Do you have a Personal Accident Plan included in your insurance portfolio? If not, do you know that you may not be adequately covered in certain aspects of your Financial Planning?

Recently I had two prospects coming to me, asking me if I could help them with their recent medical bills resulting from an accident. After looking through their portfolios, one of them have a simple Term Insurance that cover against Death, Total & Permanent Disability and the 30 Critical Illnesses. The other party has a lot of those fixed deposit plans with the banks and certain insurance companies, insurance coverage wise is just on death and total & permanent disability.

The only advice is that I can give is that they will not be able to claim from any of their current insurance plans, neither could they claim from their medishields because they were not warded and most of their treatments came from the clinical sides.

They were disappointed but they were not angry because they told me that they have never thought that they will meet with an accident and have always ditched the idea of getting a Personal Accident Plan because they feel that it’s a waste of money (no benefits until there’s a claim else money spent is down the drain)! They can only live with bearing the full medical costs on their own now!

The Importance Of Having A Personal Accident Plan

So what are the main benefits of getting a Personal Accident Plan? Let’s look at a few:

1. You Can Claim Reimbursements For Your Medical Bills For Conditions Resulted From Accidents

As long as you have suffered some form of injury because of an accident (there’s a proper definition to this so please do check against your product summary) and you have incurred a bill either from a hospital or from a clinic (yes, this is covered and it also include those TCM). You can actually claim from your Personal Accident Plan up to a certain limit depending on your plan type.

If the limits are high enough, you may be entitled to claim for future medical bills (especially follow-ups) for the current injury.

2. You Can Claim Compensation For Some Permanent Injury Suffered Due To Accidents

If, you do suffer from a permanent injury, e.g loss of an arm or an eye, you can also claim some form of compensations from your Personal Accident Plan.

3. You Can Get Some Cash Benefits Because Of Your Temporary Disablement

You may suffer from a broken arm that will result in you having to have a long medical leave and thus you are unable to go back to work. Your income may suffer as a result. Having a Personal Accident Plan may help to lessen the financial impact because most plans out there offer Cash Benefits (will never be high enough to cover your full month’s pay) to help you tide over the situations.

Why A Personal Accident Plan Is A Must-Have In Your Insurance Portfolio

In order for you to understand the importance of having a Personal Accident Plan, you must understand the limitations of some of your current Insurance Plans and its coverage type:

- Whole Life Insurance

Most of these plans cover you against Death and Total & Permanent Disability (must be really disabled). They usually pay off in a lump sum. For the 30 Critical Illnesses, your conditions must meet the definitions stated in the policy definitions in order to get the lump sum claim

- Endowment Plan

Most Endowment Plans offer basic insurance coverage like Death and Total & Permanent Disability. And for Critical Illnesses, most plans are usually recommended to have the coverage in the form of a Future Premium Waiver.

- Investment-Linked Plans (ILPs)

Likewise, most ILPs offer insurance coverage against Death, Total & Permanent Disability and Critical Illnesses.

- Medical Insurance

Most of the medical insurance plans would require you to have a minimum hour of hospital stay to receive some form of medical attention or to have some form of referral from a Specialist or Polyclinics in order for you to claim against some outpatient treatments.

- Hospital & Surgical Plans

Likewise, as the name states, you must be warded in a hospital and/or to go through some form of surgery in order to receive compensations.

As you can see, having a Personal Accident Plan included in your Insurance Portfolio will help to cover you in areas that most of your insurance plans cannot cover. Though for most, the concern is that the money spent is down the drain when there’s no claims, but on the other hand, you are given a peace of mind at all times. And for most accident plans, their premiums are easily affordable and you should never feel a pitch paying for them!

Look into your insurance portfolio today, if you do not have any Personal Accident Plan included, try to do so!

I just met up with a Client who came back to Singapore after 10 years of staying and working in the USA.

The purpose of the meet up is to recommend a Private Medical Insurance and any possible Supplementary Benefits that can be added.

How Singapore’s Medical System And the USA’s Medical System Differ

I had a good chance to understand the difference between the medical health system in the USA and Singapore. And what my Client has shared is quite shocking! And here are some of it, though I must still say that the accuracy of what I will be sharing may not be the whole truth:

- The Charge To Call For An Ambulance In The States Is $500 Per Trip

(image courtesy from sxc.hu)

Yes, you are reading this right! If there’s any emergency that you really need to call for an ambulance to fetch, be prepared to pay $500!

And if you are thinking that this ambulance will fetch you to the best hospital around, guess again. These ambulance services will still fetch you to the nearest hospital near your residence. If you stay just 30 minutes to the hospital, this $500 is a huge price to pay! This is why my Client says that most people in the States have to think twice before calling an ambulance.

