Is it too late if your aging parents don't have health insurance?

You know you're old when you remember styrofoam McDonalds containers, mobile phones that could be classified as weapons, and the $1 Singapore note from your childhood. But what about your parents?

Some of them would probably have remembered a time before Majulah Singapura, before the first HDB flat, before the Singapore River was something worth singing about. They're truly Singapore's pioneer generation and now that they've worked hard all their life, it's time for them to rest on their laurels, right?

Sure, they've got nothing to worry about… MediShield Life will cover everyone, right?

Yes, technically that's true. MediShield Life is a health insurance that covers you for life. If your parents are part of the Pioneer Generation, they will even receive significant subsidies. This is especially important because the premiums for MediShield Life get higher as you grow older. But ultimately, the coverage still remains the same - that is to say, MediShield Life only provides basic coverage.

So while MediShield Life claim limits are sufficient for more than 90 per cent of Ward B2/C hospital bills, due to the health situation your older parents may find themselves in, that reassurance may not be enough. And if you're looking for better facilities, such as Class B1 or A wards, or the choice of your own doctors and specialists, then MediShield Life simply won't be sufficient for your needs.

Then how? Is it too late for them to buy health insurance?

Now, you may have heard that you should buy insurance when you're young and the premiums remain low for the duration of the policy, because when you're older and the premiums get higher, it's just not worth it anymore. This wisdom is true only for things like life insurance.

When it comes to health insurance or Integrated Shield Plans, the premiums will rise with age regardless of when you took out the policy, so it doesn't really matter when you apply for one.

Then what are we waiting for? Let's go get health insurance for our parents now!

Unfortunately, because insurance is still a business first, there are terms and conditions. When shopping around for a good health policy, always be sure to check the policy wordings. Here are 3 things to look out for.

1. Maximum entry age

Maximum entry age refers to the latest you can apply for the policy. In general, this is set at 75 years old, which means you should apply before your parents' 75th birthday. Now, note that this may not mean that the policy will expire once your parents turn 75, as some of these policies cover you for life, it simply means that if your parents are above 75, they won't be able to apply for the policy.

2. Pre-existing conditions

That being said, age is not the only factor. Many insurers will not accept your parents if they have anything less than a spotless medical history. If they have had cancer before, for example, then even if it's in remission, they will still not be insurable. This is sadly to be expected - it doesn't make sense to insure someone who may end up costing the insurance company more than they can earn from the premiums.

However, if your parents have no serious pre-existing conditions, then you should definitely try to apply for health insurance while they're still eligible.

Note that MediShield Life still applies to all Singaporeans and Permanent Residents, even if they have pre-existing conditions. They might be expected to pay additional premiums though.

3. Cost versus coverage

Ultimately, if they're below the maximum entry age, and are relatively healthy, you should still consider the cost of coverage. I mentioned earlier that the cost of premiums goes up as they grow older. But what some insurers don't indicate is exactly how much the cost of premiums will increase. Those that do, show at least a $200 increase in premiums per year after the age of 80. Also, all insurers will remind you that premium rates are non-guaranteed and may be adjusted based on future claims experience. Bluntly put, it means that if you make a claim, they will most likely increase your premiums.

Also note that while premiums can be paid by Medisave, there are withdrawal limits. If your parents are 70 years old and below, you can use a maximum of $600 for the insurance premium. If they're 71 years and above, the limit is raised to $900. If your parents' premiums cost more than that, you will need to pay by cash.

On the other hand, Medisave can cover MediShield Life premiums fully for all ages.

So at the end of the day, you have to decide how much your cashflow is going to be affected by taking out a policy. The last thing your parents would want is for you to be in debt because you're paying for their health insurance premiums.

This article first appeared on MoneySmart is Singapore’s leading personal finance portal, and aims to help people maximise their money with powerful tools and engaging content.

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