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Insurance Basics

What events can you protect yourself from?

Coverage (or cover) refers to the events that you may obtain financial protection from.
There are five major events that can be covered under the common life policies in Singapore.

Death is not defined as Monday morning meetings at work, although it feels like it. It is instead defined as the permanent stoppage of all biological functions that sustain a human being.

In Singapore, death of an individual is recognized upon submission of a death certificate. To be recognized as payable by the insurance company, the cause of death must not be self-inflicted (suicide).

Most policies exclude suicidal death as claimable within the first year.

Terminal Illness is any such disease that cannot be treated and is reasonably expected to cause the death of the patient within a short amount of time.

In Singapore, insurance companies recognize Terminal Illness when a person is certified by a doctor as having less than 12 months left to live.

This refers to a list of predefined serious illnesses covered by an insurance company. The standard CI list spans across 30 illnesses and some well recognized ones are:

  • Major Cancers
  • Heart attack
  • Stroke
  • Coma
  • Parkinson's Disease

Critical illness claims typically can only be paid out upon prognosis of the illness that is in a severe enough stage. (ie Stage 3 or stage 4 cancer).

There is a further distinction between CI and Early Stage CI - as you may have guessed, early stage CI enables the payout to be received in early stages of the illnesses, but it is usually more expensive to purchase as a result.

Strangely enough, this refers to disability (perhaps through sickness or injury) that is both total and permanent.

Total Disability refers to the condition in which the person is unable to perform any work or conduct any profession to earn a salary.

Permanent Disability is defined as any such disability lasting more than 6 consecutive months.

One popular definition of TPD would be the loss of use of any two: eyes, hands, feet. A person rendered paralyzed by stroke would also fulfil the condition of TPD.

In contrast to the earlier defined Total and Permanent Disability, the disability we refer to here is simply the inability to work due to an accident or illness (not laziness).

Unlike TPD, the disability encountered here may be less serious or temporary.

Disability insurance is usually available as an income replacement cover, meaning the policy will replace a portion of the owner's income if he is unable to work.

Surprise! Personal Accident coverage gives you protections from *gasp* personal accidents!

In the case of an accident that leads to injury or disability or even death, Personal Accident insurance has that covered.

The important point to note about Insurance Companies definition of an Accident would be: it must be sudden and unexpected. For example, an injury from a car crash would qualify as an accident, but tennis elbow from repeated swings on the court would not.

This is coverage for hospitalization and surgical expenses incurred due to a serious (non cosmetic) illness or accident. There can be a huge range of benefits and claimables from one hospitalization plan which can include: Inpatient treatment, outpatient treatment, medical cash benefits (receive money for every day of hospitalization).

Every Singaporean is already automatically enrolled into a government (CPF) hospitalization scheme called Medishield. However this does not cover costs fully and limits treatments to only restructured (government) hospitals and basic wards.

Various insurance companies run their own shield plan which is an extension of the government's medishield. This are collectively known as Integrated Shield Plans and give people an opportunity to be insured for the best treatment in the best wards and best hospitals.

Living here in expensive Singapore, where it is well known to be more cost effective to "die than be hospitalized", we can't stress the monumental importance to obtain hospitalization cover - and comprehensive ones at that.

Having learnt about the various types of cover available, we can move on to discuss the different policies that are easily available in Singapore.