They do have Medical Insurance Plans to cover for the ambulance services but you have to read the second last Pointer to understand that having a medical insurance plan will not make much difference.

- To Call For An Ambulance In Singapore Ranges From $35 to $75 per Trip

After I know the cost to pay for an ambulance in the States is that high, I am glad to know that Singapore’s Ambulance Services (either operated by the Civil Defence or Private Companies) are within reasonable range – $35 to $75 (may still differs) per trip.

And in Singapore, there are private medical insurance plans, usually provided under the Supplementary Benefits, that will cover this Ambulance Services. Similarly, you can read the last Pointer why you are not short-changed being a Singaporean.

- There Are People In The States Who Declared Bankrupt Because Of Huge Medical Bills

My client did share that in terms of medical treatment, it’s definitely better in the States. But because of lack of regulations in the medical system, better = very expensive! And there are scenarios whereby people have to declare bankrupt because they are unable to pay off their medical bills. Just imagine a fracture may deliver you a bill that’s $XX,XXX (I really hope my Client is joking on this).

- There Are Assistance Provided For Singaporeans With Huge Medical Bills

Similarly, after understanding what the people in the States are going through, I am glad to know that Singapore does have a good medical system in place.

Till date, during my four years being a Financial Planner, I have not came across any of such cases whereby one in Singapore has to declare bankrupt because of a huge medical bill. Although there are real cases whereby one’s Medisave account is wiped out.

Beside that, I do know that there are assistance provided to help any Singaporeans who need help with their Medical Bills like through Medical Subsidies, the Medifund or through the Social Workers within the Hospital Management (I salute them!).

- Medical Insurance Plans In The States Get More And More Expensive Each Year

Understood from my Client that if you intend to purchase a medical insurance plan in the States, do prepare to pay higher premiums each and every year, irregardless of whether you have done any claims in that year.

Although their medical insurance plan can cover almost all the bills and charges but it’s only worthwhile when you are making a claim. Else, the increment in the premiums outweigh the benefits in the long run.

- Premiums For Medical Insurance Plans In Singapore Do Not Increase Each Year

If you are still contemplating whether to get that private medical insurance plan, you will be glad to know that the premiums do not increase each year but according to age band (every 10 years if you are below 60 and every 5 years once you are above 60).

How about the “once a while” increment? First you must know that your premium will not increase the moment you made a claim. This “once a while” increment is usually based on the overall claim experience. If it’s too much for the Insurer to absorb, they will have no choice to increase by a small percentage.

So Are You Still Contemplating Taking Up That Private Medical Insurance Plan?

My Client literally take up the plan (together with the supplementary benefits) after understanding the above pointers. He understands the importance of having such coverage and that in terms of the premiums that he will be paying, is definitely way much lesser should he have a similar plan in the States.

If you are still contemplating taking up one, and my few above pointers do help to answer your concerns, then I would hope that it will change your mind today!

Over the last few months, I had met up with a few clients and they shared with me that they see no reasons for them to upgrade their MediShield plans and they are adequately covered.

And I took the initiative to go through with them what they are being covered and conclusion is that most of them do not really know what they are covered.

So instead of promoting why they should upgrade their current coverage, I would rather let them know what they are being covered and let them decide whether to upgrade. If you are one of those who know that you have a MediShield Plan but do not what you are being covered, this post will give you a clearer picture!

Direct Links To Some Of The Common Questions Asked About MediShield

1. What Is MediShield?

2. What Are The Benefits Under MediShield?

3. How Much Is My MediShield Premium?

4. How Do I Know If I Have Already Covered Myself / My Dependents(s) Under MediShield?

Understanding The Benefits Under MediShield In Parts

So what are these Figures? Basically they are the daily limits. Medishield do not really limit you to any hospital type and ward (but in reality, it’s around Ward B2 and C), so if there’s any hospitalization involved, you have to check out with the Hospital the Daily Inpatient and Miscellaneous Charges for your Ward.

If it’s normal ward and $450 per day and below, this amount will be added up with the rest of the charges and summed up against the Deductible.

If it’s more than $450 per day, e.g. $500 per day, you have to take to account that you need to pay the difference of ($500 – $450 = $50 per day) whereas the rest of the $450 fall against the Deductible.

And if there’s a Surgery Involved…

If you have downloaded the PDF from the link above (under the Benefits of MediShield), you can actually click on “Table 1 to Table 7″ which will bring you to the MOH Website where you can see an exhaustive list of Surgical Operations Procedure.

Usually any Surgical Operations done will fall under one of these Tables. If it’s not, you need to ask the Hospital whether it can be claimed under your MediShield.

