4. Recommended - Travel Insurance

Here's why I recommends Travel Insurance:

• I recommend that you get this policy whenever you are going for tours. You get this claim on top of whatever existing plans that you may have in place. Additional coverage for travelling is good as it gives you a peace of mind for your trip as it covers travel related events, such as flight delay, baggage delay, lost of items during trips and even trip cancellation. For me, I prefer not to purchase such plans from the travel agency as separate purchase gives me more peace of mind.
• Annual Coverage is recommended for people that travels overseas often (such as more than 2 weeks). If the price of single trip plan cost more than $60, then you might as well get an annual cover. As you will be able to get the coverage as well whenever you visit our neighbour (Malaysia).
  

• For Singe Trip, I find NTUC's Classic Single Trip plan the most value for money.  
• For Annual Coverage, I feel that CitiBank's Savvy Traveller provides the best rate for annual insurance package, $82.5/yr for $100K coverage (Asia). There's also the Standard Chartered's Got it Covered annual insurance package at $88/yr for $50K coverage (worldwide).

That's all for my recommended insurance types.

3. Recommended - Accidental Insurance

Here's why I recommended Accidental Insurance:

• I recommends accidental insurance for those people that are currently not holding a full time job that gives you such coverage. This is an important policy be it housewife or children, etc as it will cover our bills in the event of accidents that might occur in unforeseen events:
• Accidental Death
• Accidental Medical Expenses (this is good when it comes to treatment that doesn't requires hospitalization, usually unless it's major accidents, the chances of staying in hospital due to accidents may not be very high, which means, your normal medishield may not be able to cover such bills)
• Minor accidents includes but are not limited to falls, sprains, non-hazardous sports injuries, cuts, scalds etc.
  
• Food Poisoning (Medical bills for such event is rather high especially if it happens at night and you mostly will visit either hospital emergency department or 24 hours clinic.)

Let's continue on Travel Insurance portion in the upcoming post. :)

2. Recommended - MediShield Insurance

Here's why I recommends MediShield Insurance:

• Medical Shield Plans are good as you can pay for the plan using your CPF Medisave account, of which the money is not really yours as you can only use the money in your medisave for things like medical bills, MediShields etc and you can never withdraw it anyway. Only your kins get the money in the event that you passed on.
• It's recommended that you also get the MediShield rider that comes with it as it helps to either cover 100% of your hospitalization bills or at least the main bulk of your hospitalization bills so that you only pay a fixed amount of the bill. (See my MediShield article for more info)
• Please take note that in order to make a claim, you need to at least stay in the hospital for at least 8 hours except for day surgery.

The following topic will be on Accidental Insurance.

1. Recommended - Term Insurance

Here's why I personally recommends Term Insurance

• [Buy Term and Invest the Rest] If I can set aside $100 - 200 / mth for insurance cum investment, I'll prefer to get a term insurance with critical illness coverage (add-on) at least till age 65. The cost now may be higher than short term 5 / 10 years plan but in the long run, it's more value for money. If possible, I'll love to get a term insurance plan that coverage till age 99 so that I know that I won't need to worry for the rest of my life. Then I'll use the rest of the money to invest in stocks and shares or even property. As the best possible returns actually comes from stocks or property investment, provided you know how to invest in them. If you are not sure about how to invest in that, you may want to educate yourself. Alternatively, you can also invest in mutual funds / unit trust using the balance of the money.
• If possible, get a female / male specific rider (add-on) to protect yourself in the occurrence of gender specific illness.
• As for how to have invest the rest of the funds that you are willing to set aside, just keep it in an account and invest in your desired investment every time you have about $1000. For unit trust investment, after the 1st $1000 is invested, you should be able to set a monthly or quarterly investment amount for automated investment. 

In my next post, I'll be sharing about MediShield Insurance.

