Insurance 101

Rule number 1: Buy health insurance for your child once he/she is born. Immediately. Before she develops any medical issue of any kind. Unless he/she is born with obvious issues that is detected from birth in which case you should still try to buy insurance even if that condition needs to be excluded.

This of course means you should do your research about what health insurance to get before baby is even born. In Singapore when people think of health insurance they generally think of 2 kinds 1) the shield plans and 2) the 30 critical illness plans. I venture to suggest there is a third kind but lets take it step by step.

Shield plans are generally quite cheap and you can pay for them using medisave. So just pick one and it will be good to also get the optional riders that essentially mean that for a bit more each year your medical bills are covered from the first cent.

Then there is the 30 critical illness type which is less essential and is usually tied to a life insurance plan so you can think about that later

The third kind is a comprehensive medical plan that covers everything from hospitalisation to GP visits to specialists consultation and even, for some plans, TCM, vision correction ie contact lens or glasses or lasik and even pregnancy and delivery. These are typically much more expensive than the shield plans so the price puts people off. As a result such products are few and far between in Singapore. I ended up getting one of these for both myself and Sophia and its the best thing I’ve done. Whenever Sophia is sick we just head down to our familiar pediatrician. Cost is not an issue. We do not need to consider whether we should subject Sophia to the nurses at the polyclinic or take a gamble whether we will end up with a good doctor at A&E. We know we’re in Dr Low’s good hands. As for myself, I am still relatively healthy but there could be a day where I come down with some permanent issue and may need to see some specialist on a semi regular basis but not necessarily be admitted to a hospital. This is where the comprehensive plan will come in handy for the substantial bills that cannot be claimed under the shield plans.

Rule number 2: Once the health insurance is settled, start thinking about financial planning for educational costs. The insurance planner’s choice is of course an endowment fund which is a good thing if you are not a disciplined saver and savvy investor. You can of course do much more yourself if you happen to have both these skills but if you don’t, a good endowment plan is an option to consider. If you at least have saving skills, an endowment is not all that essential. If you don’t even save, then please go get one because children are expensive these days. A premium preschool will already cost S$1000 a month which works out to S$66,000 if you plan to send them there from 18 months onwards, like I do. Overseas universities fees and living expenses, taking into account inflation, will probably cost some half a million by the time today’s babies attend universities. Its really no joke.

Rule number 3: Life insurances are a waste of money. But then that’s just my personal view and there are people who have benefited from them, say people who unfortunately meet with an accident and leave behind young children. Or people who unfortunately contract one of the critical illnesses and used the payout for treatment (but this would be covered if you have the comprehensive medical insurance discussed above).

Then there are a myrid of other insurances I could get I suppose. One that was pushed to me when Sophia was born was an sccident insurance. Which again is a waste of money because Sophia already has said comprehensive medical plan. See how the plan that looks expensive is actually cheap because it avoids the need to buy so many other plans?