So similarly, the figures you see on the right are the maximum limits. Anything that’s below, that exact amount will be added against the Deductible.

If the amount is higher than the limit of that Table, you have  to bear the difference, then the maximum will be added against the Deductible.

OutPatient Treatments

MediShield does cover some OutPatient Treatments, i.e. you are discharged from your Hospital Stay and because of the illness complications, you may have to return for regular outpatient treatments.

Similarly, these are the daily limits for each particular treatment and you do have to check with the Hospital whether these charges are just below or above the limit.

The above rules will apply. And good thing that the Deductible does not apply.

Maximum Claim Limits

And a good thing to note about your MediShield Plan is that it has a Maximum Claim Limit for Lifetime, first, your total hospital bills cannot exceed more than $50,000 and in a lifetime, it should not exceed more than $200,000. By default, should you exceed the maximum amount for a lifetime, your Plan should stop to cover you.

But till date, I have not came across such scenario, so I cannot give you a clearer picture on this. Similarly for the Maximum Per Policy Year. This is a good sign that all these Clients that I have met up are Healthy!

For the Last Entry Age, this means that if you decide to cancel your MediShield Plan for some reasons, you can still apply it back before the age of 75. And your current coverage will end at the age of 85 (if your age is this for the next birthday)

What’s This Deductible And Co-Insurance?

I have been talking a lot of Deductible, so what does this mean to you. If after taking all the necessary claimable charges into considerations, and you get a Final Claimable Bill figure (also after Government Subsidies, if any), you will match it against the Deductible.

For e.g. if it’s a Class C Ward Stay and Treatment, and the Final Claimable Bill figure is at $2000 and the Deductible according to the Table above is $1000, this would mean that you have to pay the $1000 (the Deductible amount) out of Medisave (if claimable) and/or Cash.

The Rest of the amount ($2000 – $1000 = $1000) will fall under the Co-Insurance where according to the Table, you will need to pay another 20% of the $1000 = $200 out of your Medisave and/or Cash.

So out of a $2000 bill size, you are able to claim $800 from MediShield and $1200 out of your Medisave and/or Cash.

Another Scenario – Small Bill Size

If the condition is minor or because of some other circumstances, the Total Final Claimable Bill Size is below $1000, e.g. $800. Guess what, you will not be able to make any claims out of your MediShield and you may have to accumulate with other Inpatient Hospital Bills (if any) to hit above the $1000 mark.

And now that you have a Clearer Picture of how your MediShield works, the decision to upgrade will be up to your own options and preferences.

If you are keen to explore any upgrade options, please feel free to contact me.

I would like to express my heart-felt sympathies to the two families (one of the family I do know personally) for the loss of their precious child (one is at the 30s and the other is just 22)

The Family That I Know Personally…

I know the child (younger than me by 7 years) and the child is one of those who is very quiet and also happened to be the only child of the family. I used to be one of the bouncing-around kid in the neighborhood and this child captured my attention was that it was hard to get the child to play and mingle with us…

As usual, we all grew up and went on with our personal life. Those were the times. And it’s only upon reading the newspaper that I got to know the news. This child has grew up to be independent, smart, diligent and has gotten a place in a local university and in a good course.

As a parent, which I place myself in their position, will definitely be proud and one fine day would depend on the child to take care of them upon graduation. I believe this is how my mum would have felt when I graduated with a degree – though she is no longer around to see that. Rest in peace Mum! You deserve it!

To continue… How would it have felt when suddenly the world turns against you. With all the hopes pinned on the child, a sudden collapse meant the end of everything. A bright future. Gone. A world to see and explore. Gone. The dependence… it’s gone as well.

How would you have felt… if the same should happen and I do not wish for the same to happen to anybody…

At this moment, I would like to share that time is precious. Any moment is precious. If you have somebody that’s close to you, start to pay more attention to them. If you have been busy with work, learn to take a break and spend quality time with your closed ones. Show your love. Show that you care. Do not wait too long to do that!

Okay. At this point of your reading, I would also like to share the importance of life insurance as well. If you are not ready, I would welcome you to return next time for my other posts. Else, I welcome you to explore how life insurance can help.

The Importance Of Life Insurance…

Nobody like to buy insurance and make a claim out of it. Many would rather buy a savings plan and look forward to its maturity. Life is unpredictable that’s why we need life insurance.

From the family that I know, I get to know that the Child did have a Dependent Protection Scheme (DPS), a plan that many Singaporeans despise because they get nothing out of at the age of 60. The unpredictable life has now given the family a little more chance to take good care of themselves in the absence of the precious child. I know many would say money cannot never replace the emotional loss but life still has to go on… and to go on… in this current time, you need money to live!

