understand What You Are Buying. Please ask your Advisor what’s the Fund Holdings (company mixture) that you’ll be going into. Trust your Gut Feel and Observation, not by the hear-say of your Advisor. Will you be comfortable with the performance of Holdings in the future?
• Understand all the Charges. There are some plans that will eat up most of your initial contribution. If you are investing in a short-term (especially), do understand how much charges you need to incur throughout the investment period. Will you be comfortable?
• Put everything in Writing. If you are a cautious person, ask the Advisor to put everything in writing in front of you. You do not wish to have “added information” after you are gone. As most Advisors are educated in a number of languages (Chinese/Malay/Tamil) on top of the commonly used English. Ask them for a copy of the proposal and be translated in your comfortable language. Advisors are being paid so ask them for this service.

In Conclusion

In conclusion, Investment-Linked Plans (ILPs) are plans that will help you to make your money work real hard or totally dry up your money when economy is bad. Fully appreciate the performance of your ILPs by understanding the content, options, nature of your ILPs. Do not be shy to ask your Advisor (he can be the niciest guy in the market) for a full understanding before commiting.

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You may have owned or intending to get a Whole Life Protection Plan, but with so many different features and benefits out in the market, how do you make sure you are getting the best deal?

Basic and Optional Benefits Offered By A Whole Life Protection Plan:

1. Basic Insurance coverages against Death (any causes), Total And Permanent Disability and the 30 Critical Illnesses (Dread Diseases). The payout is usually in a lump sum unless stated otherwise.
2. (Optional but commonly added) Payout of 2 to 3 times the sum assured against death caused by Personal Accident.
3. Cash Values that normally will break even around the 15-20 years period and the returns are averaging around 4% per annum (usually after the break-even). In terms of financial difficulties, you can take up a policy loan from your cash value (with the lowest interest rates as compared to commercial banks) without affecting your coverages.
4. Varying Premium Terms ranging from a single lump sum to 5 years or to when you are 85 years old.
5. For some companies, they may offer the choice of converting this plan to an annuity (what is an annuity? It’s a plan that pays you a monthly benefit from the cash value till the day you forget to breathe)
6. Term vs Whole Life. In this comparison, the benefits of getting a Whole Life is that this plan still protects you after the age 80, most of the term plans offered have maximum age till age 80. We are slowly living past the age of 80. I have came across a pair of sweet couple (who are in their own lovely world) who feels the benefit (of the whole life) of leaving aside money to the other half (after age 80) should one decide to leave first.

Is this Plan for Savings Or Protection?

I would say much depends on how much are your liabilities. Most of the time people get this plan more towards protection. The savings are additional benefits when you have no more liabilities in life, you have saved enough for any emergencies; therefore these savings are more like retirement supplements.

The common trend that I am seeing that for most clients is that they will (same budget) get two plans separately – one plan is for protection whereas the other plan is for the savings benefits. When the time is ripe for retirement, the plan used for savings can be converted to an annuity or the cash value used for savings/endowment/investment purposes.

How About The Options Of Limited Premium Term?

When it comes to the option of limited premium term, everybody shrugs on the idea of paying till age 85.

But do you know there are a few advantages to paying till age 85? They are:

• You get a higher sum assured when you stretch a longer term with the similar budget as compared to a shorter term.
• Bascially a whole life plan pays on any causes of death. If you should forget to breathe just before 85, you are the winner in terms of premium saved.
• If you are investment savvy and strict in savings, the 4% per year return is not really that attractive. By stretching to a longer term, you can use the difference (for servicing a limited premium term) to go into investment savings which can generate bigger returns (around 10% returns per year and you get to set aside more money for emergencies)

How About The Advantages of Paying A Short Limited Premium Term? They are:

• If you and I do live past the age of 85, we actually serviced a smaller premium size for the shortest premium term as compared to servicing longer or till age 85.
• Do you know that you save more premiums if you service the shortest premium terms even though the upfront premiums are higher than the rest of the term choices? The savings can amount up to a few thousands.
• If you are getting this plan for your newborn, you get to save the most as the premium rates for your newborn is at the lowest. You will not feel the impact of the premium as you are more willing to set aside more money for your newborn.

How To Choose Then?

