If
you are comparing shield plans by choosing the cheapest premium and
best policy benefits, I suggest you look deeper than that. Behold the
truth as I will explain in the FAQ below.
If you can sleep in a non-aircon room with 6-9 people, and do not foresee any use of private hospital facilities in the future, then it is alright to stay with Medishield.
You can still choose to ward into a private hospital with a Medishield, but you can only claim close to the equivalent as if you had stayed in a B2 or C class ward. The balance is payable from your Medisave account and cash.
For example, for a Singaporean who wishes to seek treatment in a private hospital might incur a bill of $16,000 but can only claim $2000 from Medishield (the stated figures are estimates and depend on the type of treatment involved)
If you are a Singapore Permanent Resident or PR, your Medishield is subject to pro-ration factors even if used for B2/C Class level. It might be wise to just purchase a private integrated shield plan altogether.
Q: There are so many private integrated shield plans! Which type should I choose?
Don't be mind-boggled about what is the difference between all the plans. Your first step is to simply choose a category. These plans are categorized into 3 classes: Class B1, Class A and Private Hospital. If you are in your 30s, the premium for a Class B1 is roughly $200/yr and $400/yr for Private hospital. If you are in your 50s, this premium is roughly $500/yr and $1000/yr for a Class B1 and Private hospital respectively.
You should choose a category that you need and is within your budget.
After you have chosen a category, you may be tempted to start comparing all their benefits and premiums one by one like Mr Kiasu. But let me tell you that your efforts will be in vain, because the plan with the lowest premium or the highest benefits may NOT necessarily be the best plan over the long term.
Q: Why do you say that the plan with the cheapest premium or the best policy benefits is not the best plan? What then is your definition of the best plan?
You can choose the cheapest plan today, but it might not be the cheapest plan tomorrow. This is because premiums and benefits can be adjusted in future at the discretion of the insurance company. Therefore it is pointless to compare current premium rates and policy benefits.
Q: But I can always choose the cheapest plan now and switch to another insurer in future who offers a cheaper premium right?
That is true. But only if you are insurable. If you are un-insurable, you will have a very hard time switching plans. When someone is un-insurable, it doesn't just mean he/she is down with a serious illness. Common problems such as diabetes, hypertension and high cholesterol may already deem you un-insurable by today's underwriting standards. It will be too late by the time you found out and you will have no choice but to stay with your existing insurance policy. So try to pick the best one today and stay with it forever.
Q: So how can I pick the best plan then?
The answer lies in the economics of the insurance company. There are certain characteristics of an insurance company that has tell-tale signs it might charge a lower premium than its competitor over the long term.
First you need to understand how insurance works. There is one law that every insurance company must obey. That is the Law of Large Numbers. I'm not going into the details of the theory behind it, but simply what it means is that generally the more people an insurance company insures, the cheaper the premiums it can offer. So, try to join a plan that has many participants.
Secondly, you need to find an insurance company that practices very strict medical underwriting. This means that they will be very picky and careful when choosing to insure you. If you declare a history of illness, they will investigate further. And if they cannot find sufficient information, they would rather decline your application and lose the chance to earn your money.
On the other hand, a company that is more relax in this area might get into trouble one day. Because over the long term, they will experience a higher claims rate. Which means they might have no choice but to increase premium rates in future. Companies that do this are probably under pressure to meet short term revenue/growth targets, but in doing so, will suffer a higher claims rate in future.
Sometimes you will hear news of complaints about insurance companies. For example, a person with a medical problem applied for insurance at Company X and was declined. But when applied at Company Y, was accepted. Naturally people will think Company X sucks. But the truth is that Company X is more risk adverse or "kiasi" with their underwriting and this is what keeps the premiums affordable for all their policyholders over the long term.
Q: Great! I think I know what is the best plan for me. But should I add riders on them?
Deductible: This is a fixed amount (eg. $1000) of the hospital bill that you cannot claim from your insurer.
Co-insurance: A percentage of the hospital bill (eg. 10%) that cannot be claimed from your insurer.
To help you put in perspective what Deductible and Co-insurance is, let's use some examples:
Example 1:
Hospital bill is $10,000. Deductible is $3000. Co-insurance is 10%.
Claimable amount = [$10,000 - $3000] x 90% = $6300
Amount payable by you: $3700
Example 2:
Hospital bill is $50,000. Deductible is $3000. Co-insurance is 10%.
Claimable amount = [$50,000 - $3000] x 90% = $42,300
Amount payable by you: $7700
If you do not have a rider, you need to be prepared to fork out thousands of dollars. And as you can see from the examples, the larger the bill, the more you need to fork out.
By adding a rider you can remove either the deductible or the co-insurance or both. Which means you can virtually pay $0 of a hospital bill.
Simply speaking, if you have adequate financial resources to pay for the deductible and co-insurance, you can avoid purchasing the rider. If you have little to no savings, you should always take the rider first. You can choose to terminate the rider in future when you don't need it. Most policies should allow you to do this.
Another common type of rider is the Daily Cash/Income rider. If you add such a rider, the insurance company will pay you for example, $100 per day of ward stay. This is useful for those who are self-employed or freelancers.
There is no hard and fast rule when it comes to choosing riders. Even if you have adequate financial resources, you can still take the riders if they make economical sense in protecting your savings in the unfortunate event of hospitalisation.
Conclusion:
I
hope this has shed some light on how to choose a Shield Plan. Get yourself and your loved ones insured asap and don't procrastinate over it too long. Good luck!
Q: I am on Medishield already. Should I upgrade to a
Private Integrated Shield Plan?
