Don’t Monkey Around With the Lack of Insurance
There was a case of a 26-year-old undergraduate who met a car accident after a pair of monkeys leapt in front of his vehicle (“Undergrad suffers brain injury after monkeys cause crash”, Sunday Times, 1 Oct 2006)
According to the newspaper report, his brain injury exceeded $40,000 in hospitalization expenses. His secretary mother will have to pay for all his medical expenses because he was uninsured. His own father died 14 years ago due to a heart attack.
Although I do not know the family personally, my sympathy goes out for the family. We are witnessing possibility another family being devastated by life unfairness. Moreover, the family who could have averted a financial crisis due to life unfortunate events. While it is impossible to avoid all problems in life, the story of the mother who has to be burden with more than $40,000 (and possibility further escalating cost) is entirely unfortunate by itself because such financial crisis could easily be avoided by a risk transfer through a legal contract.
Many people are unaware that for a 26-year old, a mere $192 of annual premium (of which $142 can be paid by Medisave) in medical insurance can pay a large chunk of the hospital bill. By my estimate, a $37,000 can be paid out by the insurer for a hospital bill of $40,000. This represents 92.5% of payout. The cost of insurance? An average of $16 per month or an average of 53 cents per day. How much does a mobile phone subscription bill cost? Mine ranges from $20 to $35 per month. How about yours? You can see how inexpensive such insurance can be for such young age.
Of course there are other insurance that provide coverage that a hospital & surgical plan cannot pay. In any case, if insurance is so important, why are people not getting themselves insured? Here are some reasons:
- Ignorance. Ignorance is not wrong because everyone is born ignorant. But the cause of prolonged ignorance lies in a person’s lack of desire to take control of one’s finances.
- Uninsurable. Those born with congenital problems may not insurable. Then there are people who procrastinated for too long only to find themselves eventually uninsurable due to medical problems developed later in life. High cholesterol, high blood pressure and diabetes are some of the urban illnesses that insurers hate to see. In fact, I have so many clients who want to buy as much insurance as they would like but they are not insurable due to pre-existing conditions. The irony is that those who are young and healthy are not interested in insuring themselves thinking that they will be perpetually healthy.
- The desire to self-insure. This desire to self-insure is more peculiar to the young and healthy individuals. I have never come across any person who is near retirement age and wants to self-insure. Most retirees are unwilling to use their retirement nest egg to self-insure. Yet, these retirees could be uninsurable due to medical problems that have developed over the years. For those who are young, the issue is not whether do they have the desire to self-insure. The issue is that young people are not capable of self-insuring because they have no assets to pay for any medical bills.
- Wrong priority. People spend a fortunate purchasing their house, spend a great deal of time in their career, pay a hefty price for the best enrichment classes for their children and yet fail to see that a serious illness or injury will tear down all they have built over the years. In fact, should anything happens to a sole breadwinner, it could cause financial bankruptcy to their dependents. As I understand, Singapore does not officially practice a social welfare system.
- Assuming good coverage by paying high premium. I know of someone who is an average wage earner paying $1000 in monthly insurance premium and yet is underinsured. The truth is that he had purchased inappropriate insurance. The older folks often say that insurance might not pay when you need it. Yes, this is correct when a person had bought the wrong insurance for the wrong purpose.
- Over reliance on companies’ group employee benefit insurance. Such an insurance is provided for employees as staff benefits. This kind of insurance is good only when you remain in the group. When you leave the group such as resignation or retirement, you are not covered. Also, you may not be insurable after you leave the group. Moreover, group insurance relies on the renewability of the group’s master contract with the insurer. In other words, the group insurance is not guaranteed renewable.
- Taking for granted that all medical insurance is the same. It is untrue that all medical insurance is the same. Many people are insured with the CPF’s medishield insurance. This insurance is severely inadequate with major sub-limits. For those who had opted for better private-integrated plans, not all are the same. Some are worst than others. Do not assume what you have is good.
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