Healt h

INSURANCE

8TH EDITION
Version 1.0
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HEALTH INSURANCE
8th Edition, Version 1.0 – 20 December 2023

© 2023 by Singapore College of Insurance Limited. All rights reserved.

Any reproduction or redistribution of this Study Text in part or in its entirety, without granted permission, other
than for the purpose of your examination preparation, is strictly prohibited and will be tantamount to a copyright
infringement. Legal action will be taken to protect our copyright. Any website references are correct as of the time
of publication.

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Any names used in this Study Text are fictitious and have no relationship to any persons living or dead.

First Edition published in 2001.

Second Edition published in 2004.
Third Edition published in 2007.
Fourth Edition published in June 2010.
Fifth Edition published in June 2013.
Sixth Edition published in October 2016.
Seventh Edition published in July 2020.
Eighth Edition published in December 2023.
 Table of Contents

Chapter 1 Overview Of Healthcare Environment In Singapore 1

Chapter Outline
Learning Outcomes
1. Introduction
2. Singapore’s Healthcare Philosophy
3. Singapore’s Healthcare Transformation
4. Healthcare System In Singapore
5. Affordable Care In Singapore

Chapter 2 Medical Expense Insurance 12

Chapter Outline
Learning Outcomes
1. Introduction
2. Health Insurance
3. Key Features Of Medical Expense Insurance
4. Underwriting
5. Healthcare Subsidy Level
6. Termination Of Cover
7. Claims
8. Notice No: MAS 117 - Training and Competency
Requirements – Health Insurance
Appendix 2A – Sample Medical Expense Insurance Benefit
Schedule
Appendix 2B – Sample Schedule Of Surgical Benefits
Appendix 2C – Subsidies for Acute Inpatient Care At Public
Healthcare Institutions
Appendix 2D – Notice No: MAS 117 - Training and
Competency Requirement: Health Insurance

Chapter 3 Group Hospital And Surgical Insurance 50

Chapter Outline

Contents
Learning Outcomes
1. Introduction
2. Group Insurance
3. Group Hospital & Surgical (GHS) Insurance
4. Medical Insurance Requirements for Migrant Workers
5. Portable Medical Benefits

Chapter 4 Disability Income Insurance 63

Chapter Outline
Learning Outcomes
1. Introduction
2. What Is Disability Income Insurance?
3. Disability Income Insurance & Total And Permanent
Disability
4. Computation Of Disability Income Insurance Benefit
5. Definitions
6. Benefits Offered Under Disability Income Insurance
7. Features Of A Disability Income Insurance Policy

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8. Underwriting
9. Cessation Of Benefits
10. Exclusions
11. Termination Of Cover
12. Group Disability Income Insurance
13. General Underwriting Principles For Group Disability
Income Insurance
14. Disability Income Claims
15. Conclusion
Appendix 4A – Clinical Abstract Form

Chapter 5 Long-Term Care Insurance 86

Chapter Outline
Learning Outcomes
1. Introduction
2. What Is Long-Term Care (LTC) Insurance?
3. Benefits Offered Under LTC Insurance
4. Other Benefits Provided Under LTC Insurance
5. Maximum Benefit
6. Benefit Payment Term
7. ElderShield
8. CareShield Life

Chapter 6 Critical Illness Insurance 100

Chapter Outline
Learning Outcomes
1. Introduction
2. Critical Illness (CI) Insurance
3. LIA Critical Illness Framework 2019 (“The CI Framework”)
4. Benefits Offered Under Critical Illness Insurance
5. Variation Of Illness Insurance
Contents

6. Underwriting
7. Factors To Consider In Determining Adequacy of Critical
Illness Coverage
8. Exclusions
9. Termination Of Cover
10. Claims
11. Group Critical Illness Insurance Policy
Appendix 6A – Standard Definitions for Severe Stage of 37
Critical Illnesses: Version 2019
Annex 1 – List of changes to the standard list of 37 critical
illness under the Critical Illness Framework 2019

Chapter 7 Other Types Of Health Insurance 134

Chapter Outline
Learning Outcomes
1. Introduction
2. Hospital Cash (Income) Insurance
3. Maternity Insurance

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4. Medical Expense Benefits Under Travel Insurance

5. Group Dental Care Insurance
Appendix 7A – Sample Maternity Insurance Benefit Table
Appendix 7B – Sample Schedule of Allowances Under Group
Dental Insurance

