Clueless about insurance? You're not alone. 60 women (in their 20s and 30s) told us their biggest quandaries about managing their insurance policies, and we spoke to the experts to find out what are some easy rules to follow. Turns out, once you get your head straight on the facts, it's more straightforward than you think.
Should I stick to just one insurance company?
Every insurance company has different strengths. By getting all your plans from one company, you could be shortchanging yourself, says Ng Si Hui, an associate manager at Ray Alliance Financial Advisers. So diversify. Another tip: Everyone has an opinion on which companies offer the best solutions. But what’s good for one person might not work for someone else, because of multiple factors like health, age and lifestyle. So cut the noise by first figuring out what you need, then doing your homework.
Also, don't push your insurance plan to the back of your mind after buying in. Check in with your financial adviser once a year, and definitely at every key life event (like when you get married or have a baby. Come up with updates on your assets, liabilities, cash flow and new financial goals. It'll help your adviser assess whether your plan needs to be updated to suit your lifestyle.
Is my company medical insurance enough?
If you’re relying solely on your company medical insurance, you should get more. First up, the coverage is likely to be pretty basic (consultations with a general practitioner, and perhaps hospitalisation fees), and there’s a limit to how much you can claim.
Then there’s the issue of how confident you are about staying with this company for the long haul. Because company insurance only covers you when you’re an employee, once you leave, you’re on your own, says Caleb Tan, executive manager, Great Eastern Financial Advisers. Your new employer has the right not to cover you for any pre-existing or long-term conditions which you might have developed while at your previous job.
So get yourself some private medical insurance. “This way, regardless of your status of employment, you will always have that safety net, adds Caleb. Plus, the older you are, the more expensive your premiums will be, so don’t wait until you leave the company before signing on.
Is there such a thing as over-coverage?
You might think you’re cool with waiting at the A&E, or recuperating in a six-bed ward, and that buying a plan which covers anything extra is over-coverage. But sometimes, you don’t know what your threshold is until it’s tested. When a health crisis strikes, you might decide that you actually prefer the comfort of a private ward. So if you can afford it, take up private medical plans rather than a government hospitalisation policy – it’ll minimise the waiting time for treatment, and you’ll have the option of choosing an upgrade. The same rules apply if you’ve never been warded and find it hard to know what your specific needs are when it comes to health care.
How much do I really have to declare to my insurance company?
If you have a pre-existing condition, you will need to declare it to your insurer before purchasing a plan. Be prepared for three outcomes: total decline (where your plan is rejected), loading (where you pay a higher premium) or exclusion (where your plan is approved but your pre-existing condition is excluded). The outcome depends on how high the risk of payout is. For example, if you have high blood pressure or high cholesterol from a young age, you run the risk of decline because of the high chance you’ll suffer from heart disease as you get older. You could decide not to declare your condition and hope your medical claim is successful, but insurers do their homework before processing claims – such as speaking to your doctor and finding out exactly when you were diagnosed.
If I’m not pregnant yet, should I bother with covering my unborn child?
It’ll come in handy if there are unexpected complications during your pregnancy, or if it turns out that your baby has congenital illnesses, says Ng Si Hui. Local companies like AIA and Great Eastern offer prenatal insurance plans that cover you when you’re 13 weeks pregnant (the earliest at which you become eligible for these plans) up to one year after the child’s birth (and up to three years for your child).
But they don’t offer plans that cover maternity expenses such as doctor’s visits or delivery costs. For these, you could opt for international health insurance plans, but there’s a waiting period, and the premiums are hefty.
What’s the one insurance that I definitely need to get?
Home insurance covers you in case of fire, theft and natural disasters. And you should get it. In Singapore, fire is probably the cause of home damage you have to worry about the most. You can’t afford to take your chances. “Home insurance makes your life easier because the insurance company will compensate your loss first,” explains Caleb. “It will then engage a lawyer to get back the compensation from your neighbour or their insurance company on your behalf.” Without fire insurance, you’ll have to go through the hassle of getting your neighbour to cover the damages.
What’s the difference between home insurance and mortgage insurance?
People often conflate the two. But you’ll want the added protection that comes with the latter, especially if you and your partner are servicing a loan together, and he gets really sick – or worse, dies. What mortgage insurance does is to pay out a lump sum upon diagnosis of terminal illness, or death. That sum is determined by the affordability of the premiums, the value of the house, or the desired value (which could be more than the actual value of the house).
This model is similar to the Home Protection Scheme under the Central Provident Fund (CPF), but with two key differences. With mortgage insurance, you can opt to add disability and critical illness riders – not an option for the scheme under the CPF. You’re also not subject to limitations such as an age cap of 65 years or a non-transferable clause if you get a new property.
Is it possible to insure my luxury goods?
There’s no minimum value required to insure items like your wedding ring, Rolex watch or even your Chanel handbag. All these can be covered under a standard home insurance package, which means the company will assess the future value of your items, and you’ll get a payout should these get stolen or damaged.
But if you’ve got a rare and valuable piece on your hands, some insurance companies do cover collectors’ items – on separate plans. Chubb Insurance, for example, offers plans that cover luxe jewellery and fine art.
Caleb Tan, Executive Manager, Great Eastern Financial Advisers
Paul Wong, Financial Planner, Great Eastern Financial Advisers
Ng Si Hui, Associate Manager of Financial Planning, Ray Alliance Financial Advisers
This article was first published in the June 2017 issue of Her World magazine.