Do you know if your parents have (enough) H&S coverage?

There are certain topics that many people avoid talking about at home. 

Money is one such topic.

Sometimes, due to this reticence, we discover too late that someone in the family might be heading for a financial disaster or that someone in the family might not have certain necessary insurance protection.

In such instances, other family members might have to help out financially if they are able to. 

What if they do not have the ability to do so? 

That is one scary thought, isn't it?





This is taken from a recent conversation with a reader:

Hello AK,

It's me again, the one who got in touch with you via Facebook recently :D

I am currently reviewing my insurance plans, fueled by my recent visit to the CPF board for my dad's CPF Life inquiries. 

One thing lead to another and I realized that he only has Eldershield on and no H&S plans at all. Thus I'm inclined to grab one for him.

The plan (hah!) I have for my dad is to have to maximize his $800 cap to pay for his private insurance, with any additional necessary cash top-ups to be done on my end, which can be part of my tax-relief(ed) contributions towards his Medisave.

As much as I want the best for him, question is, given his age and thus the increasing premiums, should I go for the highest possible plan or exercise prudence by going with what I can afford? 

If it's the latter, what's the bare minimum then for me to effectively not worry to a large extent should he be hospitalized?

Hear from you soon, AK :)

Sincerely,

F

What? No H&S plan? Alamak!

Firstly, I must apologise to F because I forgot to mention to him that contributing to his father's CPF-MA does not give him any income tax relief. 

I believe that a voluntary contribution to the CPF-MA gives income tax relief to the recipient only. 

He might want to check with the CPF Board on this to be sure.






My reply to F:

Hi F,

H&S is very important and a must have for everyone. Very lucky that you discovered your dad has no H&S coverage. 

He should definitely get coverage ASAP!

A long, long time ago when I first compared H&S plans, I decided to go with Incomeshield from NTUC and I have stuck with them since, upgrading my plan over the years. 

I got my mom in on this as well and, like you observed, upgraded her plan not too long ago too.

It is true that the yearly premium will get more expensive as we age and for my mom who is almost 70 years old, it is more than $2,000 a year. 

She finds it expensive but I told her it isn't and I will pay for her. I want her to be comfortable if she should be hospitalised and I want to be worry free when it comes to my share of the cost. 

10% of the bill with an annual cap of $3,000? That's OK. :)






Which H&S plan should you get for your dad? You have to compare the different options available and decide for yourself, of course. 

Remember, insurance is there to help us deal with bad things that might happen to us. 

It is to help us to cope with costs which we might not be able to deal with ourselves. 

As we bear this in mind, we also want to keep the cost of insurance low.

Of course, if we can afford to pay for better healthcare for our parents, why not? 

I think they deserve it. 

To make better healthcare more affordable for us, we need a good H&S policy. :) 

The yearly premium is predictable and is something we can budget for. 

The cost of hospitalisation is not predictable. ;)

Best wishes,

AK

I have talked to myself about the importance of having a good H&S plan from time to time here in my blog, of course. 

This is not something new.

However, the conversation with F nudged me to once again remind readers, especially those new to my blog, to have a conversation with family members, especially our elders, to ensure that they have H&S coverage and if they do have coverage, we want to check if the coverage is adequate when considering the types of hospital and ward preferred.





We shouldn't drag our feet when it comes to something like this. 

The weekend is upon us. 

Go talk.

Related posts:
1. Enhanced Incomeshield for my mom.
2. Eldershield: Is it really necessary?
3. Eldershield: What does it shield us from?
4. Save money and have better H&S for parents?
5. Voluntary contributions to CPF.
"My dad is still working and paying income tax. So, with regular voluntary contributions to his Medisave Account from me, he will pay less income tax too. Yes, it is tax-deductible for the recipient only."

6 points in response to Sumiko Tan's "expensive lesson".

I read an article in the newspapers by Sumiko Tan and felt the pain she must have felt. 

It is about her experience of buying an endowment policy and cancelling it, losing quite a bit of money in the process. 







Here are a few paragraphs taken from the article:

"I bought the plan from a financial adviser from a bank I have accounts with. He had cold-called me to arrange a meeting. He was patient in explaining the scheme. The returns looked decent and I didn't ask many questions.

"What really clinched it for me, though, was the shopping voucher... I would get a $1,800 Takashimaya shopping voucher. Shopping here I come, I thought gleefully."






By now, regular readers of my blog would be shaking their heads. Here are three points in response:

1. Always ask questions. 

No one cares more about our money than we do. 

If we don't care to ask questions, no one will do it for us.







2. Of course, don't ever ask a barber if we need a haircut. 

Get second opinions. 

Oh, we will be doing ourselves a BIG favour by making sure they are not from barbers too.







3. Don't succumb to the instant gratification of yield. 

If they come in the form of shopping vouchers, run away in double quick time.

Anyway, the writer, Sumiko Tan, bit the bullet and terminated the policy after agonising over it. 

I could feel the angst in her writing:

"What I had regarded as welcomed enforced monthly savings suddenly felt like a debt I owed the insurer. I felt burdened. I hate being in debt.

"I decided to bite the bullet and backed out, and said goodbye to the two months worth of premiums.

"... at my age and given how I'm childless, waiting 23 years to experience its full benefits is foolhardy. I wish I had realised that earlier.

"It was an expensive lesson, but next time, I will read all the documents, compare products and ask more questions first.

"Needless to say, I also don't get the Takashimaya shopping voucher."






There is sadness but there is also a sigh of relief. 

I believe she did the right thing if for no other reason than the fact that the purchase robbed her of her peace of mind. 

Of course, she will be doing the right thing in future after this experience.






I would like to share 3 points a friend shared with me before:

Point number one:


Fallacy:
Insurance is for savings and investments.

Truth:
Insurance is a risk management tool.







Point number two:

Fallacy:
Be insured for the highest sum we can afford.

Truth:
Get sufficient coverage. Don't over insure.







Point number three:


Fallacy:
All of us need all the different types of insurance.

Truth: 
We go through life stages and needs will change.







All very pertinent points and we will do well to remember them.

Here are some blog posts related to the points raised above:

1. Nobody cares more about our money than we do.
2. The instant gratification of yield.
3. Disastrous investments in the property market.
4. A true story about insurance and grapes.
5. Free "e-book": Retiring before 60 is not a dream.

Read the full article by Sumiko Tan: here.

Aiyoh, so tempting lor.

Alamak. What am I going to do?

AK likes freebies but are these really free? Or are they a return of capital? Hmmm...