How insurers and banks are helping you survive Covid-19 (whether quarantine or debt)

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2020 will go down in the history books as a challenging year for many. Governments across the world — including Singapore — have implemented circuit breaker measures to flatten the curve and prevent healthcare systems from being overwhelmed.

The negative economic side effects are unavoidable. As people stay home, many businesses find themselves with no customers and no revenue. The ripple effects then cascade down to their employees.

The medicine — Circuit Breaker, in this case —  is painful, but necessary. And it will take the cooperation of each person to succeed. As such, the banks and insurers have also stepped up to do their part to help alleviate financial pressures.

In this article, we will explore the various initiatives banks and insurers are taking. Keep in mind the situation is still fluid and these measures are subject to change.

What benefits can you get from insurers (that you may already qualify for)?

You may already qualify for certain benefits depending on your health and travel insurance plan. While the benefits from health insurance plans are obvious — i.e. hospitalisation coverage and such — did you know that many travel insurance plans also pay out benefits if you are quarantined?

For instance, AXA’s SmartTraveller will give you $50 per day for each day in quarantine, up to a maximum of $700.

The same goes for Sompo’s TravelJoy Deluxe, which pays out $50 for each day you are quarantined for up to five days. Chubb’s travel insurance offers the same quarantine allowance, for a maximum of $500, depending on the plan.

So, if you are unfortunate enough to contract Covid-19 from overseas and must be quarantined, make sure you check your travel insurance to see what kind of coverage you are eligible for.

How insurers are going above and beyond

On the Covid-19-specific side, the Monetary Authority of Singapore (MAS) has announced that you can apply to defer premium payments on your life and health insurance for up to six months. To apply, check with your insurer.

However, many insurers are doing more than the mandatory minimum in providing customers with additional hospitalisation and death benefits for Covid-19 cases.

Others, such as AIA, DBS/POSB, HSBC, Prudential, and Manulife will also pay out lump sum cash benefits (which can reach as high as $1,500) upon either diagnosis or being quarantined as a form of extra financial help.

Get financial relief by deferring your mortgage loans

Property in Singapore is expensive, and mortgage payments can eat up a significant portion of your monthly income. In Singapore, the MAS mandates that mortgage payments be capped at no more than 30 per cent of your gross monthly income at the time of your application.

But if your income is affected by the pandemic, that figure may now be much higher than 30 per cent. And this doesn’t even account for your other debt obligations.

That’s why, to provide relief for affected borrowers, the MAS has stipulated that you can defer payments on your residential mortgage — either the principal, or both the principal and interest — until the end of the year.

Even better, interest will only accrue on the deferred principal, not interest. This means you don’t have to pay interest on interest. You also don’t need to prove that this pandemic has affected you to qualify for this deferment — it’s open to everybody.

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Cut interest rates by converting your unsecured debt into term loans

On the non-mortgage side, the MAS also offers relief options on unsecured credit facilities like credit cards and personal loans. You can apply to convert these facilities into term loans with a maximum interest rate of 8 per cent with a tenure of up to five years.

Considering that credit card interest rates can run as high as 26 per cent per year, this option is a lifeline that can help save you from drowning in ever-increasing debt.

To qualify, you must show that you’ve suffered a drop of 25 per cent or more in your monthly income after Feb 1 and are at risk of being forced to incur substantial amounts of missed repayments.

Note: For other options on paying off spiralling credit card debt, check out this helpful article.

Going beyond the bare minimum (what we all must do)

Just like the insurers, many banks are also going above and beyond the MAS’ mandates to help everybody get through this challenging time.

For example, CIMB Singapore is offering deferments on its renovation and education loans as well. And OCBC is automatically reducing the minimum payments for its credit card and EasiCredit customers to 1 pre cent of their statement balance.

The same philosophy should apply for us all. Instead of only trying to do the bare minimum when following the measures implemented to contain the pandemic, we must keep to the spirit as well as the letter of the law. It’s the only way we will be able to get through this crisis as quickly as possible.