How Much Health Insurance Do I Need?

Singaporeans are blessed with affordable healthcare, but health insurance involves more than just the hospital bill. Understand the vital role of health insurance and what to consider when deciding your coverage.

The term “health insurance” can be a bit fuzzy, and the abundance of different health insurance plans doesn’t exactly help to clear things up.

There’s also MediShield Life, and CareShield Life, which are already provided by default, so what – if any – health insurance do you still need to get?

Part of the confusion stems from the fact that health insurance covers a few areas, some related, some overlapping. So, to get a better understanding of what you might need, let’s first define what counts as health insurance.

Together with health insurance, life insurance is as important when it comes to protecting your dependants from unforeseen circumstance. Find out more about the types of plans available on SingSaver and which is best for your needs. 

What counts as health insurance?

Generally, health insurance may be classified into four categories – two of which are already available to you if you’re a Singaporean. See the table below for more details.

Medical and hospitalisation insurance

This is the form of health insurance most Singaporeans would already be aware of. All citizens are covered under the national healthcare insurance scheme known as MediShield Life. You also have the option to increase your health insurance coverage by purchasing an Integrated Shield Plan (or IP).

The premiums for your MediShield Life are paid though your CPF Medisave Account. Furthermore, you can tap on your Medisave fund to pay for your Integrated Shield Plan, up to the stipulated limit. The remainder is payable in cash.

MediShield Life and MediShield IP fall under medical and hospitalisation insurance schemes. They subsidise the cost of surgery, medications, hospital stays, doctors’ consultations and other medical expenses, so you can enjoy a smaller hospital bill.

MediShield Life offers the same level of coverage and benefits across the board, and is meant as a basic healthcare insurance to allow more people to access affordable medical care.

Meanwhile, MediShield IPs are available in an array of different tiers and coverage levels, so you can customise your coverage according to your needs and preferences.

Related to this topic: 9 Things You Should Know About Your MediShield Life

Disability insurance

In much the same vein as MediShield Life, CareShield Life is another national health insurance scheme that focuses on serious disability.

Basically, should you become severely disabled, you will be able to claim a lifelong monthly payout to supplement your living expenses.

The amount starts from S$600 per month, but increases each year that you do not make a claim. This allows the scheme to offer higher monthly payouts to the elderly, while also helping to support the needs of younger patients.

If you want to increase your monthly payouts, you can purchase a CareShield Life supplement. You may also gain other benefits, depending on the insurer offering the supplement plan.

Related to this topic: Best CareShield Life Supplement Plans In Singapore (2023)

Critical illness insurance

Critical illness insurance provides a lump-sum payout upon a confirmed medical diagnosis of a covered critical illness. Your benefit is paid out all at once, and the policy terminates immediately after.

You can use the money paid by your insurer in any way you please – whether directly to pay for shortfalls in your MediShield Life and MediShield IP (there’s no 100% coverage), or indirectly, such as to replace loss of income or for other expenses.

If your critical illness results in disability severe enough to render you eligible for disability insurance, you can make a claim under your CareShield Life as well. This is one example of how different health insurance plans – in this case, disability insurance and critical illness insurance – can overlap.

Critical illness insurance covers a list of 37 serious illnesses and health conditions, which include cancer, heart attack and stroke. This makes critical illness plans a comprehensive option for most.

There are also sub-categories of critical illness insurance that can be used to address specific concerns without having to pay for a critical illness plan, which is often more expensive.

For instance, if there is a family history of cancer, a cancer insurance plan can be used to increase your coverage in this area.

A significant majority of critical illness claims are made for only a few diseases, among which cancer, heart attack and stroke are the top three. Hence, it might make more financial sense to purchase a plan that covers only these three conditions.

Related to this topic: Best Critical Illness Insurance Plans In Singapore (August 2023)

Personal accident insurance

The fourth category of health insurance is personal accident insurance.

This type of policy pays out a lump sum in case of death or serious injury resulting in total and permanent disability, such as losing a limb or the use of one of your senses.

Is it common for personal accident plans to include medical treatment and hospitalisation benefits, although such benefits are likely to be minor in comparison to your MediShield Life benefits.

As you can see, personal accident insurance overlaps with medical and hospital plans, as well as disability income. However, it’s best to treat personal accident plans as an additional layer of financial protection, instead of any real substitute for a medical plan or disability income.

Related to this topic: Best Personal Accident Insurance Plans In Singapore (August 2023)

How much health insurance should you get?

The million-dollar question that's on your mind. Now that you understand the different components, deciding how much health insurance hopefully becomes a little easier.

Between MediShield Life and MediShield IP, a significant portion of your cost of medical treatment and hospitalisation would already be covered. This only leaves expenses such as insurance deductibles and co-pays, and other out-of–pocket expenses.

However, you may not be able to continue working during treatment, or may only be able to work a lower-paying job in the aftermath of a serious illness.

Hence, your health insurance should focus on supplementing or replacing the loss of income that could potentially arise.

To that end, you may want to get an additional critical illness or cancer plan to cover several years of expenses.

This will allow you to establish a financial runway, giving you time to adapt to your circumstances, or come up with alternative arrangements for your continued care and wellbeing.

Another advantage is that with your expenses covered in the interim, you can better focus on recovering your health, thus improving your chances of resuming your former profession and salary level.

The main takeaway here is that when considering health insurance, it is crucial to think about not just short-term needs (such as treatment and hospitalisation), but also what you might need during recuperation and beyond.

It might be worthwhile to plan for the possibility of an altered future, and how you and your loved ones can cope with the consequences.

Read these next:

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Why Integrated Shield Plans Are Essential and How to Find the Right One for You?

Best Cancer Insurance Plans In Singapore (August 2023)

Changes to Cancer Coverage of Integrated Shield Plan: What You Need To Know