How should I prioritize my protection needs?

Probably you already know that you have to transfer some risks of health and injury to the insurance company. Sometimes insurance may appear to be really complicated and complex, with many tables filled with much numbers and percentage and decimals. Also, the representative may be saying lots of things, on and on, non-stop, like a machine gun, it appears that everything is important! Ok, so maybe everything is important, and, which exactly are more important and which should you choose to assess right now?

Let me provide a guideline.

Reimbursement Basis

Nobody likes to use their own money to pay for something. Maybe that was a sweeping statement. I think most people don’t like to use their own money to pay for something. What do you think?

When a person stays in the hospital, visits the clinic, or sustains an injury and goes for a medical scan at the hospital, in all of these scenarios medical expenses are incurred.

Who pays for these expenses? The answer is You. What if you could be reimbursed, or should I put it simply, be paid back for all these expenses? Would you want it?

And so, the first step would be to choose all the insurance that covers medical expenses. This would typically be the hospital shield plans and the accident insurance (make sure it covers for medical expenses).

Compensation Basis

Income is possibly the most important practical thing to a family. If this income is lost, meaning if the breadwinner falls sick or is injured and cannot work, how much do you think the family would want to be compensated? For how long? This is an aspect of protection most overlooked by people.

A terrible illness or injury when it hits us would cause some pain, some discomfort, some unhappiness, grouchiness, or sadness.

The question is if we were compensated for whatever we felt, how much would we want? Imagine. You’ve lost the small toe of your right foot, but you were compensated $10,000. Would you feel better? No? How much is enough? Imagine. You were hit with a terrible illness, and because of that, you’ve lost your direction in life, you feel depressed about life. If because of that, you were compensated $100,000, this amount of money could be used to pay off some of the housing loans; it could contribute to part of your child’s education, it could be used for you to travel to a nice destination to re-think about life. Would you feel better? No? How much is enough?

Death comes to us all. The only fear could be that death comes too early, and we leave people we care about in the land of the living. These people could be our children, our spouse or our parents. What is the impact of your death? Would it cause them to be unable to pay for the house mortgage, or university education, or living expenses? How much do you want your family to be compensated for your death? Do you think they should be compensated?

And so, the second and last step would be to think about how much you would want to be compensated for all the bad events that happen to you or your family.

Risks associated with ill health and injury

Most Singaporeans desire to live a life of quality. In my own opinion, I think living a life of quality means doing your job well, respecting the people around you, treasuring the time you spend with family and friends, and learning to appreciate the special moments in life. It also means a certain standard of living that you have chosen and are working hard towards having. It is all a matter of your own choosing.

In order to protect this quality of life, you would need to understand the risks that may cause changes to it. I want to emphasize on understanding these risks. I do not mean to create fear. Rather, I hope to promote awareness so that well-informed choices can be made.

Hospitalization

Medical costs are getting more and more expensive. This is understandable, as the medical technology in Singapore is also getting more and more advanced. While we appreciate how well our doctors can treat us, we also need to know that a hospitalization will cost us a considerable amount of money.

I’ll illustrate such costs using the example of the treatment of cancer.

Imagine a person falls sick, and visits the local doctor. The doctor suspects that the patient’s condition is quite serious and refers the person to the hospital. The patient gets warded into hospital and stays in a room and bed, tended by nurses, and a doctor. Laboratory tests are done. Cancer is diagnosed. Subsequently, chemotherapy and radiotherapy sessions are scheduled, and medicine is prescribed. After a long period of time, the patient recovers and goes back to work.

There are several stages briefly mentioned in this story, and they all have costs to it. Some of them are inpatient costs, some of them are outpatient costs. It is prudent to understand the costs associated with the treatment of various illnesses, serious or not, so that we can set aside resources in case it happens.

Loss of Income

An area that is often overlooked by Singaporeans is the risk of loss of income.

Imagine this scenario.

A father brings home a monthly income. This income is used to pay for food, clothing, tuition fees, utilities, holidays, and presents, just to name some basic monthly expenses. What happens when this income is removed because the father is unable to work due to an illness or injury? The family would probably have to take money out of their savings to afford the monthly expenses.

It is often recommended that 3-6 months worth of a person’s monthly income be kept aside as emergency funds, just so that there will be no drastic change in lifestyle for at least 3-6 months. It provides some buffer time to plan for what to do next.

Critical Illness

When a person gets hit in life with a critical illness, yes, treatment is needed. We may also want to consider how it can impact a person such that he is affected emotionally, psychologically and spiritually.

There is worry on how to look after the family, how to afford the child’s education, there is frustration and sadness, possibly even anger, on why this unfortunate event has happened. There could even be questions on why God, if he exists, allows such an event to happen. It also affects a person’s motivation to live life, to overcome the odds, to look at life positively,

Accidental Injury

Accidents occur all the time. It can be a small accident like a sprain whilst playing basketball, or a serious one like a traffic accident. Many serious injuries could result from accidents. I shall not go into gory details on the kind of injuries that could result as the news is full of it. A serious injury could result in a similar impact as mentioned for a critical illness, in its effect on a person emotionally, psychologically and spiritually.

When recovering from an injury, a person needs help. This is in the form of physiotherapy sessions, or traditional Chinese massages, or special movement aids. There could be other things. Another person might even need to be present to assist in movement, or other basic activities.

It is helpful to think through what are the help, or equipment needed when a person is recovering from an injury, or re-adjusting back to life.

Death

Death is simple. It is simply passing into the next thing, phase, dimension, or place. When death occurs, there is no need to make and plans or worry about the quality of living. I’m sure life after death is good.

The only consideration would be the people left behind in the land of the living. Would their lives change? How would it change? Is this change desirable? Can this change be managed?

What to do next?

Ultimately, we are only humans, made of flesh, filled with emotions, yearning for a life directed with a sense of purpose, accompanied by friends and family who love us. There is a limit to how much we can micro-manage the impact brought about by the storms of life. We can only try our best, and the first step to trying our best is to know the different kinds of storms out there.