4 Types of Insurance I Recommend

Here's the type of insurance I personally recommends:

1. Term Insurance
2. MediShield Insurance
3. Accidental Insurance
4. Travel Insurance

As for the amount of coverage recommended, it depends on how much you would want your family to get to continue with their life and yet be able to take care of you and pay off all the medical bills and other expenses. General guideline is about 2 years worth of your monthly pay plus all the possible expenses that might be incurred (about $50 - 150K, it will be higher for private hospital, even if your bills are covered, you have to consider the taxi fares and nutritious food you need to take in the event). For your family to not worry about their life anymore, you will need a much higher coverage amount. Just calculate to the period that you want this money to last your family. :)

Btw, I'm not an insurance agent so you can't buy anything from me as I really don't sell them. The main reason what I'm sharing all these is to help those that ever read my blog to benefit from it, instead of buying all those costly and yet not really beneficial policies, why not just get something cheap and good?

I'll share more about why I recommends each type in the next few days...

Term Insurance

The cost of such insurance depends on your age but it's by far the cheapest form of insurance available. Normally it covers death and total permanent disability only. Some covers critical illness as well but you will need to confirm this with your agent. There are some policies that you can buy the critical illness as a rider of the term plan. Read more on critical illness.

If you wanted to be covered permanently but is currently can't afford to do so, try finding a term insurance with convertible option that allows you to convert it into permanent insurance without the need to prove that you are still healthy. As in as long as you gets insured and remains insured for the term insurance, you can convert it into a normal life insurance that has cash values built up on the dates available for conversion.

Endowment Plans..

Well, when buying endowment plan, there are really plans out that that seems to be out to con our money.. Imagine, an endowment plan that gives you less than the amount you put in during maturity. The only good thing about it is that it does gives you a basic coverage in the event of death etc. At least not so bad ba.. But the whole point is.. how can the plan give you less than what you put in? This might be the case especially if the plan is bought at a high age and the plan is bought with cash back every 1-2 years. Please beware..

I had a very bad experience with AIA 'cos that's what my dad's endowment plan is. Firstly, his policy gives him a negative return and the potential returns on maturity decreases every single year. Yup, I saw it dropping every time my mum ask me to read, when I told her, she said no choice, since buy already better don't terminate. Then the policy price go up every 5 years, thanks to the 5 year level term coverage. The return, no matter how I calculate also very weird, I think it's about 1.5% or something like that. Confirm cannot even beat inflation one.

I'm not too sure about investment linked type of endowment plan but at least for those participating or non-participating endowment plan, please kindly do the following basic calculation on the returns.

Total yearly payment:

e.g. 2400 (*Please remember to add in all the riders it's normally not calculated as a set in the illustration)

Duration of plan:

e.g. 20 years

Total payment made:

e.g. 48000

Total Cashback: (if any)

e.g. 2000 * 10 (i.e. 2000 every 2 years) = $20000

Total value on maturity:

e.g. 48000

Total Profits:

e.g. $20000 (in simple calculation terms it's about 3.5% per year of interest 'cos we only divide by 10 instead of 20 as the money is not paid in 1 lump sum (Not bad ba at least better than fixed deposit.)

But this is only what our example illustrates. If your return is confirm to be what the document says it's supposed to be then it's still not too bad. At least it's a 3.5% per annual so not that pathetic. But do take note that if inflation is 3% and your return is only 3.5% it just means that your money didn't depreciates, maybe it appreciates by 0.5% per annual. So if inflation is 5%, it means that your money still depreciates by 1.5%. Do ponder over this.

Also take note and ask if the rider will increase in premiums along the years to ensure that the calculation holds in years to come. Please ensure that if your agent tells you it's level insurance they write it down at the document they pass to u and sign off as the proof.

Life Insurance

For Life Insurance, there's various types of them namely:

1. Whole Life Insurance (Such insurance comes mainly with a much high cost but it does entitles you to the "Cash Values" that it builds up. "Cash values" is the amount you will get back should you decide to terminate the policy. If you are into such cash values and wanted to make use of it to save up as well as to be protected, or you wish to be covered and protected for the rest of your life. Then, this is your option)
   
   • Non-Participating
     This is the cheapest in term of premium under this category as the sum assured is fixed, with everything is guaranteed as listed in the contract. So far, I haven't encountered any of such policies available in Singapore yet. If you have seen any, let me know as I'm interested in looking at what's available.
     
