Insurance 101: Beginner’s Guide to Integrated Shield Plans

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Insurance 101 Beginners Guide to Integrated Shield Plans

All Singaporeans and permanent resident (PR) are automatically enrolled in the MediShield Life. According to the latest data released by the government, there are 3.656 million MediShield Life policyholders. And among these policyholders, close to 68% have an enhanced MediShield Life by purchasing an Integrated Shield Plan (IP).

While IPs might be popular based on the ownership rate, do we really understand everything there is to know about an IP? Today, we are going to help you learn everything you need to know about IPs.

Read also: 6 Common Misconceptions Singaporeans Have When It Comes to Life Insurance

What is an integrated shield plan?

IPs consist of two components: The Medishield Life component and private insurance component.

MediShield Life layer

Medishield Life is a national health insurance scheme that provides health protection for every Singaporean and PR, including those who have serious medical conditions, i.e. a pre-existing condition. For the older generation, MediShield Life used to be known as MediShield. However, compared to MediShield, MediShield Life has a higher claim limit and lower co-insurance rates.

As the name suggests, MediShield Life covers you for life against hospitalisation bills and selected illnesses. In an unfortunate event of hospitalisation, MediShield Life will help you pay for large hospitalisation expenses. While you will need to fork out a little amount for your hospital bill, most of it will be covered by MediShield Life. However, this is only if you stay in a Class B2 or C ward in public hospitals. This is because the benefits of MediShield Life is based on the costs of those two wards.

Private insurance layer

But what if you want to recover in a more comfortable environment or prefer the services of private hospitals? Since Class A/B1 wards or private hospitals have higher costs, you will need to top up additional expenses. The government also understands that some of us might have such preferences. But in order to keep healthcare still affordable for us, they introduced IPs to offer us more choices as a consumer. You can think of IP as buying an additional layer of insurance on top of your MediShield Life from private insurers like Aviva.

Integrated Shield Plans

Source: Ministry of Health (MOH)

Related: 10 Questions to Ask Your Financial Consultant When Getting Insurance

What are the types of integrated shield plan?

IPs are differentiated into five types: Basic plan, Standard IP, Class B1 plan, Class A plan and Private Hospital plan. Each type of IP is customised to give you the best deal for the type of ward you prefer to stay in during hospitalisation.

Integrated shield plan pitfalls you need to avoid

While IPs are good insurance products to own, it doesn’t mean that everything about IPs are great. There are some pitfalls that you need to avoid that might turn this wonderful insurance into a not-so-great one.

Pitfall 1: Do you really need IPs? Are you buying for the sake of buying?

Since IPs can be paid for using your Medisave, Singaporeans may fall into the pitfall of buying excessive cover. Some of us might think that buying IP is a way of “drawing money out of Medisave”. With this “Medisave money is not exactly my money” mindset, we buy IPs even though MediShield Life is enough to cover our hospitalisation needs.

The fact is that not everyone wants to stay in higher Class wards. According to MOH, out of all patients that are hospitalised in public hospitals, only one-third of them choose to stay in B1/A wards. Are you one of them who doesn’t need to stay in higher Class wards?

Pitfall 2: Buying excessive hospitalisation cover that you don’t need or can’t afford

With the same “Medisave money is not exactly my money” mindset, we might spend on excessive coverage under IPs even though we do not need so much cover. In addition, we fail to consider the long-term impact of buying excessive cover. As a hospitalisation protection product, IP premiums will get more expensive as we grow older. By getting excessive cover under an IP, there will be negative repercussions as we grow older.

Related: Do I Need Health Insurance, Even with MediShield Life?

How do I pay for my integrated shield plan?

Unlike traditional insurance, you do not need to fork out much cash for your IP. You can pay for your IP premiums using your Medisave. There is, however, a ceiling on how much Medisave you can use each year. For those aged 40 and below, the limit is S$300 per year. If you are above 40 and below 70, the limit is S$600 per year. For those above 70, S$900 is the limit.

Who can I buy my integrated shield plan from?

If you are interested in getting an IP, here’s who you can get it from. As of 1 May 2016, there are six private insurers which have been given the green light to sell IP products. They are your usual private insurers: AlA Singapore, Aviva, AXA Insurance, Great Eastern Singapore, NTUC Income and Prudential Assurance.

Read also: As a Young Working Adult, What Insurance Should I Get?

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