A week has passed since the elections, P won comfortably, the O has gone back to the drawing board and everyone of us got back to our daily routine. With my Lazy Man Portfolio review completed, it’s time to review my Insurance Portfolio. I am going to be as detailed as possible complete with premiums and coverage but sensitive information like my policy number will be omitted. I welcome a healthy dose of discussion and debate.
How can I forget my favourite Asahi? Photo Credit: KpopStarz
I have a total of 14 insurance policies with the majority from AIA. I am not promoting AIA. It just happens that the policies my parents bought for me when I was young were from AIA and an AIA agent appeared at the same time when I am doing my first serious insurance review. That agent has since left but a good friend of mine who also happen to be with AIA, took over and I am very pleased with her attitude and services.
Having so many policies can be very time consuming. My first task is to check that my agent is still with the insurer and his/her contact is up to date so that I can contact them quickly for any insurance advice and claims. Of course I can call the service centre but if I want an answer fast especially during an emergency, a competent agent can do just that. The easiest way for me is to log in to the respective insurers’s website. There is a wealth of information to be found here:
- Name and ID of the agent taking care of my insurance.
- My policy details. It saddens me to see news likes this. Although not many of us will own a million dollar policy, I encouraged everyone to do some checks on your own.
- Keep your details up to date. A lot of insurers have started implementing 2FA and will need your mobile number or token.
AIA – HealthShield Gold Max A
This plan hnami has many names over the years – HealthShield Gold Plan A, Prestige, Max, Elite etc, and with MediShield Life, I wonder if there will be another change in the name and premiums. The maturity date is till I am 100 years old, shouldn’t it be changed till Lifetime? I will check with my agent again at the end of the year.
My current plan covers private hospitalization and a rider for the deductible and co-insurance. However when I first purchase the hospitalization plan, I did not have the rider and my coverage is till Government A ward. Given my modest income at that time, my then agent advised that my Pink of Health (a hospitalization income plan by AIA) will be sufficient. However I come to realised that medical cost will continue to rise but the Pink of Health income plan payout will remain the same. Hence in 2012 I decided to upgrade my hospitalization plan.
It was unfortunately that I had a Vertigo attack during the same time and this condition was excluded. I had to go to the Hospital A&E because It was my first experience with Vertigo and it happened in the middle of the night. I declared this and AIA sent me for another check-up under their own panel of doctors. The doctor who attended to me told me that my condition is like a common cold and if I had visited a normal GP, there will be no exclusions. My agent advised me that I can appeal again if there is no relapse after 5 years, and that is what I intend to do.
If you have plans to upgrade or purchase a insurance, try to go to a GP first as insurers tends to be more wary on hospital consultations.
AIA – HealthShield Gold Max Essential A
The rider for my above hospitalization plan. I am also concerned about the premiums due to the introduction of MediShield Life. I will have to wait till the end of the year to find out.
AIA – Prime Life
My parents bought this plan when I was 14 years old. I believe it was meant as a savings plan and by the time I knew enough to review my policies, I have been paying for this plan for over 10 years. Fast forward 20 years, I’m 34 years old now. Based on 1994 projected values, I would have paid $10,900 in premiums, have a guaranteed value of $7,500 and non-guaranteed amount of $11,659. I would have made $8,258 or 3.7% per annum. Not bad right?
Based on the actual Policy Annual Statement that I received in 2014, my revisionary bonus is $8,637.61. I believed that this is the guaranteed amount. I will ask my agent for the actual surrender value and annual statement for 2015.
AIA – Recovery Lifeline
My very first critical illness plan. Prior to 2005, I had zero coverage for Critical Illness and I am thankful that I have no medical conditions. I also come to realised that Critical Illness is one of the most expensive coverage around and the older you get, the more expensive the premiums become. I bought Critical Illness for my parents and their premiums are three times mine.
AIA – Complete Critical Cover
A fairly new critical illness plan that I purchased. Most critical illness plans only pays during the advance stage of your illness and this plan will pay out 50% for early critical illness detection. This amount can be used for my treatment, medicine etc. The alternative is to use my emergency fund but I choose to have both since I am comfortable with the premium. This plan also pays up to 200% for Catastrophic Critical Illness.
AIA – Enhanced Personal Accident For Life – Plan 1
My most utilized plan and I am glad that I bought it. I had several injuries big and small over the last few years – I fell and broke my tooth, fractured my finger, ankle sprains etc. Accident plans are the cheapest around and underwriting is usually very straight forward. I know some people may write off this type of insurance as it can easily be covered by their emergency fund. However for a regular recreational footballer like me, this plan has proven to be invaluable. Do you know that I caninjury? from a MOH approved TCM of up to $500 per injury
AIA – Pink Of Health (Enhanced)
This is the hospitalization income replacement plan that I mentioned earlier. In addition to not being able to keep up with the rising medical cost, it covers till 80 years of age only. The only advantage that I see is that it is level premium i.e. the premium does not increase with age.
I bought the same plan for my parents a few months later but the policy has changed – premiums will now increase with age. I cancelled it after a year or two and started a emergency fund for my parents instead.
