Starter Guide to Financial Planning
Are You Prepared For The Increase Of Health Insurance Premiums Every Year?
Health Insurance is something that sometimes we feel that we really need and sometimes it is just a waste of money. Let me elaborate on what the previous sentence meant.
In a situation where we get into an accident and we have to be treated, we are ever so thankful that our health insurance exists to reimburse the cost of the hospitalization.
But if you are fortunately healthy for a full year and not for once you had to go to the hospital, you will feel deep inside that the annual premium you paid had gone to waste.
Nevertheless, it is always better to be safe than the sorry. Hence, having health insurance is mandatory at this day and age. It prevents us from falling into difficult financial situations.
Age-banded premiums
You might already know that health insurance premiums are priced according to your age. In other words, as you age, your premiums will increase as well. It works differently compared to other insurance policies.
The premiums are NOT level and guaranteed. Not level means by it will not be the same amount throughout your life. And in terms of not guaranteed, it means that the number that you see on your first-year premium will most likely not be the same in the coming years. Nonetheless, you will be informed by your respective insurers regarding the changes in premiums.
Your Medisave Additional Withdrawal Limit
In Singapore, we are fortunate that we can pay our Health Insurance premiums with your Central Provident Fund (CPF) monies. We can actually use our CPF Medisave account to be exact.
Keep in mind of the Additional Withdrawal Limit. What is that? Here it is.
As you can see from the graphic above, it means that there are limitations on how much of your Medisave you are able to use. The amount depends on your age. Here is an example,
Example:
Man, Age 30
Insurance Premium: $360
Additional Withdrawal Limit: $300
Payment
Via Medisave: $300
Via Cash $60
Relating to the example above, you will realize that at a certain age of your life, you will have to top up with cash for your insurance premiums. Baer in mind, the example given is a managed 30. Imagine if you were age 70, guess how much would you need to top up. As of now, the figures are almost reaching the 4-digit mark.
Premium increase. How about your salary?
History shows that health insurance premiums will keep on increasing every year. And the growth will certainly shock you.
The insurance premiums do come from your own salary and it is a big worry if your own income does not have the same pace of growth with the insurance premiums. If it does not have the same pace, you will find yourself struggling just to keep hold of your own health insurance.
You could perhaps downgrade to a lower plan but that is your wallet saying for you. How about you? Are you prepared for a downgrade?
If you have the highest plan, you literally go anywhere. You can even request a particular doctor. But if you own a lower type of coverage, you have very limited options and cannot demand much.
So how can I afford health insurance when I am older?
Simple answer; Save Up.
We all know that we need to save but it is just a matter of your own discipline and commitment. There are other ways to face this issue of the future but it will definitely differ with each individual. Your own lifestyle and goals will determine your future.
Yes, insurance companies might be decreasing the price of insurance premiums next year but you should know the reason behind the change. Read here to know about the changes.
History does show that it is hard to predict what will happen with regards to the insurance industry in the future but one thing is for sure, changes are bound to happen at any time.
If you are interested in finding out on how you can be prepared for the surge of health insurance premiums, do contact us and we will respond to you as soon as we can.
Hope that this article was useful. Do share it with your family and friends. Till next time.
Disclaimer:
I am a financial adviser but I am not your financial adviser. Therefore, what is posted on this website, are my opinions and NOT to be taken as financial advice. Information provided might be relevant at this period of time but may be irrelevant due to alterations to rules, regulations or policies. The information provided is true to the best of my knowledge, but there maybe omissions, errors or mistakes.
