Insurance & Costs of having and raising a child

[bb88]

4) Personal Accident

Personal Accident plans are extremely profitable for insurers i.e. you are overpaying for the protection.

Look at the payouts and it's clear that for minor accidents like loss of a toe/finger the payout is laughable. For major accidents, you get the full payout, but chances are you will land in hospital anyway, and then you should be worrying about your H&S coverage.

Beef up your H&S coverage rather than buying a PA policy.

PA and hospital income plans do not pay enough when you really need the money, and for small bills you can easily self-insure.

First post. Ignorant here. Late at night reading this heavy thread. Not fully understanding. Will revisit later.

But would like to just comment on the Personal Accident Insurance. I had "benefited" from this some years back. Covered myself with NTUC for 3 years with think 25% or 50% additional loading as I ride a motorcycle. Had a 10 or 15% discount for 3yrs upfront premium. Paid ~$250 in total for the most basic coverage.

Unfortunately I met with a thankfully rather minor accident. Skidded on the road and ended up with considerable abrasions. No impact so my blessings. Medical bills over think 2 weeks or so came up to think $400-ish. Didn't exactly have a hard time claiming. Smooth process and within a couple of weeks.

Was glad that at that time I decided to take up that insurance since I do quite a number of long distance rides to MY and TH. Although death is probably a more "logical consequence", I was "attracted" to the repatriation medical coverage of think $5k? Anyhow, I recovered more bills than my premium so it was useful.

The purpose of this PAI should perhaps be thought more of a reimbursement for minor accidents rather than serious ones. If you cut yourself, burnt in kitchen, fall into the drain, sprain your ankle, etc. you can activate this policy to claim to cover medical bills. Useful if you engage in sports or is clumsy by nature :p.

[Musicwhiz]

Yes I think PA insurance is suitable for people engaging in more "high-risk" activities such as extreme sports, or are in jobs where they have to commute a lot (by bike or car), and are generally more active than the average sedentary computer user. It's helpful to be able to claim some expenses, and one must balance the costs versus benefits.

For me, my job is pretty desk-bound, so it would be pointless for me to have this insurance. I do cycle around Singapore but not on roads (I stick to pavements, which is erm illegal hahaha); but that won't justify getting PA insurance as I don't commute that often by bicycle anyway. Other than that, I play racquet games and go for an occasional swim which are also deemed non-hazardous.

[brattzz]

u know what? not sure if it's god telling me something, this morning an motorbike accident happened on my way to work,
i was driving on AYE at clementi ave 2 towards city, on the left lane of AYE slowly, at 8am, traffic is heavy and slow, suddenly the cars in front starts to sway to lane 2, so i was like wondering? har? wat happened?

then i saw it, right in front of me, a fallen motorbike was on the road, and the biker was like 6 to 8m away from the fallen motorbike location. The biker ( a young man) was face side down on the road.. there was blood on his face, he was shaking uncontrollably lying down, he was calling for help...! i saw his bloody face, i saw his eyes of pain!

Quickly i stop my car (hazard lights on), ran out and look at him, he was still shaking uncontrollably, cannot talk..
i quickly called 995, operator ask me where/what? i told him here, he say ok, ambulance in 10 mins, hang in there.

I dun't dare to move him, so i removed his bagback, to allow him to lay down better, i talk to him in chinese, tell him that an ambulance is on the way, he's eyes closed... and he stop shaking.... his breathing slows down... my wife pass me tissues and i start to wipe away his blood on face, and mouth to allow him to breath better...i hold onto his shoulder and keep talking to him, don't worry, calm down.. ambulance on the way, hang in there... 2 lorry drivers came to help, 2 indian bros, one bro support the biker on the back.. the other bro loosen the biker's shoes....

I look at his bike, it's an malaysia bike, i opened his backpack, wanted to find his passport or wallet to at least call his company or someone at his home...but i couldn't find them.. maybe it's in his jean's wallet, but i don't dare to move him as he is still laying down sideway supported... he has gone quiet.. he is still breathing. Then he starts to open his eyes... then i keep talking to him.. asking him, any no.s to call? hang in there, ambulance coming, don't move, just lay down..
slowly he say, ok ok... i was soo glad, kept talking to him... then i heard the siren of the ambulance.. my heart was like soo HAPPY!!!!
it actually arrives in less than 10 mins!

The ambulances medic, 2 of them + driver came down, it's a lady medic, they help him up slowly, put him onto the wheelchair.. and shift him into the ambulance... i ask the lady medic, will he be ok? she say, appears to have head concussion... in a daze.. it's 8 mins to NUS, let the docs see quickly... i pass her my contacts. Say thank you and i drove off..

