Sunday, September 11, 2005

Health Insurance II - My Opinions

For a short glossary of some of the terms and acronyms I use frequently in this post, please refer to Life Insurance I, II and Health Insurance I.

A recent newspaper article commented that Singaporeans are generally well insured. According to a survey by AIA, 70% of Singaporeans have death cover and 65% have accidental death and disability cover. I believe the disability mentioned here is PERMANENT disability. And as I've previously mentioned, CI policies are very popular in Singapore. The survey reported that 57% of Singaporeans have CI cover. All these figures compare favourably with our neighbours, Malaysia, Thailand and Hong Kong.

All very nice, wouldn't you say?

But I beg to differ. On some parts.

Yes, I do agree that on the whole, Singaporeans are pretty well-covered, life insurance-wise. Meaning, we're pretty well protected from the contingency of death. It is the health insurance part that I find rather lacking for the average Singaporean. And that's a pretty worrying trend.

The above survey results mentioned nothing about IPs, PMIs or LTCs. PMI coverage is mainly provided for via Medishield. With the recent revamp of Medishield, I feel it is now sufficient for the average Singaporean (I'm not talking about those who wants Class A wards and top class treatments). But IP and LTC cover is not even mentioned in the survey results. Because it is not developed in Asia in general? *Shrug* From my own working experience, very few Singaporean have IP and LTC cover. And very few insurers sell such products in Singapore!

So my first point is, health insurance coverage is lacking for the average Singaporean. Particularly IP and LTC cover.

Now, now, surely CI cover can make up for the lack of IP cover? No, in my opinion, not really. IP cover zooms in specifically on the income loss due to illness or accident during useful working life. It will guarantee one an income flow for as long as one is unable to work (until retirement). This does not happen for CI. One, there are certain diseases or injuries that can render one unable to carry out your own occupation, e.g. hand injury to musical instrument player, that are NOT covered by CI policies. Two, even if it is covered and a payout is made, the payout may not be sufficient if the recuperation period takes longer than expected.

These two reasons also apply for the case of LTC cover. LTC covers for the need for nursing care. This usually results from chronic conditions, i.e. not life threatening, non-recoverable but long-drawn diseases. These are definitely not in the list of critical illnesses. LTC cover again zooms in specifically on this need and meets them.

If you think about it, CI cover is sort of neither here nor there. If you gana a critical illness during your working life, and suppose you have adequate PMI and IP cover, then your medical expenses are met by your PMI policy and your IP policy ensures your dependents continue to have a stable income for daily expenses. If you gana a critical illness during your retirement years, and suppose you have adequate PMI and LTC cover, medical expenses are met by PMI and nursing care expenses are met by LTC.

CI doesn't really come in at all. Indeed, perhaps the only instance the CI comes in useful is for meeting the deductible part of PMI cover. Even that is a little weak. What if you've been warded for treatment for something NOT in the list of the critical illnesses?

And so, my second point is CI cover is not required, as long as you have adequate IP, PMI and LTC cover.

So why are CI policies so popular then, you may ask. The media. And this is a global thing, not just in Singapore. The media keeps harping on the serious illnesses like cancer, e.g. research shows that eating this or doing that raises the chances of catching such and such cancer by XX%. How many times have you read such reports? This creates and builds up a fear in all of us in catching these diseases, at the expense of those "in between" illnesses, i.e. those that can still put you off work for a sustained period of time. So all the attention goes to the CI and the IP gets ignored.

As for LTC cover, well, we rationalise this by thinking it is a long way off (to our retirement) and put off planning for it. But we CAN and should plan for LTC needs now. Assuming regular premium paying variants of LTC policies are available (they are in USA), one can get a LTC policy now. And since we get them at younger ages, the annual premiums required will be cheaper. A good reason to start early.

Actually, health insurance products are generally shunned in Singapore for another reason. It is that fixation on returns symptom again. Health insurance products are all protection type policies and do not give returns. Singaporeans hate it when they pay and get nothing back in return. I've mentioned this symptom before so go read it if you haven't already.

So my last point is the media causes unwarranted attention to be put on the CI. And fixation on returns causes people to ignore health insurance products in general.

The recent revamp of Medishield is a very positive move taken by our government. I applaud it. Indeed, I've gone further and queried the Ministry of Health if they intend to carry out future adjustments, especially to the lifetime and annual maximum claim amounts, to accommodate for inflation. The reply given to me was yes, they intend to do so and indeed, have already been doing so for some time. Very heartening news, this.

Looking ahead, I hope more can be done to educate the general public about the need for IP and LTC cover. With our aging population, each member of the working class will be supporting more from the golden generation. This puts greater importance on BOTH IP and LTC coverage. The financial strain on the working class will get greater during times of incapacity to work. And the needs for and costs of nursing care will only increase. Who will pay for all this?

We need each person to be self-sufficient as far as possible. Education is the starting point for making this happen.

Akan Datang: Preparations before coming over

201 days to go.


Anonymous Blue Cross of California said...

Great blog I hope we can work to build a better health care system. Health insurance is a major aspect to many.

Sat Dec 17, 02:48:00 am 2005  
Blogger Acey Deucey said...

I can't decide if that was a spam comment (because of the link). *Grin*

I suppose I'll let it be.

Sat Dec 17, 08:10:00 am 2005  

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