Chapter 8 Managed Healthcare 152

Chapter Outline
Learning Outcomes
1. Introduction
2. What Is Managed Healthcare (MHC)
3. How Does MHC Work?
4. What Are The Common Types Of MHC Plans?
5. Choice Of Providers Versus Cost Control
6. Managed Healthcare (MHC) Insurance
7. MHC Model In Singapore

Chapter 9 Part I Healthcare Financing 161

Chapter Outline
Learning Outcomes
1. Introduction
2. Healthcare Subsidies
3. MediShield Life
4. Integrated Shield Plans (IPs)
5. MediSave
6. Claiming From MediShield Life/IP & MediSave
Appendix 9A – Withdrawal Limits for Inpatient, Outpatient, Long-
Term Care and Insurance Premiums
Appendix 9B – MediShield Life Benefits
Appendix 9C – LIA Standardised Pre-Authorisation Form

Contents
Chapter 9 Part II Healthcare Financing 196
Chapter Outline
Learning Outcomes
7. ElderShield & ElderShield Supplements
8. CareShield Life & CareShield Life Supplements
9. Other Healthcare Financing Schemes Set Up By The
Singapore Government

Chapter 10 Common Policy Provisions 213

Chapter Outline
Learning Outcomes
1. Introduction
2. Sections Of A Policy Contract
3. Policy Schedule
4. Insuring Clause & Definitions
5. General Conditions
6. Benefit Provisions
7. Exclusions

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8. Claim Conditions
9. Endorsements
10. Conclusion
Appendix 10A – Policy Schedule

Chapter 11 Health Insurance Pricing 236

Chapter Outline
Learning Outcomes
1. Introduction
2. Key Factors Used In Premium Computation
3. Parameters For Premium Rating

Chapter 12 Health Insurance Underwriting 243

Chapter Outline
Learning Outcomes
1. Introduction
2. What Is Underwriting?
3. Factors That Affect Risk
4. Sources Of Underwriting Information
5. How An Insurance Representative Can Help In The
Underwriting Process
6. Final Underwriting Decision
7. Commencement Of Risk
8. Conclusion
Appendix 12A – Sample Supplementary Lifestyle
Questionnaire
Appendix 12B – Sample Individual Hospital & Surgical
Insurance Proposal Form
Appendix 12C – Sample Group Hospital & Surgical Insurance
Proposal And Health Declaration Form
Contents

Chapter 13 Notice No: MAS 120 – Disclosure And Advisory Process 269
Requirements For Accident And Health Insurance Products
Chapter Outline
Learning Outcomes
1. Introduction
2. Scope Of Notice No: MAS 120
3. Structure Of Notice No: MAS 120
Appendix 13A – Notice No: MAS 120

Chapter 14 Financial Needs Analysis 302

Chapter Outline
Learning Outcomes
1. Introduction
2. Needs Selling Versus Product Selling
3. What Is Fact Finding?
4. Identifying & Quantifying Needs
5. Product Recommendations
6. Presenting Your Recommendations

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7. Periodic Client Review

Chapter 15 Case Studies 324

Chapter Outline
Learning Outcomes
1. Introduction
2. Case Study 1 – Individual Health Insurance
3. Case Study 2 – Group Health Insurance
Appendices 15A & 15B – Mr Tang’s Existing Health Insurance
Policies

Tables 336

Contents

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 1. Overview of Healthcare Environment in Singapore

CHAPTER 1
OVERVIEW OF HEALTHCARE ENVIRONMENT
IN SINGAPORE

CHAPTER OUTLINE

1. Introduction
2. Singapore’s Healthcare Philosophy
3. Singapore’s Healthcare Transformation
4. Healthcare System in Singapore
5. Affordable Care In Singapore

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ understand the Singapore Government’s healthcare philosophy
▪ know the transformation of Singapore’s healthcare system
▪ understand the differences between primary healthcare services, hospital services,
and Aged Care services
▪ know the other healthcare services provided – dental, traditional and
complementary medicine and support services

