Hospital Income Insurance

[slytzen]

Just wanted to get the opinions of others out there regarding hospital income plans. Examples, just top of my head, are AIA's Health Cash Plus and AXA Health Cash Plan. I think Manulife & Prudential also have similar plans. I don't see many, if any, discussions on such plans.

Was wondering if such hospital income insurance plans are worthwhile? I believe it's relatively cheap and it can help a family cover any additional cost incurred directly or indirectly - e.g. parents taking unpaid leave to tend to insured child who has been hospitalized, paying for additional medication or 2nd opinion after discharge, insured self-employed/salesman being hospitalized need not worry about drawing income during time spent in hospital, etc.

Disclaimer: I am not an insurance agent.

 

[BBCWatcher]

Was wondering if such hospital income insurance plans are worthwhile?

In my view, no. Disability income insurance combined with medical insurance is a much better combination. If you don’t have those bases covered, then you have bigger insurance gaps to worry about first.

I believe it's relatively cheap....

Yes, that’s because there’s very little protection. Moreover, this sort of benefit is already part of many Integrated Shield riders that the medical insurance companies in Singapore sell. Such riders typically pay a daily cash benefit if you voluntarily downgrade to a less expensive ward, so you can decide what’s more important in that moment. And that benefit doesn’t cost any extra.

....and it can help a family cover any additional cost incurred directly or indirectly - e.g. parents taking unpaid leave to tend to insured child who has been hospitalized, paying for additional medication or 2nd opinion after discharge, insured self-employed/salesman being hospitalized need not worry about drawing income during time spent in hospital, etc.

Yes, but that’s also what emergency reserve funds are for, and for non-hospitalization scenarios. And since the insurance company has to make a profit and pay for its overheads, it’s almost always a better idea to build up your general emergency reserve funds instead of paying insurance premiums for what is very limited benefit.

Whenever considering insurance, it’s pretty simple: start with coverage for the stuff that would be truly calamitous or catastrophic. Sure, taking time off to stay with a child in a hospital (for example) isn’t fun, and there is some financial impact. But if you cannot handle *that* financial impact, work on building up your emergency reserve fund. And it’s what potentially happens after discharge, with a lifetime of medical needs and/or disability, that’s the truly catatrophic/calamitous part. Insure against that risk (on an “all risks” basis), first, before worrying about the little stuff.

 

[JuniorLion]

I agree that it is not very useful.

Would be better off buying the top tier of the Integrated Shield, and then going into a class B1 ward, and get the cash benefit pay outs.

 

[computers70]

really depend on your needs.
If you are a freelancer, you may want to get an additional coverage for hospitalization income. If I am not wrong, some accident policies do have a small coverage for hospitalization income, maybe around 50/day.
A hospitalization income policy may give around $200/day

 

[BBCWatcher]

If you are a freelancer, you may want to get an additional coverage for hospitalization income.

Why if you’re a freelancer? Wouldn’t disability income insurance be much more important, i.e. to insure against loss of income?

There are many, many reasons why a freelancer (or any other worker) could be both outside a hospital and still physically or mentally unable to work and earn an income. (And actually digital workers can sometimes get a lot of work done from a hospital bed!) I have no idea why it’s worth paying extra for limited insurance that only covers loss of income specifically and only due to hospitalization. People aren’t actually hospitalized very long, in the vast majority of cases. But loss of income is loss of income. If you’re trying to protect against that, protect against that.

 

[slytzen]

Regarding downgrading to a lower ward and getting compensated, does that apply to all integrated shield plans? I'm currently on AIA Healtshield Gold Max.

As for the hospital income plan, I guess I was looking at it to supplement my shield plan, accident plan and disability income plan. In the event that I (or my children) get hospitalized for any reason whatsoever, at the very least I don't have to worry about additional expenses, etc. I do have an emergency fund but if I can pay a nominal sum annually to leave it untouched (for minor matters), I don't really see any downside to it.

The other question I have regarding such plans is, if for instance, my accident plan provides daily hospital income and I also have a separate hospital income plan, can I claim from both plans? What if the plans are with different insurers (e.g. AIA personal accident plan and AXA hospital income plan)?

 

[computers70]

Why if you’re a freelancer? Wouldn’t disability income insurance be much more important, i.e. to insure against loss of income?

