Understanding Your Company Insurance – Is it a sufficient coverage for yourself?
At the age of 24, I developed a bad rash all over my body, and had to visit the doctor once every 4 days for almost 3 weeks, it would not completely go away. That was when my company GP decided that I needed a specialist. She referred me to Changi General Hospital and I came to realise that I suffer from Chronic Idiopathic Urticaria, aka, Hives.
Thankfully, the company has Employee Benefits that cover medical bills up to $1000 per calendar year. However, as the total bill for the year was $1200, I still had to fork out $200. As such, whenever I work with clients, I always offer to review on their company benefits programme to see if the insurance coverage they have is up to their level of expectation, and whether it is portable.
What is Company Insurance and what does it cover?
Employee’s Insurance or Company Insurance is usually separated into two main components: Group Term Life or Group Medical and Hospitalisation Insurance.
Group Term Life usually covers only Death, Total and Permanent Disability with the optional add on of Critical Illness.
If your company provides insurance for you, most likely it will be Group Medical and Hospitalisation which covers your GP, Specialist visits, Hospitalisation and Surgical Charges with other added on benefits as well.
Company insurance is a one type fits all structure, so you will not have any control over your individual coverage such as the type of hospital ward and the amount of coverage that you would like to have. You may not be able to choose a 100% coverage as there will be limitations on the coverage amount as well as other costs to bear such as co-insurance.
Most importantly, while some companies do provide all inclusion coverage for their employees, others company may have opt-in options, meaning you will not be covered unless you are willing to bear the cost of premiums together with your employer.
Is my company insurance sufficient?
Generally, companies provide coverage that is as comprehensive as possible, however, due to the nature of group insurance claim limits that apply. In severe cases, Employee Benefit alone may not be sufficient. Let me share with you a personal experience, my friend met with a traffic accident during lunch time, and she had to spend almost 2 months in the hospital with several surgeries to mend her spine and leg.
Although her company did provide insurance for her, it was limited. Furthermore, she had already reached the maximum limit of her insurance, which meant that her family had to bear the remaining cost of her medical bill. As her injury was on her spine, it affected her ability to walk. She was bedridden for months, and wheelchair-bound for even longer. She had to learn how to walk again, which took her almost two years. Her parents could support her financially and her company retained her position and put her under unpaid leave until she could return to work.
Now, maybe it is time to ask yourself as well, is your company insurance enough to cover you in such an instance? Will you be as lucky as my friend who had supportive parents and a company that kept her position?
In the worst-case scenario, most of us who rely only on company insurance, will only be able to cover the hospitalisation bill to the maximum claim limit. We may even find ourselves in a dire situation where we are no longer employable due to our injuries, leaving us solely responsible for the cost of daily expenses and post-hospitalisation bills.
Why would I need other insurance other than my company health insurance if it does cover to a certain extent?
Personal expectation
Important milestones in your life may change life’s priorities. Example, when you get a house, you will worry about the mortgage and what happens if you fall ill or unexpected death happens. It is a bigger responsibility and your company insurance may cover for death or critical illness, but it may not be enough to cover for your mortgage.
Company insurance do not provide for Early Critical Illness which covers early stages of critical illnesses. This is useful to people who are concerned about alternative treatments and income replacement while recovering from illnesses that they will most likely to recuperate from.
It is important to review your Company Insurance and see if it matches your personal expectations of coverage and if there are any gaps that you will need to close.
Changing of jobs
What happens when you change jobs? Will your previous company’s insurance be portable to the new company? These are the rather common questions that salaried workers ask me.
If your company is under one of MOM’s Portable medical benefits, then yes, you are covered with limitations, example – the Transferable Medical Insurance Scheme which is a group insurance that has inpatient coverage up to a maximum period of 12 months when an employee leaves his employment. It is important to understand how these scheme works and how portable they are as they may have limitations and may not be sufficient for your personal expectations of being adequately covered.
Unfortunately, company insurance generally only covers you during the time you are employed with them and once you leave your company, you will lose your coverage. It will be good to acknowledge that company insurance is an Employee Benefit and that it is possible that your employer can cancel this benefit anytime. Lastly, when you change jobs, your future company’s insurance may not be as comprehensive as your previous company, or worst, they may not have company insurance. These are real concerns that can happen, and you must always plan ahead and not be caught in a situation like this.
Planning for Retirement
We all know that as we age, our body will need more repairs and we will meet with more health issues. It is important that we have sufficient medical coverage, long term care and retirement planning to take care of ourselves. We do not want to become our caregiver’s liability.
We need to understand that company insurance is unlikely to cover you after retirement, so what happens when you retire? I believe most of us do have money set aside for medical fees in our retirement funds, but you will not want to use all your retirement funds to solely pay for medical expenses. We worked our whole life to enjoy this retirement, and it is important that we plan against the risks that can happen.
Due to age and health, you may meet with obstacles when trying to get a decent coverage. Always remember, you are only insurable when you are of good health, and it’s a reality that our health would decline as we grow older.
Start reviewing your company insurance now
Having adequate medical insurance is crucial and getting it done right is one of the most important step for your financial wellbeing. The harsh reality is that if we do not act then our short comings will fall on our savings, retirement funds or on our family.
You can start to review your company insurance now by downloading our tool “Company Insurance Checklist”.
(NOTE: Get our Company Insurance Checklist to help you review your company insurance. Get your checklist Here)
Article by Lee Meng Choe
Email: mengchoe.lee@gen.com.sg
The writer is the Executive Director (Distribution) of GEN Financial Advisory
