Medical and income disability insurance

After I have decided on term insurance plans, I still have to think about what term plans to buy. A starting point is to think about the risks that can happen in your life.

The types of insurance plans discussed here applies to the Singapore context. Foreign readers can skip this post. I will not discuss about specific plans. Everyone has to analyze their personal situation on their own and choose the best-fit plan. I will talk in terms of broad principles to get readers started. I am also not an expert on insurance. Experts out there, please point out any errors or mis-information that I make.

Falling sick with an illness that requires hospitalization and surgery is a very scary thing because doctors are so expensive. There is no point in being saved by a doctor from a heart attack, then suffer another heart attack on seeing his bill. You might consider dying in the second round.

Protection can be obtained through a hospitalization plan and a normal health plan with a co-deductible component. The latter can be bought using Medisave and I bought the best plan (most expensive). Since you cannot touch CPF money until retirement, you might as well use it to buy the best insurance that money can buy. In this way, you use untouchable money(CPF) to protect touchable money(cash) because the chances of forking out cash is reduced by better coverage.

I know of many Singaporeans who are covered for the 30 critical illnesses but not covered for hospitalization. This is unsafe as the chances of getting hospitalized is much higher than getting the 30 critical illnesses. Buy this first, then consider critical illness protection.

As a working adult, my most valuable asset is my ability to earn a living. Therefore, it makes good sense to insure against losing it.

I bought an income-disability plan which will pay me a percentage of my salary should I be unable to work due to accidents or disease. Even if this money is not sufficient to allow my family to live as comfortably as before, at least I will not become a burden to them should a disaster hit.