Saving Charmaine

“Charmaine Lim, a 4 year-old Singaporean girl diagnosed with a rare cancer, Neuroblastoma, stage 4. The fact that the cancer had spread to her liver and bone marrow places her in a high risk category. She is fighting the disease courageously and had undergone 4 rounds of chemotherapy. She had also undergone a surgery 4 days back, to remove the tumor from her liver.

What is her story?

Doctors attending to her had given her a mere 10-20% chance of survival even after she finishes her treatment at a local hospital. However, Charmaine's chances can be significantly increased to 40-50% should she receive treatment with a drug (3F8) which is currently under clinical trial, conducted only at Memorial Sloan Kettering Caber Center (MSKCC) in NYC.

Charmaine's doctors had written MSKCC and in their reply, the center would only decide to admit Charmaine for treatment should an upfront payment of USD350,000 (~SGD500,000) be placed as a deposit. This amount excludes all other expenses that will be incurred in the course of seeking treatment in NYC.”

 

Charmaine's blood test will be in 2 days (29th October), lets all pray for her that everything will go well :)

 

http://ourfeistyprincess.com/

http://ourfeistyprincess.blogspot.com/

How does Health Insurance Work?

 

A general idea of how Insurance works :)

Mistakes in Protection Planning

Article written by Mr. Eng Tiang Chuan

Medishield Benefits

This is the benefits that all Singaporeans enjoy from their basic Medishield plan.

MediShield premiums are paid yearly from your Medisave Account. The premium is calculated based on age at your next birthday when the cover commences.

We should not buy Insurance because the probability of claim is low

Probability of an insurance claim may be liken to finding money while walking down the streets, Low (but, seriously who actually wants to make a claim??)

Everyone should buy insurance to cover his/her “worst case scenarios” and not just buy because it is likely to happen.

In fact, your worst case scenarios are likely to be low probability events and hence, unlikely to occur. But because they are unlikely to occur, most people are unprepared for them (just when you think you are healthy). This causes the impact of such low probability events to have huge detrimental impact on your lifestyle. Analogous to betting where odds are involved, the payout for the outcome is the highest when the probability of it happening is the lowest.

If you are not insured against your worst, then you have the pay the most price in the end.

The 3 Phases of Life

 

Accumulation Phase

Individuals in the accumulation phase are those attempting to accumulate assets to satisfy fairly immediate needs, like down payment for a home, or longer-term goals like children’s education and retirement fund

Typically, individuals in the accumulation phase have a small net worth and heavy debts (car loans, college study loans).

Their investment horizon is long, 30 – 40 years, and can take higher risks in the hopes of making above-average returns over time through compounding.

These individuals will have a high need for Hospital & Surgical(H&S) and also Disability income insurance, as they are likely to have little savings due to their younger age & loans repayment.

 

Consolidation Phase

Individuals in the consolidation phase are typically past the midpoint of their careers, have paid off much or all of their outstanding debts, and are likely parents.

Earnings exceed expenses, so the excess can be channeled towards education & retirement needs.

Typical investment horizon for individuals in the consolidation phase is relatively long, 20 – 30 years, so they can take moderately risky investments, as they would not want to put their nest egg in jeopardy.

These individuals will have a high need for Hospital & Surgical(H&S) and also Whole Life or Term insurance, as they have children who are dependent on their income.

 

Spending Phase

This is when individuals retire, in Singapore the official retirement age is currently 62, according to statistics the reported life spans of Singaporean Male is 77 & Female 82.

That leaves an average of 15 years for a Male & 20 years for a Female in retirement.

Individuals in this phase would be reliant on their retirement funds accumulated from previous phases.

Let’s do a VERY SIMPLE estimation of how much a typical Singaporean would have in their CPF account retiring at age 62 living in a 4-room flat:

Assuming Income from age 25 to 62 is constant = $3500/month

Amount in CPF OA+SA accounts (including interest) at age 62 = S$673,864

Less housing payment assuming half of it is paid by spouse = S$673,864 – S$216,180 = S$457,684

Using the CPF LIFE payout estimator (high payout/lower amount for beneficiaries), the individual can get:

S$2204 - S$2372 per month

If you feel that amount isn’t enough for your retirement needs, maybe you can consider starting your own retirement fund to complement CPF LIFE.

Remember, for the older You to spend an extra dollar, the younger You would have to save an extra dollar.