That’s the cold hard facts of life!

I would also like to share this to many that I have greatly appreciated and it goes like this… “Buying insurance is not so that someone will die but buying insurance is so that someone else can continue to live!”

So do you think it’s time to look into a life insurance plan? Speak to a professional today!

(All About Life Insurance Related – Whole Life, Term and Group Term)

This post and the continuous ones will form the basis of all the past and current insurance plans out in the market and I hope this will give you a better understanding of the structure of plans that you may have in your current portfolio.

Note: there are many different variations of plans and if you do not see it, it would be best to seek your Financial Planner with regards to it. It’s better to understand now then to have issues (in terms of claiming or maturity). Do not be shy about asking! Thanks!

Here Goes The List:

1. Traditional Whole Life Insurance Plans

This is a plan that usually covers against Death, Total and Permanent Disability (TPD) and the 26 (now change to 30) Critical Illnesses (CI). This plan pays a lump sum upon claim and will terminate. Premiums to be paid are usually to the age 85 (this may varies) and comes with cash value.  Some insurance companies offer the options to convert part or full amount of the surrender value to an Annuity Plan. Do note that this plan does not cover you against any hospitalization bills. Also note that early termination will result in heavy penalty (getting less than what you have paid)

2. Limited Premium Term Whole Life Insurance Plans

This is a new variation to the Traditional Whole Life Insurance Plan by offering you with a Limited Premium Term. This means that you do not have to serve the full premium term to 85 years old. You are given some options like 5, 10, 15, 20, 25 and to age 65. The benefits are the same as per the Traditional Whole Life and pays a lump sum upon claim and terminates.

3. Term Insurance

Term Insurance is usually a plan that covers against Death, Total and Permanent Disability and some companies offer the benefit of Terminal Illnesses. No cash value and there’s no penalty for early termination. And there’s also some variations in terms of the maximum coverage age (some to age of 65, 70, 80 as such). Some variations in terms of the premium term, e.g.

• Yearly Renewable. You will get to renew the term insurance with each new policy year and premium will increase with age at each renewal.
• Renewable every X years. This plan is the same as the above just that the renewable year is set as every X years. Premium will increase by then.
• Renewable till age XX. This will cover you till your desired age and will renew by then.

Some variations in term of the structure of the Term Insurance:

• Level Term. You will be covered with the same sum assured throughout.
• Decreasing Term. Sum assured will decrease by the amount of (Sum Assured / Premium Term)

4. Group Term Insurance

This is another form of Term Insurance but related to those affinity group like e.g. SAF, Public Officer Group, SAFRA, NTUC Union as such. It’s usually tied some form of membership and will terminate upon the cessation of the membership. And also in terms of maximum coverage age, it’s usually lesser than that offered under the usual Term Insurance. Premium is usually tiered by age-group. There’s also no cash value and no penalty for early termination.

5. Dependant Protection Scheme.

A scheme devised by the CPF Board which will auto-enroll you in upon age 16 (if there’s monies in the CPF account) to maximum age of 60. No renewability beyond age 60. Premium is deducted through your CPF-OA account and tiered to an age-group. This plan covers one against Death and Permanent Incapacitation for sum assured of $46,000 and .

Know Your Insurance Term Definition

Lastly before I end off this post, with regards to the benefits being offered like Death, TPD, 30 CI, Permanent Incapacitation and such – this is crucial to your understanding in terms of what does this mean for each benefit. When there’s any claims, Insurance Companies will follow the definition listed in your contract. If your claim nature does not fall within the definition, Insurance Companies do have the rights to void the claims.

I know this may sound unfair but Insurance Companies have the right to protect the interest of other policyholders as claims will add on to claims experience and may increase premiums in the long run.

Do you think I have left out any other kind of Life Insurance Related – Whole Life, Term, Group Term? If yes, please do post your comment below:

There is still a strong sign of Singaporeans terminating their Dependent Protection Scheme and Eldershield simply because of these reasons:

1. If I do not die, be permanently incapacitated before the age of 60 (for the case of DPS) or unable to commit to at least 3 out of the daily 6 activities (for the case of Eldershield), the total premiums paid by me are down the drain

2. I do not know what these plans are all about.

3. My CPF accounts (Ordinary and Medisave) will run out because of these plans if i continue to pay.

And when unforeseen circumstances do happen, some of the fingers are actually pointing to the insurance companies for not doing their best to ask the Policy Holders to keep the plan or that the plan was terminated without the Policy Holders’ acknowledgement (they do happen!)

