5 Plans That Safeguard Your Financial Future

The need for insurance can be a debatable topic. Depending on the individual, it can be deemed as an essential or an unnecessary expense.

No matter which side you are on, there’s no denying it helps cushion the effects of expensive bills if something unfortunate should happen to you. Having adequate insurance coverage will go a long way in safeguarding your financial future.

In this article, we look at 5 common types of insurance plans you should have and the reasons why.

Suitable for: anyone with dependents

If you happen to pass on suddenly or suffer from total permanent disability, will your loved ones be able to cope financially? If such an unfortunate scenario occurs, life insurance will help to lessen any financial burden and provide for your family members.

While it’s generally recommended to get a life insurance plan as soon as one starts working, it’s also important to continually review the sum insured based on your age, number of dependents you have or your needs. Depending on your preference or requirements, you can choose between a whole life plan and a term life plan.

A whole life plan has higher premiums that partly contribute to the cash value on your policy and can be considered as an investment for long-term savings. The coverage it offers you is for life. In comparison, a term life plan has lower premiums and the coverage is only up to a specific age depending on your policy.

The Dependants’ Protection Scheme (DPS) is an example of a term life plan. It is automatically extended to eligible CPF members between age 21 and 60 when they make their first CPF working contribution. With DPS, you will be insured for up to $46,000 until you are 60 years old. The premiums can be paid from your CPF Ordinary Account and/or Special Account (if Ordinary Account is insufficient).

Suitable for: homeowners with existing home loans

Most homeowners in Singapore finance their property purchase through loans either from HDB or local banks. When servicing a monthly mortgage that spans for decades, getting financial protection is a smart choice.

Mortgage Reducing Term Assurance (MRTA) or mortgage insurance provides financial protection on outstanding mortgage payments in an unfortunate event. Home Protection Scheme (HPS) is one such example.

HPS protects CPF members and their loved ones from losing their HDB flats in the event of death, terminal illness or total permanent disability by helping to pay off the outstanding loan up to the sum assured. HPS covers you until age 65 or until your housing loans are paid up, whichever is earlier.

HDB homeowners who use their CPF savings for monthly housing loan repayments have to be covered under HPS. The premiums can also be paid using your CPF Ordinary Account savings.

Although mortgage insurance is not mandatory for private property owners, it is still highly recommended as it helps ensure that your family still has a roof over their heads in any unfortunate circumstance.

Suitable for: everyone

Medical insurance helps to pay large hospitalisation bills and certain approved outpatient treatments, thus making healthcare more affordable for most of us.

MediShield Life is a basic medical insurance plan that protects all Singaporeans and Permanent Residents against large medical bills for life, regardless of age or health conditions. It is designed to cover hospitalisations in Class B2/C wards and subsidised outpatient/day surgery treatments in public hospitals. The premiums can be fully paid using Medisave Account (MA).

If you have an Integrated Shield Plan (IP), you can enjoy the benefits of both MediShield Life and that of the additional private insurance coverage offered by private insurers. With this additional cover, you would be better covered for treatments in higher class wards and private hospitals. There is no duplication in coverage and no double payment of premium.

Suitable for: everyone

If you’d like to get coverage for even minor mishaps, consider getting personal accident insurance.

In addition to death, total or partial permanent disability coverage due to accidents, these plans also provide reimbursements for medical expenses due to accidents, up to certain limits, even if you are not warded. Like term life plans, personal accident plans do not have cash values.

Today, there are many variations of personal accident plans offering benefits that could best suit your needs. For example, some plans provide cash benefits based on number of days hospitalised or on hospitalisation leave to help cope with loss of income, while others even provide cover for infectious diseases like Hand, Foot or Mouth Disease.

Suitable for: anyone, especially older Singaporeans

As Singaporeans are living longer, there is an increasing demand for long-term care services. These services enable the elderly to receive constant care from professionals, especially if they can no longer perform daily activities on their own.

One example of a long-term care insurance plan is ElderShield, a plan that provides basic financial protection to Singaporeans who need long-term nursing care.

In the event of a severe disability, it pays policyholders a monthly cash payout for up to six years. You can enhance these benefits by purchasing an ElderShield supplement from private insurers too.

Singaporeans and Permanent Residents who have CPF accounts would be automatically enrolled in ElderShield when they turn 40 years old, unless they opt out of the scheme. Premiums for this insurance can also be paid from your Medisave savings.