Things to consider when getting an insurance plan

Before you decide on an Integrated Shield plan, you should be familiar with some of the similarities and broad differences among the plans.

One important decision that you should make is your preference of hospital ward - whether Class A or private hospital, or Class B1 or C. This is because the plans are priced based on your choice of ward. A mismatch between what the plan entitles you to and your actual choice of ward could cause a significant financial strain.

Here are some important common elements:

All the plans have a deductible and co-insurance features. The deductible is the first layer of costs that you have to pay. Co-insurance is the share of bill you have to pay on the portion that is covered by insurance. These features are meant to encourage policyholders to take responsibility for their health.

In more developed markets, first-dollar comprehensive health insurance plans that cover from the first dollar of costs have led to excessive claims which may ultimately make the plans unsustainable.

Claim limits. Plans may vary in terms of the maximum claim that you can make per policy year. Some plans may also stipulate a lifetime claim limit; other plans may not set a cap on lifetime claims.

Last entry age and maximum coverage age. For most plans, the last age of entry is 75. The maximum coverage age is the age after which coverage ceases. Some plans offer lifetime coverage. Other plans may extend cover until age 80 or 85.

Some insurers offer riders to cover the deductible and co-insurance elements of Integrated Shield plans. Do note that on these riders, the maximum coverage age may be 100, as opposed to an Integrated Shield plan which may offer lifetime cover.

Pro-ration Factor. This is an important feature to be aware of. If you stay in a higher-class ward than your plan entitles you to, a pro-ration factor will be applied to the claim which reduces the amount that can be claimed.

For example: an Integrated Shield plan for Class B1 ward of government restructured hospitals may apply a 50 per cent pro-ration factor to private hospital charges. This means an insured person with a hospitalisation bill of $20,000 for a stay in a private hospital will find that he can only claim up to $10,000 of the bill before the application of the deductible and co-insurance elements.

All Integrated Shield plans are guaranteed renewable as long as the premium is paid. Premiums, however, are not guaranteed - they may be increased on renewal depending on the claims experience of the portfolio. Premium rates rise with age.

Pre-existing conditions. These refer to conditions that you may suffer before you applied for the plan. Pre-existing conditions are usually not covered - that is why it is important to take up a plan while you are healthy.

It is important to disclose all pre-existing conditions at the time of application. Insurers may declare the policy void if you misrepresent or fail to disclose material facts such as pre-existing conditions. Some plans may cover a pre-existing condition following a waiting period of, say, five years, during which the insured does not experience any symptoms or receive treatment or medication for the conditions.

Switching plans

Switching plans

You can only take up one Integrated Shield plan. If you wish to switch, do not cancel your existing plan until you have ascertained your new choice and considered the benefits and costs. You must also ascertain whether the insurer that you wish to shift to will impose any exclusions based on pre-existing conditions.

If you are planning to switch, you should also ascertain who will provide coverage during the transition period, should you be warded.

Upon hospitalisation

The insurer of an Integrated Shield plan may provide a letter of guarantee to the hospital. This is an assurance of payment for the portion of the bill covered by the insurer. Such a letter can help to reduce the amount of upfront payment to the hospital.

The amount indicated in the letter of guarantee may not be sufficient for the entire hospital bill. To better plan for the cost, you could ask the hospital to give you an estimated billing amount, and also query the insurer on the basis for the amount indicated on its letter of guarantee.

Should you be considering an Integrated Shield plan, here are some questions to ask the insurer or the insurance adviser:

1. What are the categories of benefits and types of cover under the Integrated Shield plan? Will it cover claims incurred outside Singapore?
2. What does the plan exclude?
3. Can I buy a rider to cover the deductible and co-insurance?
4. How much is the premium for the plan and the rider? How much of the premium can be paid out from Medisave, and how much must be paid from cash?
5. Might the premium be increased? Will my premium be affected if I make a claim?
6. Is the plan guaranteed renewable and what is the penalty for late premium payment?
7. Does the insurer provide a letter of guarantee to the hospital when I'm hospitalised?
8. How do I make a claim?

This article was first published in The Business Times.