Then there will be a tough time asking for the revival of the plans… asking for leniency and such…

The Premiums Paid Is Just A Small Price…

Let’s calculate the total premiums paid when you first get in (entry age is 16 if you do make your first CPF contribution) to age 60:

• Age 16 – 34, $36 per year, a total of 19 x $36 = $684
• Age 35 – 39, $48 per year, a total of 5 x $48 = $240
• Age 40 – 44, $84 per year, a total of 5 x $84 = $420
• Age 45 – 49,  $144 per year, a total of 5 x $144 = $720
• Age 50 – 54, $228 per year, a total of 5 x $228 = $1140
• Age 55- 60, $260 per year, a total of 5 x $260 = $1300

Making a total premiums paid of $4504 during a duration of 45 years, an average of $100 per year, $8.33 per month, $0.28 per day but covering you for a lump sum $46,000 (not including the bonuses). And should anything happen meanwhile, the return-fold is 46,000/100 = 460 times instantly.

How About ElderShield?

The average yearly premium for a male of 40 years old who just got enrolled into Eldershield 400 is at $174.96. And this premium is fixed and payable till age 65 and the coverage is for the rest of his life. So total premium paid is 26 x $174.96 = $4548.96 and should something happen, the payout is $400 x 12 x 6 = $28,800.

So from the basic calculations above, the premiums you pay for a peace of mind to yourself and to your family is comparatively small when, in most times, you…

• Indulge in pampering yourself with treats like gadgets, branded items, and/or small gambling of chance.
• Do not really feel the pinch as the premiums are coming from your CPF Ordinary and Medisave Account. Most people will use the Ordinary account for purchasing of house (impact is still small) and for paying of medical services and treatment.
• Are earning interests for your CPF accounts – currently at 2.5% for your Ordinary account and 4% for your Medisave account
• Have family members to help you service the premiums if you do not really have enough in your accounts because when there’s any unforeseen circumstances, they will be obliged financially as well. Helping you to pay for the premium is just a small effort.

Don’t Think You Are Always Safe When…

…Anything can happen to anyone anytime. Death may just come unexpectedly even to people who are healthy. Long term illnesses like Stroke may also happen to people irregardless of age.

Point is… Insurance is there for a reason. You may not want to activate the benefits of your insurance policies but at least get them to give yourself and your family a peace of mind. Paying a small price (the premiums required) is for the exchange of this peace of mind.

So next time when you or your friends who are really considering to terminate their DPS and Eldershield, please think through properly. If anything should happen, you may not be around any longer, but think of what you could have leave behind (loans, medical bills) for your rest of your family.

Take care!

In Part 1 of 3 of my Mortgage Insurance series, I have shared with you why you need to consider having a Mortgage Insurance to protect your Mortgage Loan and not wait till you are able to sell off the property…

And in Part 2 of 3, I have also shared why and when so to start applying for the mortgage insurance and most importantly the underwriting requirements needed for your application. If you have concern about taking a HIV test, I have also shared some pointers to go around it and lastly some basic health tips to ace your medical checks.

In this last part, I will be sharing with you, some of the common suggestions that most of my clients have when it come to their Mortgage Insurance Planning, they know they need it, but they are thinking whether to choose either a Level Term or Mortgage Reducing Term Insurance…

How To Choose Between Mortgage Reducing Term Insurance And A Level Term Insurance?

Basically there’s no right or wrong should you decide to choose either of the plan. It’s only wrong when you decide not to plan for it. But should you need some advice (from me), here’s a few pointers to consider from the two choices…

Choose Mortgage Reducing Term Insurance as first priority because:

• Mortgage Reducing Term Insurance is created because of the existence of a Mortgage Loan. When the Loan slowly decreases, the sum assured decreases as well…
• The premium for Mortgage Reducing Term is the lowest as compared to other types of insurance. Why do you need to pay for more insurance premiums (as compared to taking a level term insurance) when you already have a major bulk of loan repayment to take care of.
• If you have areas like Critical Illness Protection, Survivors’ Protection and Medical Insurance well taken care of and you only have this mortgage loan liability to take care of, paying for a Mortgage Reducing Term Insurance will make more sense. Use the differences to put into a Retirement Planning.
• If you have intention to keep the loan for a short while, getting a Mortgage Reducing Term Insurance will be more value for money. When you have redeemed your loan, and no intention to get new loan, it’s easier to terminate this plan without feeling the pinch. Same issue – plan more for your Retirement or making your money work harder!

The above four pointers are the common ones that I usually use to share why you should consider Mortgage Reducing Term insurance as the first priority for your Mortgage Loan.

Will there be a scenario whereby the benefits of getting a Level Term Insurance outweigh a Mortgage Reducing Term Insurance?