___________________________________________________If you can sleep in a non-aircon room with 6-9 people, and do not foresee any use of private hospital facilities in the future, then it is alright to stay with Medishield.
You can still choose to ward into a private hospital with a Medishield, but you can only claim close to the equivalent as if you had stayed in a B2 or C class ward. The balance is payable from your Medisave account and cash.
For example, for a Singaporean who wishes to seek treatment in a private hospital might incur a bill of $16,000 but can only claim $2000 from Medishield (the stated figures are estimates and depend on the type of treatment involved)
If you are a Singapore Permanent Resident or PR, your Medishield is subject to pro-ration factors even if used for B2/C Class level. It might be wise to just purchase a private integrated shield plan altogether.
 |
| Great! Now which do I choose? |
Q: There are so many private integrated shield plans! Which type should I choose?
___________________________________________________
Don't be mind-boggled about what is the difference between all the plans. Your first step is to simply choose a category. These plans are categorized into 3 classes: Class B1, Class A and Private Hospital. If you are in your 30s, the premium for a Class B1 is roughly $200/yr and $400/yr for Private hospital. If you are in your 50s, this premium is roughly $500/yr and $1000/yr for a Class B1 and Private hospital respectively.
You should choose a category that you need and is within your budget.
After you have chosen a category, you may be tempted to start comparing all their benefits and premiums one by one like Mr Kiasu. But let me tell you that your efforts will be in vain, because the plan with the lowest premium or the highest benefits may NOT necessarily be the best plan over the long term.
Q: Why do you say that the plan with the cheapest premium or the best policy benefits is not the best plan? What then is your definition of the best plan?
___________________________________________________
You can choose the cheapest plan today, but it might not be the cheapest plan tomorrow. This is because premiums and benefits can be adjusted in future at the discretion of the insurance company. Therefore it is pointless to compare current premium rates and policy benefits.
 |
| Honey, same price leh! Of course we take the bigger one lah! |
Q: But I can always choose the cheapest plan now and switch to another insurer in future who offers a cheaper premium right?
___________________________________________________
That is true. But only if you are insurable. If you are un-insurable, you will have a very hard time switching plans. When someone is un-insurable, it doesn't just mean he/she is down with a serious illness. Common problems such as diabetes, hypertension and high cholesterol may already deem you un-insurable by today's underwriting standards. It will be too late by the time you found out and you will have no choice but to stay with your existing insurance policy. So try to pick the best one today and stay with it forever.
 |
| I am sure those desperate insurance companies still want my business lah! Confirm! |
Q: So how can I pick the best plan then?
___________________________________________________
The answer lies in the economics of the insurance company. There are certain characteristics of an insurance company that has tell-tale signs it might charge a lower premium than its competitor over the long term.
First you need to understand how insurance works. There is one law that every insurance company must obey. That is the Law of Large Numbers. I'm not going into the details of the theory behind it, but simply what it means is that generally the more people an insurance company insures, the cheaper the premiums it can offer. So, try to join a plan that has many participants.
Secondly, you need to find an insurance company that practices very strict medical underwriting. This means that they will be very picky and careful when choosing to insure you. If you declare a history of illness, they will investigate further. And if they cannot find sufficient information, they would rather decline your application and lose the chance to earn your money.
On the other hand, a company that is more relax in this area might get into trouble one day. Because over the long term, they will experience a higher claims rate. Which means they might have no choice but to increase premium rates in future. Companies that do this are probably under pressure to meet short term revenue/growth targets, but in doing so, will suffer a higher claims rate in future.
Sometimes you will hear news of complaints about insurance companies. For example, a person with a medical problem applied for insurance at Company X and was declined. But when applied at Company Y, was accepted. Naturally people will think Company X sucks. But the truth is that Company X is more risk adverse or "kiasi" with their underwriting and this is what keeps the premiums affordable for all their policyholders over the long term.
Q: Great! I think I know what is the best plan for me. But should I add riders on them?
___________________________________________________
Riders
are essentially mini-insurance policies that you can add to your main
insurance policy. There are a few types of riders but the most common type of rider is the one that covers the deductible and/or the co-insurance. Deductible: This is a fixed amount (eg. $1000) of the hospital bill that you cannot claim from your insurer.
Co-insurance: A percentage of the hospital bill (eg. 10%) that cannot be claimed from your insurer.
To help you put in perspective what Deductible and Co-insurance is, let's use some examples:
Example 1:
Hospital bill is $10,000. Deductible is $3000. Co-insurance is 10%.
Claimable amount = [$10,000 - $3000] x 90% = $6300
Amount payable by you: $3700
Example 2:
Hospital bill is $50,000. Deductible is $3000. Co-insurance is 10%.
Claimable amount = [$50,000 - $3000] x 90% = $42,300
Amount payable by you: $7700
If you do not have a rider, you need to be prepared to fork out thousands of dollars. And as you can see from the examples, the larger the bill, the more you need to fork out.
By adding a rider you can remove either the deductible or the co-insurance or both. Which means you can virtually pay $0 of a hospital bill.
Simply speaking, if you have adequate financial resources to pay for the deductible and co-insurance, you can avoid purchasing the rider. If you have little to no savings, you should always take the rider first. You can choose to terminate the rider in future when you don't need it. Most policies should allow you to do this.
Another common type of rider is the Daily Cash/Income rider. If you add such a rider, the insurance company will pay you for example, $100 per day of ward stay. This is useful for those who are self-employed or freelancers.
There is no hard and fast rule when it comes to choosing riders. Even if you have adequate financial resources, you can still take the riders if they make economical sense in protecting your savings in the unfortunate event of hospitalisation.
Conclusion:
___________________________________________________
