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Pointers when buying a critical illness insurance policy.
Guide to Buying Health Insurance
Mrs Loh, a 46-year-old hawker, bought a critical illness insurance policy with an insurance company which would pay her a lump sum when she is diagnosed with a disease covered by the policy, or after having a type of surgery covered by it. Less than a year later, she experienced numbness on her face, right arm and right leg. She also had difficulty talking, walking and seeing with both eyes. Mrs Loh was hospitalised for five days. Upon her discharge, she filed a claim for stroke, but it was rejected as the illness did not meet the definition of critical illness as stated in her policy. Her doctor certified that she had suffered from a condition known as transient ischaemic attack. Mrs Loh’s case underscores the need for people looking for health insurance to consider three key things.
Three Key Things
- Firstly, the benefits from a critical illness policy are paid only if the disease or surgery meets the definition in the policy exactly. Definitions of disease are fixed for all insurance companies in Singapore. The standardised definitions of critical illnesses are available on the websites of Life Insurance Association and General Insurance Association of Singapore.
- Secondly, a critical illness policy usually has a waiting period for certain diseases or types of surgery. If any disease or surgery covered by the policy is diagnosed or carried out during the waiting period, no benefits are paid.
- Finally, be clear about the terms and conditions of the policy before buying it.
The cost of healthcare can put a strain on finances, especially as a critical illness often involves major surgery and/or long term hospital care, or if the illness leads to disability and inability to work. Health insurance can help reduce these financial strains by providing some payment to compensate for potential loss of income should hospitalisation be necessary or if disability occurs. The plan may pay all or a portion of hospitalisation costs, or a lump sum payment in the event of specific illnesses or disability.
Funding Healthcare Costs
Generally, there are three sources of funds that can be used to pay for treatment of a critical illness:
- Personal Savings
- Medisave Funds
- Health Insurance
- This includes MediShield or 'Shield' plans purchased with CPF Medisave savings, as well as other personal health insurance plans.
As part of the employment benefits package, some employers also get (group) health insurance coverage for their employees. The benefits and coverage for each individual may differ. Moreover, such a plan may not cover the person when he leaves the job or retires, and taking up a personal plan can ensure continued cover. People with inadequate funds can apply for assistance under the Medifund scheme, an endowment fund set up by the government to help needy Singaporeans who are unable to pay their medical expenses. Medifund acts as a safety net for those who cannot afford the subsidised bill charges, despite Medisave and MediShield coverage.
Questions to Ask Before taking up a Health Policy
Coverage
- What will my health insurance policy cover?
- Am I already covered for the same thing under another health insurance policy?
- Are there any policy exclusions?
- How is my health insurance policy affected by other schemes that pay for healthcare?
- Is coverage for a lifetime or only up to a certain age?
- Is coverage worldwide or for only specified countries or regions?
Premiums
- How much will I be paying for my health insurance and will I be able to afford the premiums in the long term?
- How often will the premium be charged and will it be a fixed or variable sum?
- Will my policy automatically be renewed and what is the penalty if I do not pay my premiums on time?
- When or under what circumstances will my health insurance policy end?
Claims
- How do I make a claim?
- Are there claim limits for each illness, per year or for the lifetime of the policy?
- Is there a waiting period for the policy?
- Are there any limits to the benefits that can be paid out from my policy?
- How will my future premiums and coverage be affected after I have made a claim?
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