As a woman, what should you consider before getting insurance? And are there insurance plans specially catered to the needs of women? Here's the lowdown of what women need to know about insurance.
It’s 2019, and women are taking control – control over their own financial destiny, that is. This stronger desire to take charge of their personal finances is a reflection of women’s status as an equal partner at home, in the office, and everywhere in between.
As one of the most important aspects of personal finance, insurance is often a source of confusion when it comes to what sort of coverage is essential, and what one should look out for before committing to a policy.
Here’s what every woman should know about insurance.
1. Don’t Overlook Term Life Insurance
In marketing to women, the insurance industry often appeals to their sense of family, highlighting the dire consequences of not being there for their children and loved ones. This focus on ‘taking care of those left behind’ can skew women towards buying expensive life insurance plans with high payouts upon death.
You see, basic whole life plans pay out a lump sum benefit upon the death of the insured (up to age 99), and offer no other benefits. To make these plans more attractive, insurers often add on other benefits such as critical illness and permanent disability, which expands the scope of coverage. The end result is a life insurance package with premiums that can be quite expensive.
There are two things to note here.
Insurance becomes very expensive during your golden years,
A whole life plan expiring at age 99 will require you to pay for the entire duration. This can cause financial pressure or even difficulty in your retirement years. (Some plans have a limited pay duration, such as up to a specified age or number of years, but the premiums are even higher, as you are paying over a shorter time frame.)
Whole life plans allow you to surrender your policy for a sum of cash.
When examined, the rate of return on your money is often low, and critics have repeatedly pointed out that investing your money in other ways would have provided better returns. Also, the cash value of whole life plans usually only maximises after decades, forcing you to hold the policy for a long time.
As insurance makes up a major portion of your expenses, these two factors can have a significant impact on your financial status and outlook.
When planning your coverage, consider taking up term life insurance instead.
Term life plans have much cheaper premiums, and you can choose the duration of your cover. You can also add riders to cover specific circumstances, so that should death, disability or critical illness occur during the period of cover, a payout will be triggered. This will ensure your loved ones’ needs are taken care of should you pass away earlier than expected.
You also have the option to stop your term life plan during retirement and use your Medishield Life plan to pay for your medical needs instead. And don’t forget, any sum leftover in your CPF accounts will be disbursed to your surviving family members upon your demise.
(On a separate note: be sure to update your CPF nomination if you would like to specify who will receive your CPF savings, and how much each nominee should receive.)
2. Get a Pregnancy Insurance Plan
Medical advances have rendered childbirth a routine procedure, and most parents feel confident their Medishield plans will provide sufficient coverage to cover the pregnancy. What many people forget is that giving birth marks only the beginning of a long journey ahead for you and your child.
Firstly, the cost of childbirth in Singapore is expensive, and your Medisave claims limit is hardly enough to cover your bill. This means you can easily find yourself out of pocket several thousand dollars for the childbirth, as well as assorted hospital fees and charges.
Secondly, childbirth is not without risk, and complications could occur that require further medical intervention for mother or child. Depending on the severity and the condition, this could drive up the total hospital bill.
Thirdly, newborns and young children are susceptible to a range of illnesses and health complications, which require frequent visits to paediatricians. This, again, could prove to be a financial strain.
These 3 reasons make good arguments for pregnant mothers to consider getting a pregnancy plan. These type of plans offer coverage for common childbirth complications, which can prove useful should immediate danger be encountered.
Most plans also provide the option to extend the coverage for newborns until early childhood, which helps you provide the best child care possible by absorbing expensive specialists fees.
Add in the fact that pregnancy plans aren’t terribly expensive (most cost around $500 to $700 in total), and it becomes obvious that pregnancy insurance plans are a very good idea.
3. Which Women’s Healthcare Plan You Should Get Depends on Your Family Medical History
You’ve probably come across healthcare plans catered to health conditions and diseases that are specific or more common to women. Examples include:
They often focus on extra coverage for leading women’s conditions, as well as tests and checkups to check for these. Depending on how extensive these checks and coverage are, these plans can cost quite a bit more in terms of premiums. Are these plans right for every woman?
Well, it depends. The main advantage of these healthcare plans is they can extend your coverage to include a longer list of serious illnesses. Alternatively, some of these women’s healthcare plans provide additional benefits in the case of female-specific conditions, such as reconstructive surgery.
In considering these plans, look to your family history. If you find you may be vulnerable to the kind of illnesses covered in these plans, it might be worthwhile paying a higher premium for the added benefits.
Women’s plans also often provide free health screenings on a regular basis. Provided that you remember to go for them, these free checkups could be a valuable tactic in your healthcare strategy.
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By Alevin Chan
A Certified Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.