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Contents
OVERVIEW OF HEALTHCARE ENVIRONMENT IN SINGAPORE ....................................... 1
CHAPTER OUTLINE ............................................................................................................. 1
LEARNING OUTCOMES ...................................................................................................... 1
1. INTRODUCTION ......................................................................................................... 3
2. SINGAPORE’S HEALTHCARE PHILOSOPHY ............................................................ 3
3. SINGAPORE’S HEALTHCARE TRANSFORMATION.................................................. 3
A. Healthcare 2020 ..................................................................................................... 3
B. Beyond Healthcare 2020 ....................................................................................... 5
C. Healthier SG .......................................................................................................... 6
4. HEALTHCARE SYSTEM IN SINGAPORE ................................................................... 8
A. Primary Healthcare Services and Facilities.......................................................... 8
B. Hospital Services................................................................................................... 9
C. Aged Care Services ............................................................................................. 10
D. Other Healthcare Services .................................................................................. 10
5. AFFORDABLE CARE IN SINGAPORE ...................................................................... 11

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1. INTRODUCTION

1.1 Rising healthcare costs are a concern for most governments. Advances in
medical sciences, the greater use of expensive medical technology and drugs,
as well as an ageing population with longer life expectancy, are some reasons
that contribute to rising healthcare costs. In most developed countries,
healthcare expenditure has grown faster than the economy, consuming an
increasing share of the nation’s resources. This is a concern, as countries face
constraints on healthcare resources and households have limited financial
capacity. Meanwhile, consumers expect better or at least consistent quality in
healthcare. The challenge faced by most governments is meeting increasing
expectations for healthcare while maintaining affordability.

2. SINGAPORE’S HEALTHCARE PHILOSOPHY

2.1 Through the Ministry of Health (MOH), the Singapore Government manages
the healthcare system based on five fundamental objectives:
(a) To nurture a healthy nation by promoting good health;
(b) To promote personal responsibility for one's health and avoid over-
reliance on state welfare or medical insurance;
(c) To provide good and affordable basic medical services to all Singaporeans;
(d) To rely on competition and market forces to improve service and raise
efficiency; and
(e) To intervene directly in the health care sector, when necessary, should
market failures lead to unsustainable growth of healthcare costs for all.

2.2 The population is encouraged to adopt a healthy lifestyle and take

responsibility for their own health. At the same time, safety nets are in place to
ensure that no Singaporean is denied access to appropriate healthcare due to
an inability to pay.

3. SINGAPORE’S HEALTHCARE TRANSFORMATION

3.1 Over the past two decades, MOH has embarked on major healthcare
transformation efforts to address the past, present and anticipated challenges
within the healthcare system.

A. Healthcare 2020

3.2 Launched in 2012, the “Healthcare 2020” Masterplan aimed to improve

healthcare access for Singaporeans, with a focus on addressing capacity and
affordability.

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3.3 Under Healthcare 2020, the following were achieved:

(a) Improved Accessibility

MOH opened 4 new hospitals from 2012 to 2016, resulting in more than
1,800 additional beds serving acute and community healthcare needs. To
shift the centre of gravity of care towards the community, MOH ramped up
capacity expansion in the community to bring healthcare closer to home,
particularly for an aging population. This included the development of two
new polyclinics in Punggol and Pioneer in 2017, as well as the
redevelopment and expansion of 4 other polyclinics between 2016 - 2018.
Between 2015 and 2022, MOH also increased the number of nursing home
beds by 6,000, day places for centre-based care by 5,000 and home care
service slots by 8,000. Healthcare facilities were co-located with public
transport hubs and community service centres to improve access and
integration of services. This was supported by enhanced manpower
attraction and retention efforts, as well as investments in infrastructure.

(b) Improved Quality

(i) Adopted a multi-disciplinary team approach in catering to complex

patient needs.
(ii) Enhanced career development and learning initiatives for healthcare
manpower.
(iii) Introduced enhanced standards and guidelines for better, safer and
more holistic care in nursing homes, centre-based care services,
home care, community care and palliative care services.
(iv) Leveraged IT to improve delivery of patient care, e.g. The Outpatient
Pharmacy Automation System across several hospitals improved,
efficiency and patient safety by automating prescription.