There are many, many reasons why a freelancer (or any other worker) could be both outside a hospital and still physically or mentally unable to work and earn an income. (And actually digital workers can sometimes get a lot of work done from a hospital bed!) I have no idea why it’s worth paying extra for limited insurance that only covers loss of income specifically and only due to hospitalization. People aren’t actually hospitalized very long, in the vast majority of cases. But loss of income is loss of income. If you’re trying to protect against that, protect against that.

It is important, but for Disability insurance, there is a deferred period. Group SAF AVIVA is around 6 months, before the payout can start.
These hospitalization income insurance, you are looking to cover for a short period of time eg 2 days of hospitalization. I am aware of people who do get hospitalize frequently due to fever or headache.

 

[BBCWatcher]

Regarding downgrading to a lower ward and getting compensated, does that apply to all integrated shield plans? I'm currently on AIA Healtshield Gold Max.

If you have added the AIA Max Essential rider to your AIA Healthshield Gold Max Integrated Shield plan, yes. See this brochure (July, 2017, link, subject to change) for details.

As for the hospital income plan, I guess I was looking at it to supplement my shield plan, accident plan and disability income plan. In the event that I (or my children) get hospitalized for any reason whatsoever, at the very least I don't have to worry about additional expenses, etc. I do have an emergency fund but if I can pay a nominal sum annually to leave it untouched (for minor matters), I don't really see any downside to it.

I do. The insurer has to make a profit and cover its overhead, so statistically speaking you will not get back what you pay in premium. You would be better off taking those premium dollars and increasing, say, your disability income insurance coverage -- and/or your emergency reserve fund. Or perhaps an Integrated Shield plan rider. (For AIA the "Saver" or "Lite" rider is enough, as applicable.)

I don't necessarily understand your "accident plan," but that's a separate topic, perhaps for another day.

The one exception I can think of is if you have some information that you're going to be spending many days in the hospital, and therefore you can beat the actuarial tables and collect a lot of "free" money from the insurance company. Except that's hard to do legally, because pre-existing conditions are most probably excluded. And if you know you will be hospitalized in the near future, that's almost certainly a pre-existing condition as the policy defines it.

The other question I have regarding such plans is, if for instance, my accident plan provides daily hospital income and I also have a separate hospital income plan, can I claim from both plans?

Probably, but it depends on the fine print in the policies. Of course, redundant coverage is certainly less than ideal.

What if the plans are with different insurers (e.g. AIA personal accident plan and AXA hospital income plan)?

That's not a problem in particular, except of course you've got more insurance premium payments with multiple carriers to worry about.

 

[eboy]

Why if you’re a freelancer? Wouldn’t disability income insurance be much more important, i.e. to insure against loss of income?

There are many, many reasons why a freelancer (or any other worker) could be both outside a hospital and still physically or mentally unable to work and earn an income. (And actually digital workers can sometimes get a lot of work done from a hospital bed!) I have no idea why it’s worth paying extra for limited insurance that only covers loss of income specifically and only due to hospitalization. People aren’t actually hospitalized very long, in the vast majority of cases. But loss of income is loss of income. If you’re trying to protect against that, protect against that.

Nobody is saying income disability plan is not important. Just that Hospital income plan can help replace some of your income if you are self employed. FYI it can also cover for mc at home
U realised that income disability plan can only claim if certified disability right - there is no such requirement for Hospital income plan. And u can also take a break from work and focus on your recovery without worrying about loss of income

 

[maple96]

You have to check to confirm that the policy covers what u want.

For eg. A hospitalisation benefit rider can pay u a sum of money per day/week that u are on hospitalisation leave. For eg u were injured due to some accident, was hospitalised, then got discharged but still given hospitalisation leave to recover at home. Note there is a difference between hospitalisation leave and medical leave for claims. To be able to claim, there must be continuous hospitalisation leave given from hospitalisation to discharge to last date of hospitalisation leave.

Benefit: helps to cover any costs not covered under integrated shield plan (isp), eg if policy only covers 90 days after discharge, but your hospitalisation leave and medical expenses go beyond that. Or if u do not have pa policy, isp does not cover cost of walking aids (eg wheel chair). Or u are self employed, some money to cover whatever.

