Some rethink private shield plans

Even before the full details of MediShield Life are revealed, some have started to rethink their private integrated shield plans.

Financial consultants told My Paper that they have already started getting calls from older Singaporeans, who are worried that there might be overlaps between their integrated plans and MediShield Life.

Older people are more likely to terminate or downgrade their integrated plans, they said, as insurance premiums jump significantly as people age.

For policyholders aged 21-30, premiums can range from $124 to $165 per year for a plan that covers Class A wards in public hospitals, according to the Ministry of Health website. But for those aged 61-65, the same plan can cost $868 to $1,205 per year.

Financial consultant Mark Ng, 28, said those approaching retirement age could be worried about reduced income, and this might push them to downgrade their plans.

Many are also unsure how much they are actually paying as the premiums are deducted directly from Medisave, said financial consultant Xeo Lye, 35.

"It is important that consumers are aware of the high premiums for an integrated shield plan, which can go as high as $5,000 at age 80. They may be forced to let the policy lapse when they need it the most," he said.

In fact, many Singaporeans are overinsured, said Phua Kai Hong of the Lee Kuan Yew School of Public Policy, who gave the example of low-income workers whose plans include subsidies for B1 or A class wards.

"It is like selling paradise to the low-income workers, who should really be in the C class ward," Associate Professor Phua said.

He added that, with the benefits that MediShield Life would provide, a rational consumer may think twice about keeping his current plans.

"If you are old and have your pioneer package, then you might probably let your current plan lapse," he said.

Industry experts also pointed out that there are other considerations, such as the type of health services an individual wants, and that the decision to forgo an integrated plan would not depend solely on premiums.

"It all depends on the level of care. If they are comfortable with a B2 or C ward, then they might choose to have just MediShield Life," said financial consultant David Lee, 45.

Tiyo Chiat Haw, 36, a financial adviser, said that as MediShield Life was a government scheme, premiums might not be as volatile as those of private plans.

"If the difference in premiums is big, and the gap gets wider and wider, the enhanced benefits in MediShield Life may push people to downgrade," he said. "But if cost is not an issue, they are likely to hang on to plans with better benefits."

For now, most policyholders are waiting and watching.

Technology development officer Koh Boon Chye, 62, said he needs to look at the details of MediShield Life before he decides if he wants to change, but added that he is likely to continue with his current insurance plan.

"The plans are complicated and difficult to compare, and the premiums are not big until you reach 70 or 80," he said.

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