• All blog entries
    • Calculators
    • Case studies
    • Cost of living
    • CPF Are You Ready?
    • CPF Matters
    • Credit Management
    • e-Learning
    • Estate Planning
    • Events
    • Financial advisers
    • High Networth
    • Insurance
    • Investments
    • Letters to the Press
    • Magazines
    • Others
    • Retirement Planning
    • Scams
    • Surveys
    • Tragic Stories
    • Unethical sales process
    • Videos
  • Legal
  • Testimonies
    • Individual testimonies
    • Gallery
  • My Account
Hi, looking for a fee-based financial planner in Singapore? Read this article now!
  • Home
  • About
    • About Wilfred Ling
    • Why do you run your own professional financial planning practice?
  • FAQs
    • FAQs on Wilfred Ling’s Financial Services
    • FAQs on Financial Planning
    • FAQs on Investments
    • FAQs on Insurance
    • FAQs on Estate Planning
  • Services
    • Overview
    • Create a financially secure plan for your young family (package details)
    • Retirement Planning
    • Investment Portfolio Management
    • Insurance Planning
  • Fees
  • Cool Tools
  • Contact
  • Subscribe
You are here: Home / Insurance / Analysis of the new Additional Withdrawal Limits for Integrated Shield Plans (IP)

Analysis of the new Additional Withdrawal Limits for Integrated Shield Plans (IP)

10, July 2015 by Wilfred Ling 3 Comments

medishield lifeIt was announced that there will be a new Additional Withdrawal Limits for Integrated Shield Plan. While there will be no cap as to how much Medisave one can use for Medishield Life, there will be revised limits as to how much Medisave can be used to pay for the ‘enhanced’ portion.

Current Situation

Take for instance, a 71 years old person who is insured with Prudential’s PruShield A Premier. The current premium is $2,753 a year.  The current Medisave wtithdrawal limit is $1000 and hence, he would need to pay $1,753 cash currently. Note that this does not take into consideration of the cost of rider.

The New Situation

The premium amount paid to Prudential can be determined by subtracting the Medishield premium from the $2753 which is 2753 – 560 = $2,193. It is this amount that is going to be subjected to the new Additional Withdrawal Limit of $900.  Since the Life Association of Singapore (LIA) has announced that all 5 insurers will not increase the IP portion of their premium for 12 months, it can be assumed that $2,193 will remain the same for 12 months. Thus, he has to pay 2193-900 = $1,293 cash.

(The Medishield Life premium for the same 71 years old man will be $885 before subsidy.  This amount is not subject to any Medisave cap. )

So it can be seen that the cash outlay will be reduced from $1,753 to $1,293.

From what I see, the introduction of the Additional Withdrawal Limit is a control mechanism by the government to rein on the high premiums charged by the private insurers. Many will end up downgrading or give up their IP altogether when they have to pay cash instead of having the premium fully funded by their Medisave. This situation already happens in the Eldershield market. Many upgraded their Eldershield by selecting the sum assured based on the premium of less than $600 a year because that is the Medisave limit for the enhanced Eldershield.  The right way of purchasing insurance is to determine the sum assured based on needs not premium.

The Health Minister, Mr. Gan Kim Yong said that “If their intention is to use government subsidised services, B2 or C class wards, then maybe it is not necessary to purchase IPs.”

If I have a chance, I want to ask him about the on-going complains that there is no bed in B2 ward resulting in patients sleeping corridor! I also want to ask him why the claim experience for private hospitals have been increasing at a whopping 17% per annum! For government hospital, the "A/B1" wards' claim experience is increasing at 12% per annum.

In the meantime, the Ministry of Health requires all financial advisers to be trained and undergo a test on Medishield Life/Integrated Plans by end of August 2015. This is a compulsory test.

Like this article? Subscribe to my newsletter below for more.