Yes, and they are:

• You have both a Mortgage Reducing Loan and Other Credit Loans. A Mortgage Loan is reducing every year whereas your Credit Loans (e.g. Credit Card, Overdraft) are increasing each year with the compounding interest. Therefore a Level Term will make more sense in covering such liabilities.
• Tight Budget. When you did not do do a proper budgeting, you will face this issue of having tight budget. You do know the importance of being covered and planning for your survivors. As such a Level Term Insurance may make more sense. Even if your Loan is redeemed early, you can still continue with the current Plan. Or due to a Claim, there’ll be more excess left for the Survivors.
• More Than Enough Budget. That’s true! A Level Term Insurance can be used to protect your increasing assets on top of your Private Property, e.g. investment portfolio. Should anything happen, you do not wish to close off all these assets. An Insurance Plan can be well used to cover these.

Therefore as you can see, there are indeed some scenarios whereby a Level Term Insurance can simply outweigh the benefits offered by a Mortgage Reducing Term.

So How To Plan For It?

Every individual has different background and different preferences. To really plan well for this, you ought to discuss well with your trusted Financial Planner. Look through all current plans, calculate all your assets and liabilities or networth. From there, at least you know which Plan is more suitable for you. Remember to do a budgeting as well.

And do remember – it’s only worse when not planned for!

In the first part of my Three Part Series on Mortgage Insurance, I have shared why you should consider having a Mortgage Insurance to cover your Private Housing Loan and not to wait to sell of your Property and that a Mortgage Insurance would be beneficial to you because:

1. The Premium is the lowest as compared to Whole Life, Endowment, Level Term and even Decreasing Term Insurance
2. Mortgage Insurance is portable among Mortgage Loans.
3. You can still keep your Mortgage Insurance Plan to form part of your Financial Planning Process

And in this Second Part of the Three Part Series, I will be sharing with you on the Underwriting Requirements when you apply for your Mortgage Insurance.

To start off this Second Part, I shall share with you when can you start applying for your Mortgage Insurance and why so…

When Should You Apply For Your Mortgage Insurance And Why So…

You should actually start applying for your Mortgage Insurance right after you (and your partner) have signed your Mortgage Loan Agreement. The reasons so being that once you have signed:

• You are responsible for the Loan itself even if your Property should be ready in few years time
• And should you apply in a few years time (to match your actual loan disbursement), your Mortgage Insurance Premium may have increased and also should your health status changes a bit by then, you may have issues getting the Plan as Standard.

If you are worried that you are getting in too early for your Mortgage Insurance, you can actually increase your Sum Assured (matching your loan amount) by another 5% – 10%. To plan this well, you can consult your Trusted Financial Planner and go over the Benefit Illustration (quotation) to reflect the actual coverage upon Loan Disbursement.

What Documents You Need To Prepare For Your Application…

1. Your Loan Agreement if you are applying less than a year of your Loan Disbursement
2. Your Loan Statment if you are applying a year later and A Personal Statement to explain why you are applying after a year or more after your Loan Disbursement
3. Your Recent Medical Report (if any and within the last 6 months range). This can help to give evidence of your health status even if you should do badly for the current one or to provide support evidence of your current medical condition. This can also help to waive off some of the tests required for your Application
4. Your Recent 3 Years Income Tax Return Slip, if your sum assured is over a million, or upon request by the Underwriters to verify that you can be assured at a High Amount. Most underwriters will peg at 16 – 18 times of your Annual Income to match your Maximum Sum Assured you can go for.
5. If your Sum Assured is above $500,000, you will need to complete a Financial Questionnaire to give more information on your current Financial Situation (assests, liabilities and such) and/or Lifestyle Questionnaire to share information on whether you may have abnormal lifestyle.

Underwriting Requirements For Your Mortgage Insurance Application…

These are  the common underwriting requirements for your Mortgage Insurance but please do consult your Financial Planner on the actual requirements needed.

According To Age Group And Sum Assured:

1. Age 21 to 39, normal routine medical check if your sum assured is above $300,000 to $500,000. Anything above $500,000 would require you to go for ECG (treadmil or resting) and Chest X-ray.
2. Age 40 to 49, normal routine medical check for sum assured of above $200,000 to $300,000. Anything beyond that would require ECG and Chest X-ray.
3. Age 50 to 60, normal routine medical check for sum assured of above $100,000 to $150,000. Anything beyond that would require ECG and Chest X-ray.

Do note that some Insurance Companies would take into account your current coverage with them and add on to your Sum Assured under the Mortgage Insurance to determine the medical checks needed.

Also note that more specific medical checks would be required if you have any current medical condition(s).

