If
you are comparing shield plans by choosing the cheapest premium and
best policy benefits, we suggest you look deeper than that. Below is a simple FAQ to guide you and help you review what is truly the best shield plan for you:
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 Life. You can still choose to ward into a private hospital or A-class ward, but the problem is that 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. (Take note that your Medisave account is made up of your own money)
So for example, Mr Tan is ill and requires hospitalisation. He intends to seek treatment in a private hospital. The total bill incurred is $16,000. However, due to the limits of Medishield Life, he can only claim $2000 (this is an estimated figure and it depends on the type of treatment involved). The balance is payable through his own Medisave account and/or cash. Medishield Life was never meant to cater to the high-end medical market and if you do not want to face such a dilemma in future, you may wish to purchase a private integrated shield plan.
Here is the current list of private integrated shield plans available in the market:
Class 'B1' Ward and Facilities (Gov Hospitals)
AIA HealthShield Gold Max C
Aviva MyShield Plan 3
AXA Shield Standard Plan
Great Eastern SupremeHealth Plan B Plus
NTUC Income Enhanced IncomeShield Plan Basic
NTUC Income IncomeShield Plan B
Class 'A' Ward and Facilities (Gov Hospitals)
AIA HealthShield Gold Max B
Aviva MyShield Plan 2
AXA Shield Plan B
Great Eastern SupremeHealth Plan A Plus
NTUC Income Enhanced IncomeShield Plan Advantage
NTUC Income IncomeShield Plan A
Prudential PruShield Plan A Plus
Private Ward and Facilities (Private Hospitals)
AIA HealthShield Gold Max A
Aviva MyShield Plan 1
AXA Shield Plan A
Great Eastern SupremeHealth Plan P Plus
NTUC Income Enhanced IncomeShield Plan Preferred
NTUC Income IncomeShield Plan P
Prudential PruShield Plan A Premier
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 might 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 may be found by looking at the way the insurance company operates. 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.
Strict Underwriting + Big Risk Pool = Low Claims Rate = Cheaper Premiums
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. We will not be 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 premium (risk averse).
On the other hand, a company that is more lax 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: I have conducted a review of the insurance companies and decided which is the best plan for me. But why do most plans have "riders". Should I buy them?
Deductible: This is a fixed amount of a few thousand dollars depending on the hospital ward class and your policy contract. This amount cannot be claimed.
Co-insurance: 10% of the bill that cannot be claimed
To put things into perspective we shall use 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.
Conclusion:
I
hope this will guide you and 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!
If you wish to apply for a shield plan, I can link you up with an agent who will rebate you 30% of her commissions. You can contact me using the contact form below.
Q: I am on Medishield Life 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 Life. You can still choose to ward into a private hospital or A-class ward, but the problem is that 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. (Take note that your Medisave account is made up of your own money)
So for example, Mr Tan is ill and requires hospitalisation. He intends to seek treatment in a private hospital. The total bill incurred is $16,000. However, due to the limits of Medishield Life, he can only claim $2000 (this is an estimated figure and it depends on the type of treatment involved). The balance is payable through his own Medisave account and/or cash. Medishield Life was never meant to cater to the high-end medical market and if you do not want to face such a dilemma in future, you may wish to purchase a private integrated shield plan.
Here is the current list of private integrated shield plans available in the market:
Class 'B1' Ward and Facilities (Gov Hospitals)
AIA HealthShield Gold Max C
Aviva MyShield Plan 3
AXA Shield Standard Plan
Great Eastern SupremeHealth Plan B Plus
NTUC Income Enhanced IncomeShield Plan Basic
NTUC Income IncomeShield Plan B
Class 'A' Ward and Facilities (Gov Hospitals)
AIA HealthShield Gold Max B
Aviva MyShield Plan 2
AXA Shield Plan B
Great Eastern SupremeHealth Plan A Plus
NTUC Income Enhanced IncomeShield Plan Advantage
NTUC Income IncomeShield Plan A
Prudential PruShield Plan A Plus
Private Ward and Facilities (Private Hospitals)
AIA HealthShield Gold Max A
Aviva MyShield Plan 1
AXA Shield Plan A
Great Eastern SupremeHealth Plan P Plus
NTUC Income Enhanced IncomeShield Plan Preferred
NTUC Income IncomeShield Plan P
Prudential PruShield Plan A Premier
 |
| 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 might 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 company still want my business lah! Confirm! |
Q: So how can I pick the best plan then?
___________________________________________________
The answer may be found by looking at the way the insurance company operates. 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.
Strict Underwriting + Big Risk Pool = Low Claims Rate = Cheaper Premiums
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. We will not be 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 premium (risk averse).
On the other hand, a company that is more lax 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: I have conducted a review of the insurance companies and decided which is the best plan for me. But why do most plans have "riders". Should I buy them?
___________________________________________________
Riders
are essentially mini-insurance you can purchase to add to your main
insurance policy. There are many types of riders. But the most common
rider is the one that covers the deductible and/or the co-insurance. Deductible: This is a fixed amount of a few thousand dollars depending on the hospital ward class and your policy contract. This amount cannot be claimed.
Co-insurance: 10% of the bill that cannot be claimed
To put things into perspective we shall use 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.
Conclusion:
___________________________________________________
If you wish to apply for a shield plan, I can link you up with an agent who will rebate you 30% of her commissions. You can contact me using the contact form below.