AIA – Cashback Protector
I think some people will call me kiasi but being an accident prone person, I actually see a lot of benefit in having more than one accident plan. Let me explain. When I had my first major accident, the cost of treatment was about $5K to $6K. I was not hospitalized and dental surgery was not covered under MediShield. My first accident plan only covers me up to $2,500 per injury and I have to pay the rest in cash. That is when having a second accident plan will come in useful to top up the difference. In case you are thinking of profiting from your injury – using the same injury to claim from multiple insures, don’t even think about it. As far as I know, it is illegal and insurers have their own way of checking.
Most accident plan comes with a no claim bonus and my plan pays me $100 every 3 years. This works out to $13.76/month which is comparable to AIA Enhanced Personal Accident For Life – Plan 1 but with a higher coverage.
Aviva – SAF Group Insurance Scheme – Term Life
If you have been to NS, this is one of the cheapest term insurance that you can buy. I had it during my NS days and cancelled it when ORD. I am glad to be able to pick it up again and I can include my spouse to enjoy the same low premiums too.
I could not find any agent assigned to my policy and I guess that’s because it is a cheap no frills plan. However, I think the claims should be pretty straight forward.
AXA – Life Exentials
This is my most expensive policy and it combines two components – Life and Critical Illness rider. My primary reason for buying this policy is to have Critical Illness coverage till age 99. As you can see, all my critical illness coverage expire when I reach age 75. Do I really need Critical Illness coverage after age 75? You can call me Kiasi again but I believe I will live to a ripe old age and I do not want to burden anyone.
This plan may be a little ‘complicated’ to understand:
- The death/TPD component is a 35 year limited paying plan and I am paying $891.10/year. The basic coverage is $35K but it provides x 3 multiplier or $105K coverage till age 65.
- The CI component will require me to pay for life and I am paying $969.80/year.
- From the $891.10/year, a part of it is used for investment. The projected value at the end of 35 years is anyone’s guess but if it is substantial, I can consider terminating my CI rider.
Great Eastern Life PaySecure
This is my disability income plan and probably the most under-rated plan. Should I be unable to work due to sickness or injury, PaySecure will pay me a monthly sum for the loss of my income. You can read more about my thoughts of this type of insurance here.
NTUC Income Dependency Protection Scheme
This is an opt-out life insurance scheme which is automatically extended to eligible CPF members. I think this is one of the few if not the only insurance plan that we can pay using our CPF. While the coverage is very basic, it is the one of the most affordable insurance available – comparable Aviva SAF Group Insurance. I can’t understand why would anyone want to opt out but I have heard of it. Maybe someone can enlighten me?
NTUC Income Living Benefit
This is a term policy to boost my insurance coverage. If anyone is looking for a cheap term plan, you can use this policy as a benchmark. I have the option to renew my policy at age 65 but I will not do so because
- the premium based at age 65 years will be extremely expensive.
- My other policies and retirement portfolio will take over.
- I should have less liabilities as I get older and I can reduce my coverage.
Tokio Marine Life Insurance – TM Legacy
This is a 25 years limited paying plan and is very similar to AXA – Life Exentials. The major difference is that I do not have to continue paying for the CI coverage after 25 years. The catch is the premium will be paid from the bonus that I earned during the last 25 years. This is very similar to a Investment Linked Plan and I will have to keep a close eye on it.
My insurance portfolio in a nutshell:
|Total Permanent Disability:||$568,500|
|Monthly Cash Premiums:||$535.35|
According to a 2007 study by the Nanyang Technological University of Singapore, the insurance needs of an average working adult in an average household will amount to about $490,000. However this study did not show the breakdown of the insurance coverage. If CI coverage also requires $490,000, then I am still under-insured.
The next question is am I paying too much for my insurance? I don’t think there will be a clear cut answer. $535.35 is about 15% of my gross pay and I know some will advocate no more than 10% of your net pay. It gets even more ‘complicated’ when we start to mix insurance with investments. Although I do not have any pure Investment Linked Plans, I do have a few plans that have a surrender value.
I searched CompareFirst for a $400K, death, TPD and CI term plan till age 65 and the cheapest plan from AXA Life cost $1,459/year or $121.58/month. It looks like I am over paying but I believe that the Critical Illness will be the main financial burden after age 65. I have been asking for a pure term CI plan till age 99 or lifetime but I have not been able to find any. The ones that do are tied with Whole Life plans which is why I bought AXA Life Exentials and TM Legacy.
If for whatever reasons that I am no longer able to afford the premiums, I will first negotiate with the insurer to reduce my coverage and premiums. Terminating my policy will be my last resort and that is when having multiple insurance policies of the same type has its advantages. As mentioned previously, CI coverage is the most expensive, and I can choose to terminate any of my five CI plans. Compare this against owning just one CI plan. If the insurer refused to reduce my coverage/premiums, I will be forced to terminate the policy and I will have zero CI coverage.
A few other ‘tips’ to share – I pay my premiums annually. It is usually cheaper than paying monthly and whenever possible, I will use your my credit card to earn points/cash back. Finally, it is important that I share this portfolio with my family members and my agent so that if anything happen to me, they have all the information to act on my behalf. I am fortunate that a good friend of mine is also an insurance agent with AIA and I have no problems in providing her with this portfolio. I also make it an effort to meet her at least once a year.
I will like to go on to my parent’s insurance policies which I am also paying for but I will end here for now. Feel free to drop your comments and thoughts.