Terms that every financially-responsible adult in S’pore needs to know, explained

MS Explains: What the heck is a pre-existing condition? What kind of insurance is even out there? We bring you up to speed.

Andrew Koay | Sponsored | November 19, 2020, 07:00 PM

Insurance. I remember the first time I bought it.

Merely a few months into my first job, I decided to do the responsible thing and purchase some insurance — just basic coverage, in case I suddenly ended up in the hospital for one reason or another.

However, I also remember being slightly confused at the barrage of terms being thrown at me, and if I’m honest, I didn’t have perfect comprehension of what exactly I was purchasing when I signed on the dotted line.

I mostly had to trust what my insurance agent was saying about what I should buy.

So what should you know before you meet someone selling you insurance?

Terms

We compile the need-to-know terms that every responsible young adult should get acquainted with, and try to make it understandable for you.

1. Benefits

Benefits are all the things you’re entitled to because you hold a certain insurance policy.

The money that you receive in compensation would be considered one of the benefits of that insurance policy.

There are a few different types of benefit payouts, but two to know are:

  • Lump-sum benefit payout: This is where you receive the benefit in one payment — all at once.
  • Accelerated benefit payout: This is where you are paid a portion of the policy’s sum assured upon the occurrence of specific events, such as early cancer.

2. Premium

A premium is the amount of money that you pay each year to maintain your insurance policy. You can think of it as membership fees, which you might pay to have continued access to your gym.

Premiums are typically calculated by weighing up the probability of you having to utilise your insurance. This is why premiums for health insurance tend to be lower when you’re younger, as younger people are generally considered to be healthier.

3. Claim

An insurance claim is basically a request by you (or the policyholder) to the insurer that you want to use the plan you’d previously purchased.

It’s you saying: “hey, I could really use those benefits now to help pay for this!”

Of course, claims have to be made in line with the conditions set out in your insurance policy, and once you’ve filed a claim the insurance company will have to make sure that it’s all above board and by the rules.

Once it has been approved and validated, you’ll receive access to the help and coverage that you need.

4. Pre-existing conditions

When it comes to health insurance, you may already have some illnesses or injuries dating back to before you began an insurance plan, like a knee injury for example.

These are called pre-existing conditions because they existed before your insurance plan did. It is common for insurers to collect a higher premium for coverage involving pre-existing conditions, or excluded all together.

As a rule of thumb, it makes sense to try and buy policies early to ensure you are covered before an illness develops.

5. Exclusions

When something is excluded from coverage, that means you can’t make a claim for benefits involving the excluded condition, expenses, treatments, activities, events or situations.

Some insurers have tighter exclusions, and some are broader in definitions, you should always read the policy wording before you purchase any insurance.

Types of Insurance

Insurance policies fall into three broad categories: life insurance, critical illness health insurance and general insurance.

Life Insurance

According to Moneysense, life insurance are long-term policies that have a range of purposes, including:

  • Covering your dependants in the event of your death
  • Long term savings or investments
  • Regular income during your retirement

Critical Illness

  • Critical Illness: Also known as the ‘living benefit’, typically pays a lump sum, giving you financial relief in the event you’re afflicted with a major illness like cancer, heart attack, kidney failure and stroke. There are two types of products out there, multiple critical illness provides pay-outs for different critical illnesses and early critical illness that provides pay-outs during earlier stages of major illnesses
  • Cancer Insurance: More specific than critical illness insurance, this product covers you in the event you’ve been diagnosed with cancer — the leading cause of death in Singapore according to the Ministry of Health. Such products might be useful if you feel like your existing critical illness insurance is insufficient, or if you’ve just started working and have a smaller budget. MSIG’s CancerCare Plus insurance helps policyholders by handing out a full pay of S$100,000 upon the patient's diagnosis of major cancer; premiums for CancerCare Plus start from less than 15 cents per day.

Health Insurance

This is insurance that, well, has to do with your health. It’s meant to help you pay for the costs of any healthcare that you may need, depending on the actual plan that you buy. Examples of health insurance that you may want to consider include:

  • Hospitalisation or Medishield Life: Typically covers the costs of in-patient hospital stays. To ensure better coverage, upgrading your Shield plan will ensure you can seek treatment in both private and public hospitals.
  • Hospital Cash Benefit: Provides a daily hospital cash in fixed amount in the event of hospitalisation.

MSIG’s Prestige Healthcare insurance allows those who have purchased the Platinum Plan up to S$1 million in compensation for inpatient hospital treatment and other healthcare-related services such as outpatient services.

General insurance on the other hand refers to shorter-term policies that cover the risks involved in everyday life. There are a few different kinds of insurance in these categories. Here’s a quick breakdown:

Motor Insurance

This is insurance that protects you from the brunt of costs related to accidental damage or theft of your vehicles. So if you’ve gotten into an accident, this kind of insurance will help to pay for the repair of your car.

It is compulsory for all cars to be insured before they can be driven on the road, but you can still choose the kind of motor insurance plan you want as long as it meets minimum standards.

Some plans even cover the costs of the driver’s medical treatment for injuries sustained in the accident, and provide you with some money for you to take alternate forms of transport (like taxis) while your car is in the workshop for accident repairs.

Home Insurance

Gives you coverage for damage that happens to your house or the things inside your house. For example, if a fire were to burn down your house and destroy your furniture and valuables with it, home insurance would compensate you for your losses and give you a sum of money so that you can repair or replace what was damaged.

Like how motor insurance is compulsory for cars on the roads, it is compulsory for HDB flat owners who have an outstanding HDB loan to have basic fire insurance. For properties which are mortgaged to a bank or financial institution, the bank or financial institution will also require you to have a fire insurance policy on the outstanding amount.

With the possibility of homes flooding in Singapore becoming very real, you can also opt for more comprehensive insurance such as MSIG’s Enhanced HomePlus insurance which gives you up to S$270,000 coverage for renovations, movable household items, household contents and personal belongings.

It’ll also take care of your expenses related to temporary accommodation and loss of rent.

Travel Insurance

Most travel has ceased for now, but when it starts up again. Globetrotters are sure to be reintroduced to stresses like delayed flights, or lost baggage.

Travel insurance protects you during the common unfortunate situations encountered by those going overseas.

Benefits of such insurance may include compensating you with $100 for every six hours of delay, up to $3,000 for travellers on the family plan.

Learn how insurance plans may help in different scenarios and better understand the consequences, visit HelpMeLeh.com for more information.

Writing this MSIG sponsored article made the author realise that he might need more protection from life’s uncertainties.


Mothership Explains is a series where we dig deep into the important, interesting, and confusing going-ons in our world and try to, well, explain them.

This series aims to provide in-depth, easy-to-understand explanations to keep our readers up to date on not just what is going on in the world, but also the "why's".


Top image adapted from Pawel Czerwinski via Unsplash