If Your Sum Assured Is Above $1.2 million:

You may be needed to go for the below:

• Routine Medical Check
• Chest X-ray
• HIV Test
• Treadmill ECG
• Lipid Profile Test (at least 8 hours of fasting required)
• Liver Function and Hepatitis B screening tests with e-antigen
• Renal Function Test with Urine Feme
• Full Blood Count
• Fasting Blood Sugar
• Serum Uric Acid
• ESR (erythrocyte sedimentation rate)

This Thing About HIV And Blood Test…

There’s no two ways round Blood Test especially if you are scared at the sight of Blood. To avoid going for any Blood Test, the only alternative is to go for a lower Sum Assured even if it’s below the actual Loan Amount. Do remember that being covered is better than not covered at all.

If you are worried about doing a HIV Test (could be due to some privacy issue), in my course of work, I have checked out that there’s actually a non-invasive HIV test out in the market – by using your Saliva only. Do check with your Financial Planner on whether the Underwriter can accept the result from this test.

How To Ace The Medical Checks…

I have written about this in my last two posts and you can check them out here:

• You Are Unhealthy For Your Insurance… What Happen Now? Part 1 of 2
• You Are Unhealthy For Your Insurance… What Happen Now? Part 2 of 2

In general, the basic tips that I can give to help you ace the medical checks would be

• Enough Sleep,
• No Unhealthy Lifestyle before the Checks,
• Drink Lots Of Water,
• Do A Bit Of Exercise and
• Have A Healthy Diet

With this, I shall mark the end of my sharing in the second part of the Three Part Series. In the last part, I shall be sharing on why you should consider getting a Mortgage Insurance rather than a Level Term or Decreasing Term to cover your Mortgage Insurance. Or on what grounds would a Term Insurance be beneficial to you!

With the recent property boom in Singapore, there’s an increment in people taking up Private Bank Loan and thus creating a concern in terms of financial planning – a need to protect the mortgage loan (and their pricey assets) should anything unforeseen happen to the Loan Owners…

The Common Belief - Should Anything Happen, I Can Just Sell Off The Property…

If everything is so straight forward, life will be perfect! In Reality, Property does not sell by itself especially if the Developer had done quite a heavy bit of their own advertising. The initial selling price is usually jacked up and to really pull it off in selling – takes patience, time, effort, negotiation and being able to sustain the few months of loan payment.

Or even the worst case of selling the property below the market value…

So What Should You Do? For Any Mortgage Loan, There’s Mortgage Insurance!

If you only know Term Insurance, there’s in fact a Mortgage Insurance or commonly known as Mortgage Reducing Term Insurance and not to be confused with Decreasing Term Insurance.

In general, Mortgage Insurance works in manner of:

• Basic Coverage against Death and Total and Permanent Disability (TPD)
• For Death, the payout is usually in terms of Lump Sum
• For TPD, the payout will vary amongst Insurance Companies – Partial Lump Sum or Percentage Payout
• For Concern against Critical Illness, the coverage can be added in the form of a Rider. And the Rider can be used to provide lump sum payout against any Critical Illness or to waive off future Premiums for the Main Plan
• There’s usually no Cash Value for this plan

And in terms of the Sum Assured:

• The Sum Assured reduces with each year in accordance to the Interest Rate. This interest rate is usually set higher than the mortgage loan interest rate (accordance to the inital fixed and future Sibor). The reduction of Sum Assured will mimic your actual and regular loan repayments
• The interest rate is usually set higher because with a higher interest rate set, the run-down rate is slower than your actual loan reduction and that also means that should anything happens, the payout is more than your actual loan.

In terms Of The Premiums:

• Premium is the lowest for Mortgage Reducing Term Insurance in comparison to Whole Life, Endowment, Level Term and even Decreasing Term Insurance
• You also get to service limited Premium Term for the Mortgage Reducing Term Insurance and also vary amongst Insurance Companies, some offer 75% or 2-4 year less of the Coverage Term
• The Premium is level throughout and not slowly decreasing because nobody will want to pay so much upfront and should anything happen – have paid so much upfront  and will not be value for money!

What Else To Note For Your Mortgage Insurance…

1. Mortgage Insurance is portable among Mortgage Loans. This means that should you clear off one loan and decide to take up a new loan, your existing Mortgage Insurance can be used to cover the new Loan. Any shortfall can be covered up with a new Mortgage Insurance. You will get to save premiums in the long run as compared to terminating an existing to get a total new one.
2. You can request to reduce your current Sum Assured after a significant Capital Repayment to see if you can save on the future premiums. Do note that the new premium for the Reduced Sum Assured may be based on your onset age. Please kindly check with your Financial Planner on better clarification.
3. After clearing your Loan, can you still keep your Mortgage Insurance. Answer is Yes! Mortgage Insurance is still a Life Insurance after all therefore you can still keep the Plan after the Loan. Only requirement is that when you apply for the Insurance, you must produce your Legal Loan Document to prove that a loan is in existence and not because you are buying this insurance to save on the premiums.

