Merits of pre-funding for MediShield Life

Pre-funding for MediShield Life has its merits ("Problems with pre-funding" by Mr David Boey; Tuesday).

The concept is already a feature in traditional whole-life, endowment and term insurance policies, where the policyholder pays the same premium throughout the duration of the coverage.

The "additional" premiums paid when one is younger "subsidises" the higher premiums one would otherwise incur in later years. This should encourage people to insure themselves when they are young and healthy.

A younger person may not have had time to accumulate much savings in his Medisave account, but older people will have a higher likelihood of being hospitalised, thus depleting their Medisave savings at a much faster rate.

Many of today's elderly may not have that much Medisave savings to begin with. Many may be housewives who have sacrificed their careers to look after their families.

If the elderly are unable to pay their MediShield Life premiums, the burden will likely fall on their children, if they have any. If not, the State will have to provide the subsidy using tax dollars. Ultimately, someone has to foot the bill.

To make paying higher premiums more palatable, perhaps the MediShield Life panel could examine the feasibility of offering no-claim discounts to policyholders after a certain number of years, similar to the approach taken by the motor insurance industry.

This will encourage Singaporeans to opt for healthier lifestyles and go for regular health screenings, to lessen the chance of coming down with a major illness.

Perhaps the tax authorities could also consider a separate tax relief for MediShield Life premiums, in addition to the existing relief for life insurance premiums.

New Singapore citizens or permanent residents who join the scheme would generally be in their prime working years and very likely will not have major health issues. So we can actually benefit from them contributing to the insurance pool and not making many claims in the near future. Further equity can be introduced by having them pay a certain percentage of loading on their premiums, perhaps for the first few years.

If we face our future health-care issues in solidarity, Singapore as a whole will be better off.

Maria Loh Mun Foong (Ms)

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