• If you know that you will really die early, get a premium term that stretches to age 85. Even better, get a term plan as the premium is even lower than a whole life.
• If you are above 45 years old, you should opt for the shortest premium term to get the break-even faster.
• If you are below 45, this will depend on your comfortable budget.
• If you are getting for your newborn or young child, opt for the shortest premium term to enjoy premium savings.
• If I have not mentioned areas that you need to choose, have a good chat with your financial advisor to help you understand which is the better option.

I hope with this post, you have a better understanding of the benefits of a Whole Life Plan. Also if you are interested to understand which is a better option for you in terms of a Whoe Life Plan with limited premium term, I hope this post has given you a better understanding.

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Today I had a chance to do a review for a client on her Hubby’s Two Insurance Policies bought in the Year of 2001. (note, at the juncture of reviewing, I only thought this is just purely understanding what the policies are all about… read on…)

Let’s see what the Hubby had bought in 2001:

1. A Whole Life Policy covering Death and Total, Permanent Disability worth around $20,000. There is an additional decreasing term rider of $80,000 for the next 9 years (when it’s bought in 2001) and by this date, the decreasing term rider is around $20k
2. A Mortgage Protection Plan of $100,000 for the next 20 years bought like 4 years ago.

One thing to note of the Second Policy is that the Hubby has been diagnosed with Stroke, therefore coverage for Total and Permanent Disability has been declined. Secondly, there was a loading of an extra 100% on the inital premium.

Instead of rejecting the plan and the loading (as many would), the Hubby reduced the Sum Assured by half and accepted the application. By this date, the initial sum assured is $50,000 and has reduced to around $44,000.

The Actual Happening

As previously mentioned, I thought my current service is to review what they have bought. To the acutual reality, the Hubby has acutally passed away (my condolences) due to a fall (the wife is shocked to realize that a simple fall can still kill someone). His wife was at the insurance company doing his death claim (getting back around $80,000).

The Disargreement and The Acknowledgement

There was a disagreement on the claim as the wife felt that they have been short-changed in the claims and the nature of the policy. Main concern of her disagreement is that:

Why did the Advisor not advise them, right from the start, to take the whole sum assured of $100,000. Instead it was coupled with $20,000 + decreasing rider $80,000.

My explanation to her was, “Mdm, your acutal premium, then, was around $140 ($100 + $40)/month for the package of Whole Life ($20,000) and Decreasing Term ($80,000). If the advisor has advised a cool $100,000 whole life plan, you could be seeing 5 times of the $100, which is $500/month. Would you have agreed to go ahead with the plan?” Her answer was No.

Also, the lady has a budget of around $300/month, that’s the reason why the Advisor has introduced this package.

Then I asked back again, “If the Advisor has only advised $20,000 whole life coverage and save you the additional $40/month for the decreasing rider, would you have gotten back around $40,000?” She agrees with where I am heading.

So Are You For or Against Insurance?

Before bidding each other farewell, she told me something that warms my heart and make me feel proud of what I am currently doing.

She said that many people around her do not ever like the idea of getting any insurance, but she went against all odds and had the insurance done for her hubby 9 years ago. Now she is able to see the benefits of getting an insurance when it is much needed now.

If you are a logical person reading this, she has set aside a total premium of around $18,000. With insurance, she receives around $80,000 - a meaningful gift, I feel, from the hubby to the family.

If she has only leave this money with the bank, she is only getting back around the most $19,000 (with interest). With insurance, that money has multiplied 4.2 times (this is lower because the hubby has a health condition).

My Take To You…

Do not reject insurance. Even if you are against the idea of taking a whole life plan (because of the poor returns) – take on a term plan. Lower premium but Higher Coverage and Better Piece of Mind.

Do not wait till your health is getting lousier than you decide to get some insurance. You have to know, insurance companies may reject your application or introduce special terms/additional loadings. You may end up paying more!

If there is ever a loading/special terms, do not reject the application straight away. If you are able to accept a lower coverage, go for it. It’s better to transfer your risk to the insurance company rather than to bear it all upon yourself.

Remember… Getting an insurance is never a waste of money. Even if you get a Term Plan today, the money you had set aside for this plan has been converted to a Peace Of Mind (something priceless). You’ll never know, as seen above, a simple fall can even kill. Therefore a small premium today can become a lump sum of money tomorrow.

Do not wait. There is a saying… “Time and Tide wait for No Man.” Speak to an advisor today for your insurance planning!

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