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Types of Insurance

In the nature of our work, we often meet clients who are confused with the different types of insurance in Singapore. In fact, many have the misconception that there are types of insurance that will provide coverage for “everything”.

Unfortunately, no insurance covers “everything”. Even if there is an insurance that covers “everything”, it will probably be extremely high cost and highly inefficient.

The good news is that insurance product development has improved tremendously over last decade. There are many different types of insurance plans that cover various aspects of our life. With a proper combination, many can be adequately insured. Hence, it is essential to know the different types of insurance plan available to build a sound insurance portfolio.  We would like to educate the public to understand better by giving a short introduction below.

5 types of insurance coverage the one should have

types of insurance -

As per the picture above, they are

  1. Death Coverage
  2. Critical Illnesses Coverage
  3. Disability Income Protection Coverage
  4. Accident Coverage
  5. Hospital Insurance Coverage

Death Coverage is the first insurance policy. It covers death and usually combines with coverage for Total Permanent Disability (TPD). The general definition of TPD is

  • Total blindness or
  • Loss of use of 2 limbs

This coverage is usually suitable for

  • Sole breadwinner or parent to provide living expenses for their surviving spouses and children in the event of their early departure
  • Young working adults to provide living expenses for their aged parents
  • Grandparents who want to leave a legacy behind for their children and grandchildren

Critical Illnesses Coverage was first introduced in the late 1990s. It covered only a few specific conditions like cancer and heart attack. The list of critical illnesses had increased as most insurers offered coverage for up to 30 critical illnesses. The definition of critical illnesses was also standardised across all insurance company in Singapore to avoid confusion from the public.

There are 2 types of insurance coverage for critical illnesses coverage, and they are as follow

  • Advance Stage Critical Illness cover (standardised in 2003 as stated above)
  • Early Stage Critical Illnesses (introduce in 2009). With the advancement in medical technology, many critical illnesses that could only be detected at the advanced/terminal stage in the past can now be diagnosed in the early stages. For example, there is cancer stage 0 and stage 1 now. Unfortunately, this early stage is NOT claimable in the advanced stage critical illnesses coverage as they do not fit the definition. This situation created a lot of unhappiness as patients diagnosed with early cancer cannot claim from their existing critical illnesses coverage. Hence, the early stage critical illness plan is introduced to cover the early stage of a critical illness that is not covered by the critical illness coverage in the past.

This coverage is suitable for everyone as it provides a lump sum upon diagnosing of 30 critical illnesses (early & advanced stages) The lump sum would be handy for outpatient treatments, replacement of loss of income, purchase of additional medical equipment.

However, do note that the early stage critical illnesses coverage are more expensive than the advance critical illnesses coverage. Hence, we recommend a combination of both types of insurance for a sufficient coverage at a reasonable cost. Contact us here for a friendly discussion.

Disability Income Protection Coverage is an income replacement policy if a person is not able to work in his/her occupation due to sickness or accident. There are only 3 insurance companies that provide coverage for this insurance. One can insure up to 75% of his income to age 55, 60 or 65.

This type of insurance coverage is recommended for

  • Sole breadwinner to ensure his family lifestyle goes on in the event he is not able to work
  • Professionals who want to protect their best asset – their ability to earn their income

This is a more complicated insurance among different types of insurance. There are many terms & conditions, and it varies from insurers. We strongly recommend you to speak to a professional if you are interested in this insurance or you can contact us here for a friendly discussion.

Accident Plans as per suggested by its name. It ONLY covers financial losses due to an accident. There are many sections of the accident plan, and we will go through the more important ones.

  • Accidental death which many agents & telemarketer used it to impressed you in significant amounts ($200,000 coverage etc)
  • Major and other permanent disablement (similar to the above)
  • Accident Medical Reimbursement. This is the one that you should pay attention to, and we feel that this is the most relevant section of the accident plan with the highest possible claim. It covers outpatient medical charges as long as the clause is an accident. Many agents & telemarketer don’t recommend this as they have not process a claim before or they are just not aware of such feature.

The cost of accident plan is affordable within the range of $20 to $30 per month for a reasonable coverage.

Hospital Insurance Coverage in Singapore is made of CPF Integrated MediShield and private insurance plan from private insurers. The combination of these 2 plans often reimburses the insured’s hospitalisation bill “As charge” in most cases. The coverage includes pre & post admission consultation (subject to 90 to 180 days depending on the insurer). There are usually 3 different types of insurance coverage for hospitalisation.

  • Private & Restructure Hospital (all ward classes up to hospital ward A)
  • Restructure Hospital (all ward class up to hospital ward A)
  • Restructure Hospital (ward B and below)

Although the plan type is “As-charge”, some items are not claimable. A short list of non-claimable items is shown below.

  • Extra side bed for the accompanying spouse or parents
  • Additional meals or snacks
  • Other non-standard items and exclusion items stated in the policy contract

With the massive increase in the cost of hospitalisation in Singapore, this is the most important insurance plan that we feel every Singaporean should have regardless of age. We would recommend you to get the private & restructure plan as long as this doesn’t exceed your budget. This is because the waiting treatment time for the private hospital is shorter than restructure hospital in most of our claim experience in the last 10 years.

To better understand the types of insurance that you have.

To ensure your protection needs are met.

To ensure your current cover is appropriate.

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Disclaimer: All postings are personal views and opinions meant solely for educational or informational purposes and not to be taken as actual advice. Please contact a qualified person or organisation who is capable of answering your questions about the particular topics you are keen to find out in further details. Certain information may change from time to time and may not be accurate or updated by the time you come across it here. You are advised to counter-check information for its accuracy before concluding on your own. We hope this article on different types of insurance is useful to you.

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