We must pay a premium for "best" healthcare.

Reader says...
I would like to ask you regarding H&S insurance. I have spoken to a few agents to understand more about the H&S products that they are offering.

They would frequently mention “Do you want to stay in private for the best healthcare?” “With riders, you don’t have to worry about co-insurances or deductibles..”






Sounds enticing but I got a shock when I looked at the premiums I have to paid in the long term run and also, I am wondering how am I be able to pay for the premiums once I stopped working in the future. Premiums are highly likely to increase in the future.

So, I asked myself do I really need the ‘best’ healthcare? I am quite contended with decent healthcare that has government subsidies.

As such, I thinking of getting a H&S + rider that has coverage for B1 and below.





The reasons being:
• The premiums paid in the long run is still within my range

• I don’t want to be slapped with a huge bill that cannot be claimed and end up worrying about it

• I hope to have affordable out-patient treatments as a subsidised patient. As some illness need permanent follow ups and not everything can be claimed. 






For Ward B2 and below, one will be considered as subsidised patient. The rest will be considered as private

Can I ask for an unbiased third party view? I am ok with staying in B1 and below + decent healthcare from the public hospital. 

Do think the coverage is sufficient for my requirements? Or am I missing something? Thanks for talking to yourself again.

AK says...
If you are OK with staying in B2 or C ward, then, you only need Medishield Life.

If you wish to stay in B1 or better ward, then, you need a private shield plan.

I am inclined to believe that a higher class ward will provide a more comfortable stay which could help promote recovery.





However, whichever class we are warded in, I believe that we would have access to the same quality of healthcare. :)


Related post:
Is my insurance agent scaring me?

When not to do voluntary contribution (VC) to CPF?

Reader says...
It's the first time I did a VC to my CPF as I have already hit my FRS.

I was surprised to see that part of my VC actually went into my SA account.

I thought all of it will go into my OA.






I am still employed and I will be getting Mandatory Contribution to my OA and SA.

But after going through my last year's CPF statement, I realised that I am very close to the $37,740 annual limit.

I know that any excess will be returned to me interest free next year.






My questions are,

What happens when my MC reaches $37,740?

How is the interest in my OA and SA affected?

This $2,378.20 will be earning 4% compounded interest in my SA for the next 12 months.

How will this interest be affected when I hit $37,740?

Do they stop paying interest?





Let's say, for easy calculation my yearly MC is exactly $37,740. And in this case, I did a VC of $11,000 in Jan.

I know that they will return to me $11,000 next year. But what about the compounding interest of $2,378.20?

From your experience when you were working, what happened to your CPF interest when you did VC?

If the compounding effect of a VC in January is not affected.

A working person can earn more interest by doing a VC of $37,740 every January and get the VC back the next year, only to do it all over again.

AK says...
In the past, having met the CPF minimum sum, I would wait for closer to year end to see how much my year to date MC was and I would then do a VC to hit the CPF annual limit for the year if possible and if I had the spare cash.

Some years, I would estimate my MC for the year and do a VC earlier in the year.






In such cases, usually, I ended up overdoing it and CPFB would refund the excess contribution and also deduct any interest earned by the excess.

This is also something I have blogged about before.

Related posts:
1. CPF is a PONZI scheme!
2. Know how to grow our CPF.