My mind went back to the moment i open the biker's backpack, inside, it's a sweater, a 1 litre PET bottle of water, and a tool bag for his work... he's a malaysian working in sg.. making a living.. to think of it, i used to be a biker too until i change job and have to have a car.

For SGD$1.5k or so salary or $60 per day... the biker puts his life at risk everyday, riding from causeway 2 to sg to work...it's an honest living, doing what he can to bring home the bread.. wat will happen to him? will he be ok? does he have P&A insurance? does he have disability income? how does he pays his hospital bills? how about his dependents, parents/wife and worst kids?? what happens if he is TPD or dead?

i still think about it now.

[mikh]

brattzz, that's wonderful help!

[belgarathc]

I am a biker too, rode locally almost everyday and rode overseas once or twice a year.

I better take care of myself and my family.

[Poowawa]

A very interesting thread! The debate over Term v Whole Life never ends.

I would just like to ask the experts, for someone whose wife is working, does not have any children (not at the moment anyway) and coupled with retired parents who are not financially dependent on me, would it make sense for me to get term insurance? I currently am in my early thirties and have 3 Whole Life and 2 Endowments Plans with premiums totalling around $9,000 per year.

I previously did my own research on insurance sometime back and did consider terminating one of my Whole Life Policies and getting Term but ultimately decided against it. My basis is term insurance is to essentially ensure that dependents are taken care of in the event of death/disability but seeing that I do not exactly have any dependents, I have decided not to take up term insurance until i have a child. Is this a wise move?

Another thing is regarding shield plans. Sometime back, I attended a financial planning course and the instructor actually suggested getting the best possible shield plan (e.g. private hospitalization). His rationale and experience is this: While he thinks that public hospitals are equally good as compared to private hospitals, the problem he sees is that they tend to be overcrowded. In a time crucial situation where every second counts, his view is that he would rather pay that extra bit to have peace of mind. As his reasoning seems sound, I took up a top end shield plan (Private Hospital with Class A ward --> I don't quite like sharing a ward with others personally).

Any views on this?

[yeokiwi]

A very interesting thread! The debate over Term v Whole Life never ends.

I would just like to ask the experts, for someone whose wife is working, does not have any children (not at the moment anyway) and coupled with retired parents who are not financially dependent on me, would it make sense for me to get term insurance? I currently am in my early thirties and have 3 Whole Life and 2 Endowments Plans with premiums totalling around $9,000 per year.

I previously did my own research on insurance sometime back and did consider terminating one of my Whole Life Policies and getting Term but ultimately decided against it. My basis is term insurance is to essentially ensure that dependents are taken care of in the event of death/disability but seeing that I do not exactly have any dependents, I have decided not to take up term insurance until i have a child. Is this a wise move?

Another thing is regarding shield plans. Sometime back, I attended a financial planning course and the instructor actually suggested getting the best possible shield plan (e.g. private hospitalization). His rationale and experience is this: While he thinks that public hospitals are equally good as compared to private hospitals, the problem he sees is that they tend to be overcrowded. In a time crucial situation where every second counts, his view is that he would rather pay that extra bit to have peace of mind. As his reasoning seems sound, I took up a top end shield plan (Private Hospital with Class A ward --> I don't quite like sharing a ward with others personally).

Any views on this?

Your current risks are sickness and disability. Therefore, it may be prudent to purchase disability insurance.
Being disabled is quite different from death. The maintenance fee for after life is almost zero(except the annual visits to crematorium....) but disability coupled with the loss of monthly income can be quite taxing for the family.

Since you have no dependents at the moment, there is actually no real need to have whole life policies or term insurance.
Unless there are some liabilities that you wish that you can clear for your family members if you pass away.
Some examples are mortgage loans, credit card bills, funeral expenses, car loans, business loans etc.

Obviously, money can never replaced your loved ones but money can give the surviving family members some other options in their life.(start a business, go back to school, change career, travels, pursue hobby etc..)

If you plan to have a child, maybe it is time to look into protection for the mother and the child. Giving birth is a common affair but it is still rather dangerous. It is important to look into medical plans that cover pregnancy complications.
As for baby's congenital diseases, I believe there are none out there that covers these. Since the risks cannot be hedged, it will be wiser to have some savings to deal with it.

[Blackjack]

I met up with my advisor recently, and decided to take up a separate H&S plan to augment my existing coverage, which is the basic Medishield. I also took up the best possible shield plan to cover private hospitalisation, along with riders to offset the premium payable.