Insurance needs at this phase of life would be the lowest as the children are grown-up and able to take care of themselves, but it would be good to have at least a Hospital & Surgical(H&S) plan to take care of excessive medical expenses.

 

 

CPF LIFE PAYOUT ESTIMATOR can be found here:

https://www.cpf.gov.sg/cpf_trans/ssl/financial_model/lifecal/index.html

Always have a good cash reserve on hand

Emergencies, job cuts and other unforeseen expenses happen, good investment opportunities may also present themselves at unexpected moments.

Having enough cash reserves reduces the likelihood of being forced to sell investments at inopportune times to pay for unexpected expenses.

Most experts recommend having at least 3-months salary OR 6-months living expenses in cash or cash equivalents.

Why is Life Insurance an important component of any financial plan?

Life insurance protects loved ones against financial hardship should death occur before our financial goals are achieved.

Death benefit paid by the insurance company can help pay medical bills, funeral expenses, provide cash that family members can use to maintain their lifestyle, service debt, or invest for future needs like education expenses.

Therefore, one of the first steps in developing a financial plan is to purchase adequate Life insurance coverage.

Although nobody ever expects to use his/her insurance coverage, a first step in a sound financial plan is to have adequate coverage “just in case”.

Lack of insurance coverage can ruin the best-planned investment program.

Principal Causes of Death in Singapore 2008

 

 

source:

http://www.moh.gov.sg/mohcorp/statistics.aspx?id=5526

What is the Dependants' Protection Scheme (DPS)

The Dependants’ Protection Scheme is an optional Term insurance scheme which covers permanent disability and death worldwide. The maximum sum assured is S$46,000 up to age 60.

Currently administered by two insurers, Great Eastern Life and NTUC Income. The scheme is extended to CPF members who are Singapore citizens or Permanent Residents, between age 16 and 60, when they make their first CPF contribution.

New Framework for Nomination of Insurance Nominees takes effect

Under the new framework there are 2 options to choose from when taking up a new policy with death payout:

- Trust nomination (relinquishes all rights to the policy)

- Revocable nomination (retains the ability to unilateror remove nominees)

The new Insurance Nomination Law does not apply retrospectively to existing policies with previous nominations.

However, existing policies with no previous nominations are eligible for nomination under the new law.

 

 

Here’s a link to the Guide to Nomination of Insurance Nominees 2009:

English

Chinese

Medisave-approved Integrated Insurance Plans

 

Here’s a link to all the Medisave-Approved insurance plans:

http://www.moh.gov.sg/mohcorp/hcfinancing.aspx?id=342

 

Here’s a useful link to a comparison of all the plans:

http://www.moh.gov.sg/mohcorp/hcfinancing.aspx?id=11164

 

What is the SRS?

 

The Supplementary Retirement Scheme (SRS) is a voluntary scheme to encourage working individuals to save for their retirement, over and above their CPF savings.

 

The scheme provides the following Tax advantages:

- Participants are eligible for tax relief on the contributions they make to their SRS account

- Investment returns are tax-free except for Singapore dividends

- Participants who reach the statutory retirement age prevailing at the time of the first contribution are taxed only on 50% of the total amount withdrawn.

What is the CPFIS?

 

The CPFIS is an investment scheme (IS), it is designed to give CPF members more options to enhance their retirement savings through investments.

Currently, the CPF board guarantees a minimum interest of 2.5% for the Ordinary Account (OA) and 4% for the Special Account (4%).

 

Unless you are a savvy investor i strongly suggest keeping your monies with the CPF board as they are giving out very decent interest.

What is the Minimum Sum Scheme?

 

The Minimum Sum (MS) Scheme aims to help CPF members set aside sufficient savings to support a modest standard of living during retirement.

All CPF members are required to set aside the MS when they turn 55.

 

Options for the use of the MS for CPF members:

1] leave the MS with the CPF board

2] keep it with a participating bank

3] buy a life annuity from a participating insurance company [Recommended]

 

For all 3 options members will only receive a monthly payment from age 62 (or any new statutory retirement age).

Why is buying an Annuity recommended?

The Annuity option is the only one which guarantees payment till death, for the other options payment will cease upon exhaustion of the MS.