Get regular Tips on Financial Planning. Free subscription for 3 years. Covers all aspect of financial planning such as 'How much salary you should have?', 'How to avoid insurance that is not suitable?", 'What are the retirement planning methods?", etc

Share this:

  • Tweet
  • Print

Related

Filed Under: Insurance

Comments

  1. Jasmin says

    12, July 2015 at 6:07 pm

    With higher withdrawal limit, does this mean private insurers can charge a higher amt of premiums while convincing policyholders that they can still afford it since the premiums are payable from the Medisave a/c?

    Reply
    • Wilfred Ling says

      13, July 2015 at 5:14 pm

      Hi Jasmin,

      For 12 months, there will be no increase in the private’s insurer portion of the premium. But you are right that there is now “more room” to increase premium. Given that the claim escalation average 12-17% per annum, be prepared for an above-average inflation increase in premiums in the future once the premium freeze is over.

      Reply
  2. xyz says

    13, July 2015 at 5:21 pm

    Irrespective of higher withdrawal limits or not, insurers will keep on increasing premiums every 4-5 years to cover the super-inflation in Singapore’s medical costs & to maintain a fat profit margin.

    In a way, Medishield Life will be a blessing for >50% of elderly as majority cannot afford PMI and usually fall back to basic Medishield with pre-existing exclusions, or even no insurance at all as they can’t even afford the few hundred dollars of yearly basic Medishield premium.

    Anyway within the next 2 years, govt will come out with a standardised B1 plan for all insurers to follow. So my advice is to tahan for the next 2 years & see this standardised B1 plan, before you decide to give up your PMI & go to Medishield Life.

    Reply

What do you think? Leave a comment. Cancel reply


WILFRED LING, CFA

WANT TO GET REGULAR TIPS ON FINANCIAL PLANNING?

JOIN with thousands of other subscribers in getting tips on all aspect of financial planning such as "What is the minimum salary required?", "How avoid insurance that is not suitable", etc.


WILFRED LING IN THE NEWS

Click HERE to find out more.


THE KIND OF CLIENTS I AM LOOKING FOR

NEW TO US?

Learn how you can fully benefit from this massive website: HERE

For Registered Users Only (free)

  • How and what to invest now? (Webinar) 28/7/2022
  • How to identify high performing unit trusts in 3 steps (Webinar) 3/9/2021
  • Financial Planning – Christian Perspective Part 2 (Webinar) 14/8/2021
  • How and what to invest now? (Webinar) 22/7/2021
  • Financial Planning – Christian Perspective Part 1 (Webinar) 10/7/2021

View All

For Clients Only

  • Video Message to Clients 30/12/2021
  • Exclusive client-only Investment Update Webinar by Wilfred 26/11/2021
  • JPMorgan Guide to Market Q2 2020 15/4/2020
  • JPMorgan Perspective Q2 2020 15/4/2020
  • JPMorgan Guide to Market Q1 2020 5/2/2020

View All

Top Posts

  • Strange way of how CPF Interest is calculated & retirement planning CPF has a rather strange way of calculating interest. I...
  • Access Information & Sign Up Page
  • Why are your prospects paying expensive investment courses instead of consulting you?   This video is for financial advisers. However...
  • List of all blog articles
  • AIA Pro Achiever 2.0 and my recommendations AIA Pro Achiever 2.0 was a product which someone recent...

Recent comments

  • Sinkie on Why Vanguard Fund Investors Underperformed The Fund Significantly?
  • Sinkie on Why You Always BUY HIGH In Investments?
  • honest_me on Cancer patient ends up with $33,000 bill after insurer refuses to pay for drug & what you must do to avoid this situation
  • susan on Single Premium NTUC Income SAIL
  • susan on Single Premium NTUC Income SAIL
  • LittleTiger on Nomination in insurance policies

To be notified of new blog post, like this facebook page

To be notified of new blog post, like this facebook page

Read articles based on different categories

Investment Login

iFAST Central: Login

iFAST Prestige: Login

Navigator: Login

Chartered Financial Analyst

CFA

Chartered Financial Consultant

ChFC

Featured Blogger

IM$avvy

© Copyright 2006-2022 Wilfred Ling

This advertisement or publication has not been reviewed by the Monetary Authority of Singapore

hollow-nasty
hollow-nasty
hollow-nasty
hollow-nasty