   • Participating
     This type of insurance comes with bonus attached that is given and "locked-in" every year on policy anniversary. Which means, once the bonus is given to you, it will remain as part of your "Cash Values" or Sum Assured for the life of that policy. They either gives you bonus calculated purely based on the Sum Assured or calculated based on both existing bonus and the Sum Assured. But of course with such features, comes with a slightly higher price than the non-participating one. During in economic downturn, insurers might not give you bonus but they can't take away your existing bonus. So it's pretty "safe" for in my opinion. But due to the "non-guaranteed" component of things, it's still slightly risky just that it's not as much.
     [If you prefer the insurer to take at least half of the risk (why half? 'cos about 1/2 is guaranteed and half non-guaranteed mah) on your behalf and wants to be insured for life with some upsides in terms of bonus when the insurer makes profit, this may be for you.]
     
     
   • Investment Linked
     This is the riskiest under this category. But it comes with clarity in the expenses etc. However, for such policy, I always felt that one is better off buying the Unit Trust itself along with a Term Insurance especially so for those endowment Investment Linked Policies. 'cos the charges of the underlying unit trust is slightly lower and 100% of what u invested goes into the Unit Trust 'cos the coverage will come from the Term Insurance of course. But, when it comes to whole life policy, then it's a different story.
     [If you are looking for the upsides of "higher" potential returns, savings and insurance coverage for life and don't mind risks, then this may be for you. But I still think that buying term and invest the balance is a wiser choice. Read more on buy term and invest the difference.]
     
     
2. Term Life Insurance (Such insurance is relatively cheaply available in the market but is purely protection for your dependents in the event of death and total permanent disability only, DPS [Dependants’ Protection Scheme] is an example of a cheap Term Life Insurance but it only covers from 16 to 60 years old.)
   The thing about this type is that it does not cover for life. Usually up to age 65 but who really needs coverage after age 65? Your kids / dependents should have been independent by then.
   

In this section, only purely life component of the insurance will be addressed for. The critical illness part will be addressed under "Health / Critical Illness Insurance Coverage" section in the near future.

Singapore Medisave Approved Medishield Plans

MOH: Medisave-approved Insurance

Here's the summary:

We have 5 companies providing such Medishield Plans in order of my ratings towards them:

1. Great Eastern
2. NTUC (Provides Letter of Guarantee to Restructured Hospitals and Institutions)
3. Prudential
4. AVIVA (Does not absorb cost to obtain medical records to process claims)
   
5. AIA (Does not absorb cost to obtain medical records to process claims)

(I'll further rate them after having more details on their plans info, currently they are being rated by efficiency in claims i.e. cumulative returns rate and mean return rate.)

My ratings towards them in terms of pricing (Based on age 19 - 30, 100% coverage if possible):
(Medisave, Cash)

1. NTUC Enhanced Shield with Rider (Enhanced IncomeShield Advantage: $95, Rider: $147 or Assist Rider: $100)
   (Note: Rider (For Renewal only), now cannot be subscribed anymore. Assist Rider (Current for purchase) - you will pay for the 10% of the (co-insurance + deductible) part, up a maximum of $2500)
2. AVIVA (MyShield Plan 2: $104.39, MyShield Plus: $36.60), with free kids coverage if both parents holds the plan (other terms and conditions applies) But the catch is that it's only 100% co-insurance coverage, which means the deductible needs to be paid by urself. (Note: Deductible are charged at $1K - C, $1.5K - B2, $2K - B1 and $3K - A1/Private, plus another $3K if day surgery is required. It's usually higher than co-insurance itself unless the medical bill is really very high, i.e. > $10K - $30K, or even $60K if surgery is involved)
3. Great Eastern (SupremeHealth A Plus: $99 , Total Shield: $209.28)
4. Prudential (PruShield A Plus: $102, PruShield Extra: $219)
   
5. AIA (HealthShield Gold Elite: $149.80, Essential Rider: $201.20)
   

Please note that the above rates are all subjected to changes by the insurer. Also the rates for different age group varies, i.e. the premium increases with a higher age group. It's purely up to the individuals when it comes to which policy they prefer, my opinions are just on the good and bad points of things.
(Correct as at 8 May 2009)