(c) Enhanced Affordability

(i) Enhanced subsidies for services in the Specialist Outpatient Clinics

(SOCs) and drugs in public hospitals, including a list of subsidised
drugs, for Singaporeans.
(ii) Expanded MediSave use to more treatments, further reducing cash
out-of-pocket costs for Singaporeans.
(iii) Launched MediShield Life in 2015 as the national basic health
insurance scheme. This covers large hospitalisation bills and
selected costly outpatient treatments to provide assurance to all
Singaporeans, including the elderly and those with pre-existing
conditions.
(iv) Launched Pioneer Generation (PG) package in 2014 and the Merdeka
Generation (MG) package in 2019, which provided Pioneers and MG
seniors with more support for their healthcare costs. These seniors
will enjoy MediSave top-ups, additional subsidies for outpatient care,
and additional premium subsidies for MediShield Life.

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B. Beyond Healthcare 2020

3.4 Further changes were needed to ensure a sustainable healthcare system. In

2016, MOH embarked on the “3 Beyonds”, for Better Health, Better Care and
Better Life. Six regional health systems were reorganised into three fully
integrated clusters in 2017, each with a mix of acute hospitals, community
hospitals and polyclinics. This aimed to shift care to the community by
improving integrated care delivery, supporting regional health development
and collaborating with private and community providers. MOH also began
work to replace the Private Hospitals and Medical Clinics Act (PHMCA) with
the Healthcare Services Act (HCSA), in recognition of the fact that healthcare
service delivery was no longer limited to the traditional brick-and-mortar
premise.

(a) Beyond Healthcare to Health

MOH has implemented a range of initiatives across the lifespan of

Singaporeans to support Singaporeans in promoting healthier living and
well-being:

(i) Promoted healthier eating through multipronged strategies, such as

Health Promotion Board’s Healthier Dining programme and Healthier
Ingredient Development Scheme, banning partially hydrogenated
oils and introducing regulatory measures on beverages to reduce
sugar intake.
(ii) Encouraged greater physical activity through the National Steps
Challenge.
(iii) Tightened tobacco controls, e.g. raising the minimum legal age for
tobacco use to 21 years, since January 2021.
(iv) Enhanced social-health integration efforts for targeted population
segments, e.g. children, women and vulnerable groups such as
those from the lower-income families.
(v) Expanded service scope of active ageing centres to include active
ageing programmes, befriending services and care referral services.

(b) Beyond Hospital to Community

To enable Singaporeans in receiving appropriate care in the community or

at home, MOH has focused on strengthening primary care, expanding
community-based care, enhancing primary and long-term care
affordability.

(i) Developed the Primary Care Networks (PCN) scheme to expand the
role of private General Practitioner (GP) clinics to include holistic and
team-based care for patients with chronic diseases.
(ii) Expanded the Community Health Assist Scheme (CHAS) to cover all
Singaporeans for selected chronic conditions, regardless of income,
thus allowing more Singaporeans to receive subsidised care from
private GPs.
(iii) Expanded list of conditions under the Chronic Disease Management
Programme (CDMP) to allow more Singaporeans with chronic

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conditions to tap on government subsidies at CHAS clinics and on

their MediSave.
(iv) Expanded Community Nursing services to provide accessible care
for seniors with multiple chronic diseases within the community.
(v) Launched the Caregiver Support Action Plan and enhanced support
schemes such as the Home Caregiving Grant and Seniors’ Mobility
and Enabling Fund, to reduce caregivers’ financial strain and
strengthen caregiver support thus enabling seniors to age well in
the community.
(vi) Launched CareShield Life in 2020, a national long-term care
insurance scheme, which provides basic financial protection for
long-term care costs, especially in old age. It covers all Singaporeans
born in 1980 or after, including those with pre-existing disabilities.
Singaporeans born before 1980 may also opt into the scheme.

(c) Beyond Quality to Value

MOH also took steps to ensure the delivery of quality care in a cost-
effective and sustainable manner.

(i) Established the Agency for Care Effectiveness (ACE) as the national
Health Technology Assessment (HTA) and Clinical Guidance Agency
in Singapore. ACE supports providers, patients, and payers to make
better-informed decisions about patient care by conducting health
technology assessments, publishing healthcare guidance and
providing education to drive evidence-based care.
(ii) Initiated Value-Based Healthcare programme in public hospitals to
optimize cost management while improving treatment quality and
patient outcomes.
(iii) Introduced fee benchmarks to ensure reasonable fees and address
overcharging tendencies.

C. Healthier SG

3.5 The progress made under the 3 Beyonds enabled the development of strong
regional health systems and essential groundwork for MOH to embark on the
next leap in healthcare transformation. From mid-2023, MOH launched
Healthier SG — a multi-year strategy to promote proactive preventive care and
empower individuals to chart their own journey towards better health.

