The 1 thing you need to have for your retirement planning

Contrary to popular belief, planning for one’s retirement is not just about ensuring that you have enough cash and assets to ensure a comfortable lifestyle

What else are you missing, you ask? Protection.

While you might have built up a tidy little nest egg for yourself, there are many situations beyond your control which could lead to financial loss for you and your family. In your elderly years, high medical bills or care required due to illness or disability is a cost that you should plan for by getting insured to take your mind off financial burdens. With insurance, which transfers the financial risks to insurers, you will be able to receive a set amount of money from the insurers in case the worst happens.

If you’re still unsure of how getting insured will help ease your retirement woes, read on!

Why do you need insurance?

As you age, it is only natural that you become more prone to health problems and accidents. Health problems can range from those associated with the normal ageing process, to more serious ones that require hospitalisation.

According to insurance company Aviva’s 2013 health insurance claims statistics, each hospital claim can range from $800 to more than $10,000. The top 3 conditions claimed by customers aged 65 and above include malignant neoplasms of the breast, bronchus/lung, or prostate, diseases of the eye like cataracts, and diseases of the digestive system such as gastritis and polyps of the colon.

Apart from hospitalisation bills, long-term care is another area that you might want to plan for. Long-term care refers to support or services you might require to help with everyday tasks such as showering, dressing or transferring between bed and wheelchair. According to Aviva, stroke and heart attack are amongst the top causes for Singaporeans needing long-term care.

Such care can be very costly. Aviva’s Long Term Care Study 2011 showed that claimants on average required about $2,150 per month to pay for a domestic helper or nursing home, transportation to and from the hospital for treatments or physiotherapy, mobility aids, as well as daily expenses and bills. Apart from being costly, long-term care can also be required for a prolonged period of time. A Department of Statistics Singapore paper published in 2011 showed that, in Singapore, more than a third of caregivers had been providing care to their recipients for over a decade.

Unless you are confident that your savings is enough to pay for the high cost of medical treatment and long-term care, insurance is a more cost-efficient option to ensure you are able to afford the treatments required if you do fall ill in your elderly years. 

What type of insurance should you look at?

In Singapore, we have the MediShield scheme, designed to cover large hospitalisation bills for those who wish to seek treatment at restructured hospitals and be warded in B2 wards and below, which are shared and non-airconditioned wards.

For those who prefer additional benefits on top of MediShield, they can purchase a Medisave-approved Integrated Shield plan from a private insurer. Integrated Shield plans offer higher insurance coverage that can cover treatment at private hospitals or stays in A/B1 wards in restructured hospitals as well. Integrated Shield plans also typically have higher claim limits.

For protection against the high cost of long-term care, ElderShield is an affordable severe disability insurance scheme which provides basic financial protection to those who need long-term care, especially during old age. It provides a monthly cash payout of $400 a month over six years to help pay the out-of-pocket expenses for the care of a severely-disabled person.

This however, may not be enough for the actual expenses that will be incurred in cases of disability, which is where ElderShield Supplements like Aviva’s MyCare or MyCare Plus come in. With these plans, you may choose to increase the payout amount and duration to help manage the costs considerably. ElderShield Supplements are also typically designed to offer additional benefits – for example, Aviva’s ElderShield Supplements provide lump sum payouts at the start of the claim period to defray initial costs and dependant care benefit to help offset the costs of providing for dependants. 

Who needs to be protected?

Everyone. This is unless of course you are certain that you have more than sufficient cash to pay for your medical bills and long-term care. Otherwise, it is prudent that you protect yourself now in case of an unfortunate event in the future. 

When should you get protected?

When it comes to health insurance like MediShield or Integrated Shield plans, the earlier you get covered, the better. The likelihood of contracting a serious illness or condition increases as you age, and health insurance typically does not cover conditions that you already have prior to purchase. As such, it would be wise to purchase a plan while you are still young and healthy to enjoy full coverage.

The national ElderShield scheme kicks in when you turn 40. All Singaporeans and PRs are automatically covered unless you choose to opt out. If you are thinking of topping up the basic ElderShield coverage with ElderShield Supplements, it is worth noting that up to $600 of your ElderShield Supplement premiums can be paid with Medisave. Moreover, these premiums stay flat and do not increase with age once you have purchased a plan, so it makes sense to purchase a Supplement as soon as you are enrolled into the ElderShield scheme at age 40.

Ideally, everyone would like to be healthy and rid of all financial problems in their golden years. However, since no one can guarantee this, it is definitely better to plan for protection instead. With insurance protection, you will avoid having to bear the financial burden on top of the emotional stress you would have to deal with in cases of unfortunate events.

Transfer the financial risks to insurers today and have peace of mind tomorrow.

This advertising feature was sponsored by Aviva Ltd and published on AsiaOne on 1 Oct 2014. Reproduced with permission.

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