On the DI insurance, I actually felt it was a bit onerous for the policy holder in the following areas, though some are contentious and may be debatable:

1) Premiums are not guaranteed and may be adjusted based on future experience or due to changes in occupation or country of residence. Whilst it may be reasonable to expect premiums may increase if one were to take on a more hazardous job or categorized in a different category of employment, it seems that the above phrase is meant as a catch-all via the use of 'future experience' and 'changes in occupation'. It essentially means even if one were to change from one desk-bound job to another desk-bound job, premiums are still not guaranteed as the 'future experience' may change. Similarly, a change of country of residence also requires the policy holder to actively remember to inform the insurer to the move, and such a notice is not an FYI action, but to seek concurrence on the policy remaining unchanged.

2) "Total Disability" means a state of incapacity, resulting from illness or accident, which is such that the Life Assured is
(a) totally unable to perform the material duties of
i. his own occupation or profession for the first twenty four (24) months of any period of Total Disability; and
ii. any occupation or profession to which he is suited by reason of his training, education or experience after the first twenty four (24) months of any period of Total Disability; My thoughts as follow: Firstly, clause(ii) weakens the proposition as the insurer can argue the claimant can easily find employment in any other 'related' employment even if the claimant may find it physically strenuous to do so. The onus is placed on the claimant to prove why it is practically infeasible to do so? Secondly, for people who expect to work in desk-bound jobs in the near future, is the effective value add of the policy reduced? Since it effectively insures only against primarily loss of both hands, and perhaps loss of mental capability via depression, psychological disorders, etc. (Assuming one can still turn up for work with other losses since it does not prevent the person from doing what he/she used to do) The premium for this category is much less than other categories however. Thirdly, my understanding from my advisor was that the certifying doctor will most likely be required to substantiate the certification with "a lot of paperwork" in reality, hence one would be prudent to utilise the deferment period (shortest is 3 months) to sort out the paperwork. However, there is no guarantee that the process will be completed within this period. My feel that is that for short periods of loss of income for instance, the benefit becomes marginalised severely especially if the entire certification process drags on.

[d.o.g.]

On the DI insurance, I actually felt it was a bit onerous for the policy holder

This is true. However it is understandable given that the insurer is potentially on the hook for 30-40 years of payouts if you get disabled early. Obviously it will want as many escape clauses as possible. To get the full payout is quite tough, since you need to be totally unable to do your own job for the first 2 years, and thereafter unable to do ANY job that you can physically perform. However you CAN get the partial payout which reimburses the difference.

So if you were a CEO, then got attacked by someone and now suffer from poor memory, you can still be a clerk (you can write down your assignments etc) but you can't be CEO anymore. The policy should then reimburse you the difference in income. Or if you were an airforce pilot and lost the use of one hand, you can still work on the airbase. You won't get your pilot pay, so the policy should kick in and make up the difference.

In general the disability income policies in Singapore are not very good. However they are probably better than nothing. It would still be prudent to avoid high-risk behaviour rather than rely on the policy. Like people riding bicycles - wear a helmet, but also avoid busy roads!

---

I would just like to ask the experts, for someone whose wife is working, does not have any children (not at the moment anyway) and coupled with retired parents who are not financially dependent on me, would it make sense for me to get term insurance? I currently am in my early thirties and have 3 Whole Life and 2 Endowments Plans with premiums totalling around $9,000 per year.

Disclaimer: I am not an "expert" in insurance. At best I am an informed consumer.

My $0.02:

You have zero dependents i.e. financially nobody is worse off if you die. Therefore from the purely economic standpoint there is no need to buy any insurance on your life, whether term or whole life.

Since you have 3 whole life and 2 endowment policies you in fact have most of the money going into investments and very little going into actual insurance coverage.

Think about WHY you have the policies. If you want life insurance (even though it appears that you don't need it), buy term. If you want investment, invest by yourself into index funds or stocks. Right now your insurance policies are the worst of both worlds: low coverage and low returns.

I took up a top end shield plan (Private Hospital with Class A ward --> I don't quite like sharing a ward with others personally).

IMHO this is the most sensible choice for EVERYONE. Why? Not because you necessarily want to stay in Class A but because your medical bills could be very high. On a cheaper plan you are more likely to bust the annual or lifetime claim limit. Even plans with no lifetime limit have an annual limit.

As you get older the premiums go up. If you are destitute but healthy (a rather unlikely combination) you can downgrade the policy to save money. On the other hand, if you are well-off but sick (a more likely situation) you cannot upgrade the policy to improve coverage!

[Blackjack]

Hi d.o.g.

To add on, I originally had the impression that for a good DI insurance, the policy will pay a percentage, often 75%, of the difference between one's new wage and the old one, where one's new wage will keep changing. However, my take-away from my advisor is that I will need to attribute an amount I wish to cover, and this will be constant even as I age or get increments. i.e. Premiums payable for $1k income coverage is lower than $10k income coverage.

Is this still a good policy to take up in your opinion?