What To Expect For Part 2 and Part 3?

This first post is all about what to expect in a Mortgage Insurance and in Part 2, you and I will be looking into the Underwriting Requirements for a Mortgage Insurance and in Part 3, we’ll be looking into why should you really choose Mortgage Insurance and not a Level or Decreasing Term to protect your Mortgage Loan…

Meanwhile, if you are one of the many Singaporeans who have gotten your Private Property, congratulations and do remember it’s a Prized Possession and do get a Mortgage Insurance to protect your loan and your family.

If you are a person who are into fixed deposit offered by financial institutions or into those kind of single premium savings plan offered by insurance companies, I do have a question to ask you and that is

“Are you the kind who read your Benefit Illustration carefully especially on the Guaranteed and Projected Returns or just those who hear out from the Planner and make a purchase from there?”

The danger is here, if you are sold by the Planner based on the verbal recommendations that the plan is a Guaranteed one and in no way that it’s stated in the Proposal or Benefit Illustration. After you have signed it and at end of the term, the plan does not performed as what the Planner has stated, you will hold your own responsibilities and you have no one – even the Planner to blame for.

A Real Life Case Scenario Of Verbal Recommendation

I happen to come across this very simple couple who are having their Five Year Single Premium Endowment Plan maturing soon and would like to have a recommendation on a similar type of Plan as offered by my company.

They happened to see an advertisement in one of the roadshows that features a higher return as compared to the one that they had and would like a further clarification on it.

They were very happy with the maturity returns and with the plan that they once had. But upon seeing that advertisement from my company, they were tempted to make a comparison…

I shared with them that our Plan is similar to the plan that they once had. I printed out the benefit illustration, and explained that at the end of the term, they will have the Guaranteed Return, and the final value will be based between a projected return based on a 3.75% return of investment and another based on a 5.25% return of investment.

Then The Debate Of Discussion Started…

They were shocked to realize that my plan is not a guaranteed plan whereas theirs are. Then our discussions went further on to say that they want a Guaranteed Plan and seems like the other company is the only one offering that. They seemed disappointed…

I requested for further information as to what was the plan that they have bought and lucky enough, their plan is still being sold in the market so I can have a better understanding and position to explain.

Before showing them the wordings and such, they further shared that the Planner has told them that their Plan is a Five Years Guaranteed 2.6% per annum returns Endowment Plan and they have verbally confirmed with the Planner on it. Was that Guarantee being shown and written in the contract and Planner’s recommendation?

The answers from them were a mixed of “don’t know and no’s” and an attitude of not wanting to listen to me at all.

The Showdown Of The Truth Behind The Plan They Have Bought

I showed them the brochure of the plan they have bought and in it, the 2.6% return was in it and labeled with two words shocking to them – “Projected Return”.

I shared with them further that they were blessed that the other Company is able to fulfil and give them a return based on the projected return at the end of the term especially in times like the recent economic crisis.

Why Did The Planner Did What He Did?

I do not know the obvious reasons but there could be a few common possibilities like:

• The Sake of Commission. By saying that the deal is guaranteed, the Planner will close the deal much easier.
• It’s all Verbal and Not Documented. You will tend to lose memory of what is being said at that time. Therefore you can’t fault the Planner for the mis-advise unless everything is documented.

Things To Note When You Are Going For Any Single Premium Plan

1. Go through the figures and have the Planner explained clearly to you whether the plan is guaranteed. If it is, you can ask the Planner to print another set of the Quotation and have it clearly stated. Anything that is documented will be easily justifiable in the future.
2. Do ask for the available options like early termination, policy alteration or at worsened economic conditions. Ask what will happen to the Plan.
3. There are really plans that are guaranteed but only to exist for a short moment. That means that the Plan is only being sold for a short period of time till the target is hit. We normally call this a tranche.
4. There can be many other types of Single Premium Plans available like Investment-Linked or Endowment related, and if your Planner persists in promoting only one type, please ask why is it so? Better Commission or Sales Quota?
5. Anything that you do not feel uncomfortable, please do not do up the plan straight away. Ask for better clarification.

I hope this will help you or even for your parents to understand better the features of a Single Premium Plan. Putting your money into such Plans are meant to make your money work harder and not against you. You have all the rights to know the mechanisms of the plan and your Planner must share what he really knows.