 

For Married Couples

Married couples age 55 or above may set aside a combined MS of 1.5 times provided they nominate each other as the beneficiary for the balance of their MS. (Note: Once nomination is made it CANNOT be revoked)

General Insurance Products

 

Fire Insurance – Protect house against destruction by fire

House-owner Insurance – Protect the building or the contents in the building

Personal Accident Insurance – Protect against accidental death or disablement

Personal Liability Insurance – Protect against third-party liability

Types of Investments and their risk levels

 

Risks of losing capital invested in the respective instruments:

LOW RISK:

Money Market Securities (treasury bills, bank deposits)

Whole Life Insurance

Endowment

Annuities

 

MODERATE RISK:

Fixed Income Securities (bonds)

 

MODERATE TO HIGH RISK:

Unit Trust

Investment-Linked Products

 

HIGH RISK:

Equity Investments (shares)

Derivative Instruments

Property

 

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Alternatives to surrendering a policy

 

Here are some alternatives to surrendering a policy, if you are having difficulty servicing the policy premiums:

 

- Take a policy loan on the policy (note: interest rate is high)

- Surrender only the bonuses for cash

- Convert to paid up policy without payment of future premiums

- Convert to extended term insurance without payment of future premiums

- Reduce the premium payable by reducing the sum assured

- Apply for premium holiday (note: Only for investment-linked)

CPF LIFE

 

CPF LIFE is a scheme that is designed to provide lifelong income for the elderly in their retirement.

All CPF members are required to put aside the Minimum Sum (MS) at age 55 for their retirement needs.

The scheme will start in the year 2013.

 

The MS cash balance will be split into 2 parts:

Retirement Account – Monthly payment starts from age 65 to 80

LIFE premium – Monthly payment starts at age 80 till death

What do the different Bonuses mean?

 

Reversionary Bonus is an addition to the sum assured, once declared it becomes a guaranteed amount in addition to the sum assured and is payable when the policy becomes a claim.

 

Terminal/Maturity Bonus is the bonus that the insurer pays to a participating policy that has been kept in force until maturity or death.

What is Cash Value?

 

Cash Value, is the amount of money, that a policy-owner will get when he surrenders his policy to the insurer for cancellation.

 

Section 60(1) of the Insurance Act (Cap. 142), provides for the policy-owner to surrender his policy and be entitled to receive the cash value ONLY AFTER the policy has been in force for 3-years or more.

(click to enlarge the picture)

Factors influencing pricing of Insurance premiums

 

1] Mortality (chances of death) & Morbidity rates (chances of falling ill)

2] Investment Income

3] Expenses

4] Gender

5] Smoking status

6] Sum assured

7] Frequency of Premium payment

What are the uses of Insurance?

 

Main uses:

1] Financial protection against premature death

- Whole Life

- Term

- Endowment

2] Financial protection against outliving ones resources

- Annuity

- Endowment

3] Financial protection against ill-health

- Critical illness

- Hospital cash (income)

 

Alternative uses:

1] Protection against creditors

2] For charitable donations

3] Funding Trusts at death

4] Investment (note: Personally, i do not recommend using Insurance as an Investment vehicle)

 

Business uses:

1] Indemnify against lost of keyman

2] Credit enhancement

3] Business continuation

4] Employee benefit plan

Insurable Interest in a Key-person

 

A key-person is an employee who is vital to the continued profitability of a business.

The sum assured should be that which is required to compensate for the loss of profits on the death of the Key-person.

What is an Annuity?

 

 

An Annuity is a contract that provides a guaranteed income to the annuitant for life or a certain specified period of time, with income payments made annually, semi-annually, quarterly or monthly.

 

There are 2 types:

Immediate – Payments begin immediately depending on the frequency of payment selected.

Deferred – Payments begin after a specified period of time has elapsed after the purchase date.

 

The Deferred Annuity plan is the only one allowed under the CPF Minimum Sum Scheme (MS).

It is better to buy an Annuity with the MS because payment under the Deferred Annuity plan is for life, while payments from the MS will stop when it is exhausted.

Another advantage is Annuity Income payments from an Annuity plan bought with the CPF MS is Tax-free.

What are they for?

 

Main types of Insurance and their objectives:

 

Term Insurance – Purely death protection needs

Whole Life Insurance – Death protection & Savings needs

Endowment Insurance – Mainly for Savings needs

Investment-Linked Insurance – Mainly for Investment needs

Annuities – Protection against outliving ones resources

What is Mediguard Scheme?

 

The Mediguard Scheme was launched by the Singapore Government.

It is a joint scheme between the Public Trustees Office & AIA.