If u buy a B1 isp and stay in C, u get daily cash benefits, only pays if u are in hospital, not after, "objective" of this is different from above policy.

Just my view of benefits

 

[BBCWatcher]

Just that Hospital income plan can help replace some of your income if you are self employed.

If you're hospitalized, when you're hospitalized, which isn't actually very long. And that insurance won't provide income if you miss work due to a funeral you have attend overseas, or if you have to take care of a sick kid, or if you want to stand in line for 6 days for the next iPhone, or.... there are thousands of reasons why you might lose income because you cannot (or don't want) to work. That's what emergency reserve funds are for! You should not pay an insurance company (i.e. a middleman) their profit and their overhead in order to protect against one minor risk among thousands of unprotected risks. It doesn't make sense!

What would such a policy pay out? Let's suppose you're hospitalized for 10 days, and it pays $200/day. So what? Save the premium, and boost your emergency reserve fund by $2,000. That's peanuts, or at least it should be for most people. Peanut insurance is not something you should be chasing, at all. It's the expensive and disruptive risks that you need to defend against, the risks you cannot handle on your own. That's when insurance (and paying the insurer's profit and overhead) makes financial sense.

....Unless you're expecting a long hospital stay that somehow isn't subject to the insurer's preexisting condition exclusion. Then you're collecting "free money" from the insurance company, and that's lovely for you. If that's the case, no problem, go for it.

 

[BBCWatcher]

Let's take a look at how this actually works with an example and some real numbers.

I'll pick MSIG's Hospital CashPlus mid-level Gold Plan as a reference example here, and we'll assume a 44 year old (unlucky age according to superstition) has a sudden heart attack with complications. It has to be sudden and unexpected -- no hint of heart disease -- otherwise the insurer won't pay anything (pre-existing condition). According to MOH data, the average hospital stay for that sort of medical problem is about 8 days. Let's artificially add 50%, or 12 days, of which 2 days are in the ICU.

OK, so what that 44 year old gets in exchange for paying her annual premium of $564 (eek!) is $400/day when in the ICU, $200/day in the hospital otherwise, and $500 because the stay exceeded 7 days. That's a whopping $3,300 total payout, and you have to pay $564/year in premiums to get it (44 year old in this example).

What the heck are you doing buying that sort of product? I don't get it. If a swing of $3,300 is going to wreck your life, then this policy won't fix that. A bigger emergency reserve fund will, and you're $564/year farther ahead in building up that emergency reserve if you don't buy this policy. That's because there are myriad reasons why you might not be able (or want to) work. Maybe a member of the family is traveling overseas and gets into trouble, and you have to fly there to help out for several days. That's not part of the deal for your $564.

Let's contrast this with an Integrated Shield plan rider that pays a hospital cash benefit if you voluntarily downgrade one ward class. Plus the rider itself reduces or eliminates deductibles/co-pays. I'll use Prudential as the random example here. Let's say that 44 year old has Prudential's PRUshield Plus (which covers public hospital A wards), and she decides to add the PRUextra Plus rider for $341/year (not $564/year). She then has her heart attack, with complications, and stays in a lovely air conditioned B1 public hospital ward for her 12 days. Her rider immediately eliminates her deductible and co-pays, meaning she avoids at least $2,500 of medical bills right off the bat. (That's her deductible in B1 ward under the main Integrated Shield policy.) For a 12 day stay (2 in ICU) in B1 ward she's probably going to see a bill in the $5,000+ range. Let's call it $5,000 (too low), so that's a minimum of $2,750 of rider benefit so far ($2,500 deductible plus $250 co-pay, i.e. 10% of the amount above the deductible). Then she also gets a flat $125/day cash payout because she stayed in B1 ward instead of A ward, so that's another $1,500. Plus she gets $30/day to accommodate a family member who stays with her, but let's not count that. So for $341/year (the premium for the PRUextra Plus rider), for the same heart attack with complications, her rider policy pays her $4,250 -- $950 more than MSIG's Gold hospital plan would have. And she saves $223/year in premiums. Better deal!

I'm not necessarily recommending an Integrated Shield plan rider either, but at least it's a wiser use of premium dollars. You can construct other scenarios and compare them, but suffice it to say I'm not a fan of "hospital plan" policies.