Quick Answers Life & Health

You may have many questions on life and health insurance plans – what they do, how they work and what to look out for.
With this section, we hope to shed some light on some of these questions.

If you can’t find the answer to your question here, please get in contact us and we'd be happy to help!

Life

How much death coverage should I have?

One method is to add up the expenses that you want covered for your loved ones, over a set period of time, if you weren't able to provide for them.

For example, you may want your life insurance to pay off the mortgage, kids' education, and living expenses for your family for 10 years.

A professional financial adviser will be able to help you map out an appropriate level of coverage.

Term life policies – What's the difference between a level and decreasing plan?

With a level term plan, the coverage remains the same throughout the entire policy duration.
With a decreasing term plan, the coverage diminishes at your chosen rate over a specific period of time, and is ideal for protection against reducing debts such as mortgages and large loans.

I’m young and single so I don't need life insurance, right?

Even if there's no one financially dependent on you, a small amount of death cover may still be needed to cover your debts e.g. student loans and credit card bills.

You should also consider critical illness and disability coverage to take care of your living expenses and bills, in the event that you aren’t able to work.

Other reasons to buy while young include locking in the lower premiums, and ensuring you get full coverage before you develop any health problems later on in life.

I already bought life insurance years ago. Why do I need to review it?

Here are three good reasons why you should:

1. Inflation.
The coverage amount – known as Sum Assured in insurance terms – that you bought years ago may now no longer be sufficient, thanks to the rising cost of living.
According to Singstat (2013), Singapore's annual inflation rate averaged 4% over the last 5 years. Assuming it stays flat at 4%, $100,000 today will only be worth $45,639 – less than half – in 20 years!

2. Dependants.
As you move through different life stages such as getting married and having children, the number of people who are financially dependent on you will also change. Naturally, the amount of coverage needed would increase with the number of dependants you have.
Think about what would happen if they were left with an unpaid mortgage, education fees and their daily expenses, if you were no longer able to provide for them. 

3. Lifestyle.
As your income level rises, you should increase the amount of coverage you have to match your higher net worth and more expensive lifestyle. This will protect you and your loved ones against any potential (and uncomfortable) downgrading of lifestyle, in the event that you’re not able to provide for them.

I’m a housewife so I don't need life insurance since nobody is depending on me for income.

This is a misconception.

A stay-at-home mum has many responsibilities such as taking care of the household and children. If she's no longer able to carry out those functions due to illness, death or disability, the family will have to seek alternatives, such as engaging a domestic helper or paying for daycare and tuition services. These will require funds that, with proper planning, payouts from insurance plans can help with. 

What is the difference between a Term and Whole Life plan?

A Term plan is a pure protection plan that's meant to cover you for a specific period of time, although it's become increasingly common for insurers to extend coverage to age 99.

A Whole Life plan covers you for the remainder of your lifetime, and includes a savings component where you can get money back when withdraw the cash value. It’s essentially a protection and savings plan rolled into one, so premiums for such plans are higher.

Take a look at a comparison of term life and whole life plans .

Besides the standard Death benefit, most Term and Whole Life plans have critical illness, total & permanent disability (TPD), and premium waiver add-ons available to complement your coverage.

Health

What is or isn't covered with an Integrated Shield plan?

Covered:
Hospitalisation and surgical bills, including pre- and post-hospitalisation consultations and treatments such as kidney dialysis and chemotherapy. 

Not covered:
Elective treatments, small outpatient bills such as GP visits for common cough and cold, preventative health screenings, cosmetic surgeries and similar.

What level of coverage should I pick?

The plan type that you choose should be determined by the type of hospital (government or private) and ward class where you'd expect to receive treatment at.

Note that a pro-ration factor will be applied if you stay in a higher class ward than what your plan covers. For example, with an Aviva's MyShield, if you've purchased a plan for a Class B ward and choose to stay in a Class A ward, only 85% of the claimable amount will be paid out.

Are pre-existing conditions covered by Integrated Shield plans?

Pre-existing conditions aren't covered by Integrated Shield plans since insurance is meant to protect against future events, not to pay for events that have already occurred.

Please note that you have to disclose all pre-existing conditions at the time of application as insurers may declare the policy void if you misrepresent or fail to disclose them.

Aviva is the only insurer in Singapore to offer a moratorium underwriting option which can provide you with the opportunity to cover minor pre-existing conditions.

What is the difference between moratorium and full underwriting for health plans?

Full underwriting means you provide complete disclosure of your health and medical background when you apply for the policy. The insurer assesses the risk and determines whether or not to accept an application as well as the terms or coverage they can offer. You may be asked to undergo a medical check-up.

With moratorium underwriting, you don't need to make any health declaration, nor undergo a medical examination. Instead, the insurer will declare a waiting period. If you don't experience any symptoms, or receive treatments, medication or advice for certain pre-existing condition or related conditions, then you'll be covered even for those conditions, once the waiting period is up. Do note that there are some pre-existing conditions that won't be covered even after a moratorium – or waiting period – has passed, such as stroke, kidney failure, dementia.

The obvious appeal of this is that the application process is simple because there are no lengthy medical history forms to complete and your policy can be issued quickly. There’s also an opportunity for minor pre-existing conditions to be covered if you can meet the conditions of the moratorium.

Why do health plans have deductibles and co-insurance, and what are they?

The deductible is the initial amount you need to pay for claim(s) made in a policy year, before the medical cost is covered by your insurance plan. This is usually the first S$3,000.

Co-insurance is the percentage of the bill you need to pay, to co-share the bill with the insurer. This is usually 10%.

These features help to keep health plans affordable by preventing abuse of the coverage by the insured. Consumers should weigh their out-of-pocket costs against the premium. If their concern is to reduce out-of-pocket medical expenses, most insurers typically offer riders that allow customers to also cover the co-insurance and/or deductible portions. However, please note that the amount of deductible and co-insurance may vary across different insurers and different choice of plan types.