The aim is to enable minors whose money is being held by the Public Trustee’s Office to consult GPs without having to pay.

 

Illness covered under the scheme include:

- flu

- colds

- hand, foot & mouth disease

- one-off health screening

 

The premium is $267.80 for 2-years cover paid directly from the minor’s estate.

What is ElderCare Fund?

 

The ElderCare Fund is an endowment fund set up by the Singapore Government using budget surplus to sustain financing for eldercare.

 

The interest earned is used to subsidize nursing home care for the elderly run by Voluntary Welfare Organizations.

 

Prior to ElderCare Fund, subsidies were paid directly from the Government’s budget.

What is Medifund?

 

Medifund is an endowment fund set up by the Singapore Government.

 

The Government uses interest earned from the fund to help the poor to pay for their medical bills.

What is Interim Assistance Programme for the Elderly (IDAPE) ?

 

IDAPE was launched by the Singapore government to take care of Singaporeans who are not eligible to join ElderShield.

 

Individuals covered under the scheme need not pay any premiums. The payment is dependent on the individual’s per capita household income.

 

The scheme is currently run by NTUC Income.

What is ElderShield?

 

ElderShield is a severe disability insurance scheme launched by the Singapore Government.

 

It is aimed at providing long-term care protection to elderly Singaporeans.

 

This scheme is currently run by 2 insurers, NTUC Income & Great Eastern Life.

All CPF members who reach the age of 40 are automatically covered under the scheme, unless they opt out.

 

The scheme pays a cash benefit of $300 a month for up to a maximum of 60-months if the insured (policy-holder) is unable to perform at least 3 ADLs.

What is MediShield?

 

MediShield is a low cost catastrophic medical insurance scheme.

In 2005, the CPF board privatized the MediShield Plus plans through NTUC Income.

The 2 MediShield Plus plans were integrated into NTUC Income’s IncomeShield, known as IncomeShield Plan MA & MB.

 

Annual premiums for MediShield are deducted automatically from the CPF member’s Medisave.

MediShield is renewed automatically every year until the member reaches 80 years old.

 

The main features of Medishield are:

1] Claimable Limit

- The portion the bill that is eligible for reimbursement

2] Deductible

- The initial amount that the claimant needs to pay for claims made in a policy year, before payouts from MediShield

- Deductibles only need to be paid once in a policy year

- The deductible keeps MediShield premiums affordable (since smaller amounts can be paid using Medisave)

- For approved outpatient treatments claimable under MediShield, the deductibles are waived

- For Class C ward it is $1,000

- For Class B2 and above wards it is $1,500

3] Co-insurance

- This is the percentage of the bill the claimant needs to pay on the portion of the bill above the deductible

- Co-insurance for inpatient bills is three-tiered, ranging from 20% to 10% as the bill size increases (the larger the bill, the lower the co-insurance needed to be paid)

- MediShield pays between 80% - 90% of the claim amount that exceeds the deductible

 

Go to this page for an estimate of how much you may need to pay:

https://www.cpf.gov.sg/cpf_trans/ssl/medicalEnh/medi_calc_step1.asp

Here’s an example i generated using the link given above, 7 days stay in a community B2 ward:

Follow this link to see Benefits & Premium tables for Medishield:

http://havenoworries.blogspot.com/2009/10/medishield-benefits.html

What is Medisave?

 

Medisave is a compulsory savings scheme to help Singaporeans save and pay for their hospitalization expenses.

It was introduced in 1984, it pays 4% interest yearly.

 

The Scheme has 2 main features:

1] Minimum Sum (SG$29,500)

2] Contribution Ceiling (SG$34,500)

- This ceiling serves as a limit to members’ contribution

- Any excess amount will be transferred to the Special Account (SA) [OR the Retirement account if the member is above 55 years of age]

 

Medisave can be used for the following expenses:

- hospitalization expenses

- maternity charges

- approved outpatient treatments

- day surgery charges

- psychiatric treatment

- stay in community hospitals, hospices..etc

- gamma knife treatment (for brain tumor & other dysfunction)

- day care charges

- premiums for Medishield, Eldershield & other Medisave approved medical insurance schemes

 

For those who prefer higher coverage for their hospital expenses they can use their Medisave to purchase an enhanced plan such as AIA’s Healthshield, enhanced plans are integrated with Medishield, and provide protection on top of what Medishield is providing.