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I received an email from a reader, B, and he has agreed for it to be published in the hope of getting more ideas from other readers here:
Dear AK,
Thanks for your ever inspiring and encouraging blog posts for our daily living.
I would like to seek your advice (or what would you do if you were in my shoes) on some insurance matters.
As a background, I am a 27 year old working professional working for around 2+ years, just married, received my BTO flat and planning to have kids next year or the following. I owned a few income producing shares like REITS (not surprising as I am a regular reader of your blog).
I do not own a Investment linked insurance policy nor an endowment. I do have the SAF Group term insurance (Assured for $300,000) as well as the MyShield Plus (the hospitalization plan plus full rider).
I received a letter from SAF Group insurance, asking me to add 2 riders to my term insurance:
1) Supplementary Living Care - For 30 critical illnesses, Sum Assured $300,000, monthly premium of $30.00
2) Living Care Plus - For common early critical illnesses, Sum Assured $200,000, monthly premium of $20,00
FYI, I am currently paying monthly premium of $38.40 for the SAF Group Term Insurance.
More info on the 2 riders can be found below if it is useful:
Hi B,
I enjoy reading your email because from the looks of things, you are doing things right and doing well. Happy for you. :)
I firmly believe that we need CI (critical illness) coverage. So, I would encourage that you take up the rider. I am not so sure about early critical illness coverage though. I suppose for people who might not have a lot of money put aside for emergencies (or do not have meaningful passive income), this would provide peace of mind.
I like to look at the annual cost instead of monthly cost so as not to be lured into an illusion of cheapness.
$30 x 12 = $360 a year. For a $300,000 coverage, it is inexpensive.
$20 x 12 = $240 a year. For a $200,000 coverage, it is also inexpensive.
If you do not yet have a CI plan, you should give the above serious consideration.
Genuine and constructive comments are appreciated, as always. Thank you.
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Update: 13 September 2016.
A reader received this:
Value for money!
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| Complete table: here. |
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14 comments:
I agree that CI is important
I reserve my comments on whether you should or should take the saf rider.
I find the early stage ci rider is subjective on personal circunstances.
Hi B,
I made the same decision as you 2 years back and signed up on the Supplementary Living Care, $30 a month is still affordable for me at my current age and it provides some protection to your hard earned income while you are still young.
Make sure you have a medishield plan that covers hospitalisation and you should be sufficiently covered. And final note is to buy enough insurance but don't over buy, the rest take and invest.
Regards,
Adrian
Please take note that after Age 45, the premium rate is based on the attained age which can be quite expensive at older age, no longer $10/mth per SA $100k. So do the calculation to see if you are still willing to pay the higher premium at older age where CI coverage is more impt. Alternatively is to get a level premium Term plan w CI coverage, though it's definitely more expensive, but premium is fixed(non-guaranteed) based on entry age.
SAF Group scheme is the cheapest Term Insurance that you can get in Singapore, so, should take advantage of it.
On the other hand, do take note that CI usually came with specific and strict requirements for the covering conditions i.e. (in short, it doesn't means that the doctor said you have heart attack, you can straight away claim the benefit even though heart attack is one of the illnesses). So, do read the t&c more carefully.
Cheers!
Hi B,
I have a early CI coverage from prudential. As I was already diagnosed for Thyroid when I bought the plan, i was smack with a 50% rider.
Personally, I think it is good to have a early CI coverage, I did spend some time reading how my 30 CI illnesses are defined under myy AIA plan.
I cannot really understand how serious the conditions are, until I ask my dad about his heart transplant. He is considered very serious and need operation ASAP, according to the doctor, I cannot remembered very clearly now, he was telling us something like 1 main artery is blocked and the minor is congested.
And I remembered reading something like it will take 2 main arteries to be blocked before they payout... WT...
The earlier payout clause just need 1 artery to be blocked.
The rest I am no doctor.
Anyway, basically, unless you are dying, my impression is I will not be able to claim my CI, even though I might not be able to work during my recuperation period.
Next, CI coverage should perhaps be at least 5 years of household expenese, that is what my sister working in the insurance line told me and ask me to up my coverage.
I would take both riders. It is extremely cheap. For reference I take a number of early CI private insurance plans, and it is at least 10 times more expensive.
I can't really shed light on CI or early CI. That is whether can detect early or hv some liquidity or not in the event detect early, etc etc. Also including how early the doc detect....my own personal experience is that for a very painful ailment, it took 2 yrs and 6 docs (including 2 at A&E) and still cld not detect by any docs! Happened that i am one exception to the rule that docs studied. And lagi best....i studied my own symptoms and diagnosed myself and dictated the test to do to my GP. Viola!
U know....when i think of insurance for CI, ppl think whether coverage is enough or not....200k, 300k, 500k....for now, today's dollars, we may know how much is enough. But 10 to 20yrs from now is dunno.
I tend to think these few hundred Ks are enough for 1 major op and health care surrounding that op. If need to stay in hospital 1 or 2 months, cannot work another 3 to 6months. Need subsequent health care..the 300 or 500k might be almost gone le....esp w dependents.
So its good if it is a one time event. Hopefully.
What is more tragic is the slow and painful bleeding to death. Eg, chemo, kidney dialysis, etc....those 2k per month/treatment kind (subsidy according to your flat size, etc....so don't stay in wrong size flat. Right size! Haha....)
Those cancer lagi jia lat. Op 1 time, chemo chemo chemo then got well...skarly 5 yrs down the road, relapse. ..another op, another serious of treatments.
By the 2nd time, already no insurance cover, u know....
So, to me....not only must cover 1 lump sum. Must hv a string of cash flow for those long term continous treatments.
Hi pf,
Healthcare costs will only go higher. This is why although having CI coverage is important, we need a good H&S plan that limits out of pocket payments and we also need to strengthen our self insurance ability over time. :)
Enhanced Incomeshield (H&S) for my mom.
The best insurance to have in life.
Hi Richard, I think b has to consider how much future premiums will be as it is not a level term insurance. Also, B should consider if there any catch to the SAF GROUP SCHEME?
Not disputing the importance of CI coverage but besides the 1 big lump sum payoff, we might wanna think of how to get a series of cash flow payoff in the event we need.
Hi pf,
This is a valid and very important point. This is why I keep emphasising the importance of self-insurance.
Disability insurance is available, of course, but it is very expensive.
The sooner we are able to build a portfolio of income producing assets, the better it is for us. This is self insurance. :)
Guys.. What's the advantage of CI over h&s other than the ability of the former to cover for loss of income?
I believe a proper h&s with complete riders cover both operation costs as well as per and post timelines.
Yes, that's true. :)
In this regard, i wld prefer having a property to generate the cash flow rather than stocks.
Melvir, H&S will only cover hospitalisation costs. It will not provide any excess cash if you are unable to work, or if you need to hire a helper/nurse, or if you need costly long term medication. I believe both are complementary should you feel the need for it. They are not substitutes for each other.
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