Singaporeans are hell-bent when it comes to safeguarding their finances. We continually speak about the value of money since young but a lot of us are not walking the talk as we grow older. (Insurance myths back at it again!) According to the 2016 Prudential Protection & Insurance Poll, 8 in 10 Singaporeans are potentially under-insured.
In essence, this portion of financial planning you are neglecting is alarming. Whether you are a 23 year-old fresh graduate, a corporate dropout or a senior industry leader, read on to find out which of these 5 common insurance myths you ought to abandon.
MYTH #1: I HAVE ENOUGH INSURANCE.
A quick refresher: MediShield Life is a basic health insurance plan that helps to pay off hospital bills and selected costly outpatient treatments such as dialysis and chemotherapy for cancer. It provides for Class B/C wards and subsidised treatment in the public hospitals. All Singaporean Citizens and Singaporean Permanent Residents are automatically covered in this plan.
What a lot of us don’t realise is that Medishield Life merely acts as a financial safety net at the most bare rudimentary level. Solely relying on it means you won’t have the capacity to enjoy:
- Pre-and-post hospitalisation coverage
- Flexibility in choice of hospitals/doctors/wards
- Additional specialist and surgical coverage
- Higher claim limits
MediShield Life provides a maximum claim limit of only $100,000 per policy year. Medishield Life might serve you well now but in a rare event of a catastrophic incident, your hospital bills may likely exceed that. With an Integrated Shield Plan, you can claim up to $1,000,000 per policy year – that’s x10 times more!
When it comes to personal healthcare, do you prioritise budget or freedom? Always weigh in considerations of how much coverage you will need and how much you are willing to pay in the long run.
So essentially, would you rather pay higher premiums for a more comprehensive coverage or lower premiums with the possibility of draining cash out of the wallet?
Beware of little expenses; a small leak will sink a great ship.
#MYTH 2: INSURANCE IS EXPENSIVE.
In the context of affordability, insurance is perhaps the last thing on your list. Not forgetting extras like house insurance and car insurance. Well, that’s what you think – and then you start compromising unnecessarily on your coverage.
Insurance is solely about coverage for you and your family. It should be sufficient to meet your current lifestyle as well as your long-term financial goals. Along the journey, you’re going to be building wealth, venturing on investments etc. But on top of that, protecting them is another thing.
Can you afford to risk more in the next 20, 30 or 50 years for being under-insured?
MYTH #3: INSURANCE IS ALL ABOUT BUYING AND SELLING PLANS.
There is an old adage that insurance is a wallet-draining “you-get-what-you-pay-for” product. In today’s world, insurance is no longer a profit-motive business. It’s an educational ground to empower both policyholders and finance professionals. Reality is, insurance does provide a solution to a fundamental need – that is to supplement and support individuals like you and me during unexpected crisis.
As a matter of fact, insurance encourages people to take wiser risk-reducing decisions and plugs the gaps in financial literacy to those who are less financially-savvy.
MYTH #4: I’VE BOUGHT INSURANCE YEARS AGO, I’M SAFE!
Think back to when you last reviewed your policy. There are probable risks you shouldn’t ignore if your last review was more than 2 years ago. (Even worse – if you haven’t reviewed it since purchase.)
- Out-of-date policies can affect existing policyholders who bought their plans 10 to 20 years ago. Back then, policies may have limited coverage and can be difficult to claim. Today’s policies are so much more comprehensive, customisable and transparent. However, such improvements are not always communicated to policyholders – likely baby boomers (get your parents checked!).
- Changes in family is another major factor in policy-reviewing. A marriage, a new family member or a divorce could mean benefits from an enhanced policy. Similarly, as children grow into adults and become more financially independent, they may be less of a dependent to you. It is important that your insurance plan adequately provides for all of your family in an unexpected event.
- Changes in occupation can affect your current and future lifestyle needs. A growing number of Singaporeans are moving into freelancing and solopreneurship. If you are switching into self-employment, consider the heavier financial responsibilities on your back and cut-off on employment benefits. Reviewing your policies help ensure that you can still afford to maintain your lifestyle or sustain your business.
MYTH #5: I’M TOO YOUNG! I DON’T GET A THING ABOUT INSURANCE.
Your twenties hold by far one of the major crossroads in life revolving around studies, career and possibly family. “Out of sight, out of mind.” Tackling expenses, debts or any form of worst-case life scenario hardly ranks in the priority list.
If you were a lucky kid, insurance would be something your kiasu parents might have taken care of for you long ago. Regardless, it’s wise to start taking charge of your financial independence for the next couple of decades to go!
Adopting forward-thinking financial habits and investing in comprehensive protection early can help you get first-mover advantage to a more financially secure future. It also helps that premiums aren’t likely a bank breaker because you’re still fairly in good shape and health.
Financial success is for first-comers.
Insurance is a pretty extensive topic to chunk into writing, and is complicating for anyone who isn’t working directly in the industry. We hope however that the 5 myths brought up have helped cleared your misconceptions and enlightened you on the basics of how insurance operates!
Look out for our next InsurBites edition so you’ll always be at the forefront in all things financial planning!
Alternatively, contact our growth consultants to find out more about our upcoming masterclasses and programmes. We are committed to creating real change in the community in our in-class sessions, and hope to see you and your teams’ breakthroughs!