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Save ($18,000) and have better H&S insurance for parents?

Thursday, March 12, 2015

I had a conversation with a friend recently on why he should get the best H&S plan he could afford for his parents:

AK: I think you can easily afford the premium.

F: OMG! It is more than $5,000 a year for the two of them.

AK: Well, you make $120,000 a year. That is like 4% of your annual income. That is not too much to pay for peace of mind.

F: That is a lot of money to me.

AK: For most middle class families, that is a lot of money, not just to you.

F: It would mean some serious cutting back of expenses.

AK: It shouldn't be that difficult. Maybe, instead of spending $10,000 on that annual family vacation, keep to a budget of $5,000 instead. Thailand is really a nice vacation destination.

F: Let me discuss this with my wife.

AK: Well, tell her that insurance premium is something you can budget for. If your parents should be warded in a private hospital for some reason, you might get a shocker of a bill when you see how little Medishield's share of the bill actually is.

F: How much is it?

AK: From experience? Less than 10%. Imagine a bill of $15,000 and Medishield pays only $1,000, for example.

F: That little?

AK: Yup. I am not saying that your parents will stay in private hospitals but I am just saying that it could happen.

F: Yes, of course...

AK: These things are hard to predict and if they should happen, we want to be prepared. That is where a good H&S comes in. At least, with insurance premiums, you know how much money you have to set aside each year. Like I said, it is about having peace of mind.

F: You are right. We can include the insurance premiums in our household budget more easily than anticipating a bomb of a hospital bill... I need to discuss this with my wife...

This friend of mine stays in a condominium and has a big mortgage to service. He also drives a European make MPV.

I understand that, like many other middle class families in Singapore, the children also go for myriad enrichment classes.

An annual holiday at the end of the year is also a must for the family.

So, I can quite understand why he thinks that having to pay more than $5,000 in insurance premium a year for his parents is a big financial burden although his salary is definitely way above average.

There are many things in life which will compete for our limited financial resources.

However, when we think rationally, we would be able to tell which of these items should really have priority in our lives.

Related to this, I shared in another blog post how a reader in his 40s made some changes in his lifestyle. In making the changes, he managed to save an additional $18,000 a year. That is quite a bit of money to any middle class family. (See related post number 2 below.)

This blog's title has $18,000 in brackets. This is because all our circumstances are different. The extent to which we are willing to cut back on expenses will also be different.

Some might be able to save more than others, whether it is a matter of will or ability. It is about conserving financial resources and diverting them to the things that really matter more.

I believe that if my friend is able to make some adjustments in his lifestyle, he would have enough savings to pay for the higher H&S insurance premium for his old folks at home. I feel that it is the prudent thing to do.

If you are like my friend, this might have provided you with some food for thought.

Related posts:
1. Enhanced Incomeshield for my mom.
2. How to have a comfortable retirement?
3. How to have children and retire comfortably?


Siew Mun said...

My mother is 77 this year. I have been paying using my CPF MA $1200 and cash $5344 for the last 2 years. Total of $6544 annually which comprises of private Integrated Shield Plan and a rider. The H&S insurance allows her to stay in a private hospital class A without having to co-pay. My late father spend $250,000 in H&S before succumbing to colon and liver cancer over a period of 2 years. I learn the lesson to buy a very good H&S for my mother for peace of mind. :-p

AK71 said...

Hi Siew Mun,

Thank you so much for sharing your experience with us here. It is truly invaluable. I am sure all readers would appreciate it like I have. :)

Kyran Tan said...

Hi AK, I understand H&S insurance covers surgery and hospital stay. But not the specialist consultation fees if I remember in my own case. I may be mistaken but just thought it would be good to clarify this. Thanks!

AK71 said...

Hi Kyran,

Really? That is strange. It should cover. You might want to check with your insurer on this.

This is taken from NTUC Income:

Enhanced Incomeshield

Inpatient hospital treatment benefit is made up of the following sub-benefits.

a Room, board and medical-related services

Ward charges the insured has to pay for each day in a hospital including:

• meals;
• prescriptions;
• medical consultations;
• miscellaneous medical charges;
• specialist consultations;

caelitus said...

Mitigation is better than correction. Putting aside the fact that most cancers are probabilistic, there are still illnesses out there which are lifestyle driven. Stay healthy by eating right, exercising right and doing things right. For example, please do not jaywalk. Our judgement and reactions are impaired as we age. Take the extra steps to the pedestrian crossing and never assume the motorist is going to give way to you.

The above should lower the chance of us having to activate the H&S policy except when we are nearing our final destination in life.

AK71 said...

Hi caelitus,

A stitch in time saves nine, as the saying goes. :)

I think I am the type who will have illnesses which are lifestyle driven. I spend too much time sitting down in front of my PC. -.-"

Siew Mun said...

Like all engines, we humans have meantime between failure. No matter how well we maintain our engines we still breakdown unfortunately.

AK71 said...

Hi Siew Mun,

Sometimes, it really is luck too.

Someone I know who exercises regularly and is very fit (well, fitter than I am) actually got a heart attack recently. He is only 42.

Another person I know who watches his weight and eats healthily collapsed while playing golf last year. He is also in his early 40s.

I am now in my mid 40s. The next one could be me. -.-"

Kyran Tan said...

Hmm. Guess I was mistaken then! so that's really another plus to have a H&S plan.

AK71 said...

Hi Kyran,

All I see are pluses. The only minus is that we have to pay for it. LOL.

Of course, you know how to get around that little minus. ;p

Unknown said...

Hi Guys & Ladies, I am very very confused about Insurance in Singapore and require some assistance in these maters. I with my family have been in Singapore since 2003 (now with Pink IC) and have the flwg Insurance policies:-
Like every Singaporean I have Medishield cover. In addition I have Enhanced Income Shield with Enhanced Income shield rider. It costs me SGD3433 for a family of four. Does this insurance cover critical illness.
In addition to above I also have NTUC Life Assurance policy "VIVOLIFE" I understand that this is Whole life and Critical illness. I am paying SGD 5682 for self (another 9 instalments to go) and SGD 3778 for wife (another 14 instalments to go) and SGD 3555 for 2 daughters (another 14 instalments to go) before the cover is fully paid up. The life assurance cover is for SGD 100K for each policy.
Actually I do not require any Life assurance for self and wife. Both my daughters would be joining work force by next year therefore they can decide whether they want to continue with VIVOLIFE or not.
I only require Hospitalisation and critical life cover for self and wife, therefore, am I over insured based on the above facts. Sometimes I think the Insurance premium is very heavy commitment and there must be way to minimise the premium.
Would like to hear your views / comments.

AK71 said...

Hi R Singh,

Well, the way to pay less for insurance is to pay for what you need. If you are "over-insured", you are likely to be paying too much. ;p

If you are not sure what your insurance policy covers, it is best that you give your insurer a call to find out. They made money from you. They must do the work. ;)

AK71 said...

On Facebook:

Chia Peng Chwan shared a memory.

If dun have hospital plan, please stay in C Class or B2. You dun get aircon, you share the room with more ppl, you have to wait longer but at least the bill is heavily subsidized.

Dun choose A or private and complain about the bill later and complain about the government or why should the medical social worker or your relatives help you with the bill later. There are options in Ward class.

If you are still healthy should consider a good hospital plan. I am stuck with B1 and my parents will have to be C or B2. If only I know earlier or bother to read up last time...

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