Insurance Driver In Singapore: Which One Do You Actually Want?
Just when you think that you have thoroughly compared insurance products and found the absolute best one for your needs, scroll down and find out that there are these things called "drivers".
What the hell are they, do you have to pay for them and do you really need them?
What are insurance drivers exactly?
Insurance drivers are optional add-ons that can be purchased for an insurance policy. A driver provides additional benefits or protection to improve the protection of the original plan. So when comparing insurance plans from different insurers, it is important to compare not only the basic plans but also the drivers.
Of course, drivers are not free. The cost of the driver will be added to your total premium.
The drivers you are most likely to encounter in Singapore are Health insurance driver and Life insurance driver. The good news is that the drivers of these two types of insurance are pretty similar across insurers, which makes it easy to compare.
What are health insurance drivers?
Health insurance is a broad term, but for the purposes of this article we'll be discussing Integrated Shield Plans (IPs). IPs are hospital insurances that partner with MediShield Life, the basic government health insurance system that covers Singapore citizens and PRs.
In short, IPs cover most of your medical expenses when you are hospitalized. The majority of your hospital bills, as well as associated outpatient costs such as doctor visits that occur within a certain period of time, are covered by the plan. Here are the 7 IPs in Singapore:
You may have noticed that I said "most" rather than all of your costs. IPs in Singapore are not allowed to 100% cover your expenses.
Before you can make a claim, you have to pay a so-called deductible in the form of a lump sum. That's not all. Part of the bill, known as the “co-insurance” or “co-payment component”, must also be paid by you. This is to ensure that people aren't hospitalized for fun or asking to be checked into the most luxurious hospital suite.
IP drivers usually focus on reducing the deductible and the co-insurance or copayment portion of your hospital bill in order to keep your expenses as low as possible.
There are also passengers who offer additional benefits such as hospital benefits, health insurance, and other perks like ambulance rides.
Continue reading: Health Insurance In Singapore – Everything You Need To Know To Survive
How do health insurance drivers work?
As already mentioned, with an IP driver you can reduce your deductible and your co-insurance share. Thanks to passengers, the insurer can cover up to 95% of your excess and reduce your co-insurance to up to 5%.
Let's say your Integrated Shield plan has a deductible of $ 3,500 and a 10% co-insurance.
You choose the most comprehensive driver that the insurer offers, with which the insurer pays 95% of your deductible and reduces your co-insurance share to 5%.
You will then pay a $ 100,000 hospital bill.
Without rider: You would have to pay USD 3,500 deductible + USD 9,650 co-insurance (USD 100,000 – USD 3,500 x 10%). That is total $ 13,150 which have to be paid for out of pocket or with Medisave.
With the rider: You pay a deductible of USD 175 + USD 4,825 co-insurance ((USD 100,000 – USD 3,500) x 5%). That makes a total of $ 4,700 – almost $ 9,000 less.
OK what about life insurance drivers?
Life insurance is designed to support your family financially when you die or can no longer work. The policy has a sum insured, which is usually paid out in the form of a lump sum in the event of death. Some plans also offer you protection if you have total and permanent disability and / or terminal illness.
The simplest form of life insurance is term life insurance, which only offers life insurance protection for a specific term.
There is another type of life insurance, life insurance, that is designed to cover you for life or up to a certain age such as 99 or 100 years. Life insurance also accumulates a cash value over the years.
Read more: Life Insurance in Singapore – The Basics of Life and Term Life Insurance
Fixed-term or full, life insurance policies usually come with a fairly wide variety of drivers. It's not uncommon to have five to ten drivers available for a single plan, which is a nightmare for those with decision paralysis.
And unlike health insurance, where drivers tend to focus on cutting your expenses, life insurance drivers come in a whole range of flavors and all of them have different purposes.
However, we can explain the three most common types of life insurance drivers: drivers with complete and permanent disability, drivers with critical illness, and drivers with premium waiver.
What are Total and Permanent Disability (TPD) Drivers?
Life insurance drivers usually extend the coverage of your baseline plan. This means that you can get paid out in more scenarios than what is set out in your baseline.
For example, many life insurances only pay in the event of death or an incurable diagnosis of illness. The insurer usually offers an optional passenger, so you can still get a payout if you have a total and permanent disability (TPD).
When you buy the TPD driver, you can rest assured that you will receive your sum insured when you land with TPD. This money can be used to support you and your family.
Before you decide on a TPD driver, however, compare it to other insurance plans. Some life insurance policies cover TPD from the start without the need for a driver, which may be more cost effective.
You can compare life insurance on MoneySmart or read more articles on our blog.
Read more: The 7 Best Term Life Insurance In Singapore For Affordable Protection
What are critically ill drivers?
Critically Ill drivers operate similarly to TPD drivers. They give you extra coverage by extending your life insurance payout to include the time you are diagnosed with a critical illness.
When you buy one, you get a lump sum payment if you are diagnosed with a critical illness that is covered by the plan – illnesses like heart attack or terminal cancer are usually covered.
Getting a life insurance policy + critical illness tab can be a good idea if you want to cover all of the basics. However, some life insurance policies can expire once you receive a payout for a serious illness. This means that you will not be eligible for a life insurance payout after receiving your Critical Illness Payout. This varies from policy to policy – check the fine print.
To avoid this, consider taking out separate insurance for serious illness or cancer.
What other types of life insurance drivers are there?
The third common type of life insurance drivers are premium waiver drivers. These drivers exempt you from paying the premiums in certain situations, for example if you are diagnosed with a serious illness.
Your plan will continue after that, but you will no longer have to pay premiums thanks to the premium waiver driver.
You can also purchase payer premium exempt drivers when paying for someone else's life insurance. That way, if something happens to you, your rewards are waived.
Other common passengers include accident insurance, disability benefits, hospitalization cash benefits, etc. These vary widely depending on the insurer.
So which insurance drivers are worth buying?
If only I had to choose a driver, and IP driver would be my first choice. The differences in medical costs with and without a driver can be significant, so it is advisable to pay a little more for a lower deductible and co-insurance.
All 7 IP providers offer co-payment tabs. In this article you can compare IPs and their drivers. Note, however, that you have to pay in cash for all IP drivers (not Medisave).
When it comes to life insurance, if your plan doesn't already provide for it TPD coverIt can be a good idea to either get some through a rider or simply choose a basic life insurance policy that offers TPD coverage without having to add it. Make sure to check the cut-off age for TPD coverage as it usually doesn't last forever.
If you have cash left over, you can get one too Critically Ill drivers if you do not want to take out a separate policy for critical illnesses. Make sure you read your plan carefully as these drivers may not be as simple – especially check to see if the payouts are subtracted from or separate from the amount insured on your basic plan.
Finally, remember that insurance premiums increase with age and the same goes for your driver premiums. So, be sure to check how your total premiums are evolving over time and make sure you don't commit too much.
Did you find this article useful? Share it with other new insurers you know.