Sunday, September 20, 2015

Let's See My Insurance!

Inspired by this post by Derek, I have decided to list down my insurance and take a look at them!


As you can see, my insurance is very simple and straight forward.

I have term life insurance from the DPS scheme and also the AVIVA SAF GTL from my NS days. It was actually at $100,000 SA, but I felt that I am more valuable after working so I upped it to $200,000 then. This would be a nice gift to repay my parents whatever they have spent on me, which is mostly my university education.

I have minimal CI coverage because I do not think that CI will set me back so much. I am very aware of my family history, so I have a pretty ace chance of getting cancer in my lifetime. However, my father (who has had cancer) told me that he spent around $40,000 which wasn't covered by insurance.

I have H&S insurance from NTUC which I took over from my father. I'm not sure if I would have picked the preferred plan. My father has been to many hospitals, so I'll just trust him on this. I have the assist rider so my out of pocket payment for any hospitalization will be capped at $3,000 which I think is a pretty reasonable sum.

Since my parents are financially equipped to look after themselves in old age, I have no dependents. I think it must be very clearly pointed out that I am over-insured. In my demise, my parents would not need the payout money. Of course, leaving them with a gift is nice. Nice, but not necessary.

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With the introduction of DIRECT insurance products (due to lack of distribution costs), I can see that it is actually much cheaper for me to layer on additional coverage instead of increasing my existing policy coverage. However, in the longer term, it would seem that the SAF policy will be cheaper for later stage life insurance coverage, especially with the policy rebate.

I have decided that I will keep my current policies as it is for now, but I will be doing some research to take action:

1) Find out the difference between all the different NTUC riders and if my current Assist Rider is what I need.

2) Look for and consider a DIRECT insurance that is good until age 65 and compare that to one that is 5 year renewable. I need to find out what is the discount rate that the insurers are using to know if it is worthwhile for me to level out my premiums until 65, or if I should renew after every 5 years. The policy would covers Life + CI for SA $50,000. I am also looking out for an insurer that currently does NOT cover me so that I can "diversify" my insurance risks as well.

AXA Age to 65 seems to be the right plan, but I'll follow up on this when I have time.

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Again, I am a strong disbeliever of insuring yourself for everything for your whole life. Insurance is not only a cost premiums / value of sum assured game. Insurance is greatly dependent on your financial standing and the ability to bear the brunt of the force if you meet with an unfortunate incident and need to pay out of pocket.

But then again, it's your life and your money, so you can do what you want with it. For me, I am very clear about why I will not want to be covered and burdened paying insurance premiums for the rest of my life.

You can read more about my philosophy on insurance here.

12 comments:

  1. Hi GMGH,

    Thanks for sharing. I share the same views that Whole Life is unnecessary and the reason why I have two expensive WL plans is for CI coverage. I have the niggling feeling that I will be struck by a CI only after age 65.

    You got me thinking:

    1) Your dad spent $40,000. Do I really need $190K CI coverage after age 65?
    2) Your AVIVA Early CI plan cost just $1.50 monthly for $50K coverage vs my AIA that cost almost $50/month for $30K coverage. Granted yours may not be level premium but I don't think it will cost as much as mine.

    ReplyDelete
    Replies
    1. Hi Derek,

      The way I see it, if I am struck with anything after the age of 65, the insurance is not to reimburse me from lost income (since I will already be retired), but will instead be compensating me for additional medical costs and inconveniences / drop in quality of life. I am prepared to bear the brunt of an unfortunate incident fully by dipping into my own savings because I think the cost / value of such insurance drops off quite drastically once you've reached the point of financial security.

      However, if you know you're gonna strike, then no harm betting big, haha!

      On the bright side, it is better to be able to be over-insured than under-insured, especially if you are in a situation that you can afford it.

      My early CI plan goes up to $5 next year and tops out at $44 a month at the 61-65 bracket for $50k coverage. I call it early CI, but I really just have it because I know if I get any "early CI", it will be early cancer and I do pretty specific annual screenings given my family history.

      More details about the coverage and premiums of the SAF rider can be found here: http://www.aviva.com.sg/pdf/SAF_Living_Care_Plus_Brochure.pdf

      Delete
    2. Hi GMGH,

      Over-insured is better than under-insured. :)

      While reading through living care policy, I came across this statement which my agent also highlighted:
      "Upon diagnosis of any one of the 37 critical illnesses, the insured person must survive for 30 days before a claim can be admitted. "

      This is very weird. If I were to die within 30 days of a critical illness, this plan will not pay me a single cent. Of course I will want to win the battle against the illness but if I don't make it, it is like I have to make myself survive for 30 days else my dependents will not have a single cent.

      Delete
  2. https://www.google.com.sg/search?q=singapore+medical+cost+inflation&source=lnms&tbm=isch&sa=X&ved=0CAcQ_AUoAWoVChMI__z00oaKyAIVASmUCh3_vwGO&biw=1600&bih=731

    http://www.todayonline.com/commentary/reining-healthcare-inflation-beast

    https://www.google.com.sg/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=%3D40000*(1.06%5E30)

    ReplyDelete
    Replies
    1. Hi SMK,

      Thanks for the links!

      The best part about the SAF Living Care and Living Care plus plans is that you can opt to increase your coverage any time! When I can see that cost of medical care for my risky outcomes have gone up, I will increase my coverage appropriately.

      Delete
  3. Hi Mate,

    Won't you want to insure yourself after 65years old in case there's any big medical fee that you will need to pay?

    ReplyDelete
    Replies
    1. Hi Edmund,

      If I have any big medical fees that I have to pay after 65, I will be dipping into my emergency fund / retirement portfolio / savings to pay for it. In a sense, I am "self-insuring". The cost/benefit of insurance after retirement is not worth it in my opinion.

      Delete
  4. Impressed by your insurance listing and beliefs. Given you seem to think it's likely you will develop a cancer at some time I'd think you'd be better advised to take out some kind of serious illness cover to insure potential costs. Dropping life insurance could be one way to take this out, you state your parents don't need your cover!

    Derek Walsh @ Simply Insure

    ReplyDelete
  5. I can understand your stance on insurance and I appreciate you sharing your opinion. I am not completely sure where I stand on these issues but your post has given me a lot to think about. Maybe I should look more into the matter so I can make an informed decision.

    Jason Hayes @ DECORM

    ReplyDelete
  6. This was an interesting read. Choosing insurance is definitely a balancing act. You never know whether you'll become ill at some point throughout your life, or live healthily through to retirement. If you can afford the monthly premiums that you're paying and it gives you peace of mind, then it makes sense to take out a comprehensive plan.

    Henry Hansen @ Ethica Private Wealth Specialists

    ReplyDelete

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