3.6 Five key features of Healthier SG:

(a) Mobilise family doctors to deliver preventive care for residents. MOH will
mobilise the network of family doctors to provide holistic care that focuses
on prevention and improved chronic care. MOH will ensure a consistent
and evidence-based level of care delivery across the diverse primary care
landscape. MOH, together with primary care leaders, is developing care
protocols to guide family doctors on providing screening and vaccination
and managing key chronic conditions.

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(b) Develop health plans that include lifestyle adjustments, regular health
screening, and appropriate vaccinations which doctors will discuss with
residents. Residents participating in Healthier SG will have a digitally
enabled health plan on the HealthHub application. This will enable
residents to access the key points of their discussions with their family
doctor and track their health outcomes. The Healthy 365 application will
also be enhanced to better track physical activities and diets, as well as
support access to community activities.

(c) Activate community partners to support residents in leading healthier

lifestyles. Improving health goes beyond a doctor’s visit. Family doctors
will be able to make social prescriptions and encourage residents to adopt
healthy lifestyles by bringing healthy living options to the "doorstep".
Healthier SG will make it easier for residents to consciously connect to the
wide range of activities provided by agencies such as Health Promotion
Board, Agency for Integrated Care, People’s Association, Sport Singapore,
and community partners. Additional support will be made available for
seniors through Active Ageing Centres (AACs).

(d) Launch a national enrolment exercise for residents to commit to seeing

one family doctor and adopt a health plan. Individuals who visit a regular
family doctor are generally healthier and have fewer visits to the
emergency departments and hospitals. Under Healthier SG, residents will
be encouraged to choose and enrol with a GP clinic. Residents will have
some flexibility to change their family doctor, taking into account changes
in their life circumstances. The family doctor will serve as the first point-
of-contact to holistically manage the residents’ health. To encourage
residents to follow their health plan and to seek care with their enrolled
family doctor, MOH will:

(i) Fully subsidise nationally recommended screenings and vaccinations

for Singapore Citizens;
(ii) Waive the requirement for residents to co-pay part of their bills in
cash when using MediSave for chronic care management;
(iii) Introduce a new CHAS drug subsidy tier for a whitelist of chronic
disease management drugs so that their prices at private GP clinics
are comparable with those at polyclinics; and
(iv) Leverage the Healthpoints system under Healthy 365 to offer
rewards to residents for enrolling and completing their first
consultation with their selected family doctor and for leading active
and healthy lifestyles.

Healthier SG GPs will receive annual service fee payments for Healthier
SG enrolees each year, based on the health risk profile of each enrolled
resident, scope of required care, and the progress made in terms of
preventive care or chronic disease management.

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(e) Establish necessary enablers such as IT, manpower development, and

financing policy.

(i) There is a need to build up and optimise the primary and community
care workforce to further support the shift towards primary and
community care. MOH will develop the competencies and skills of
the healthcare workforce through more broad-based education. MOH
will also expand the role of community pharmacists and the scope of
work for allied health professionals in primary and community care
to improve care delivery and support to residents and doctors in the
community.
(ii) MOH will enhance the healthcare IT infrastructure to improve data
submission and sharing, and bolster data governance frameworks
and cybersecurity capabilities. This will enable healthcare clusters,
family doctors and partners to work more closely together to serve
residents better.
(iii) The funding model for healthcare clusters will shift from a workload-
based model to a capitation-based model, where clusters receive a
pre-determined fee for every resident assigned to their geographical
region, including every home, workplace, and school by 2020. The
fee is adjusted based on the age of their residents. Each cluster will
care for approximately 1.5 million residents and this shift in funding
model will give them the mandate and incentive to improve
population health within their regions and focus on preventive care.

4. HEALTHCARE SYSTEM IN SINGAPORE

4.1 There are three main types of healthcare services:

(a) Primary healthcare services and facilities
(b) Hospital services
(c) Aged Care services

A. Primary Healthcare Services and Facilities

4.2 Primary healthcare involves the provision of basic medical treatment,

preventive healthcare and health education. In Singapore, primary healthcare
services are mostly provided by the public sector, as well as the private sector
with the remainder provided through a network of public outpatient
polyclinics. These healthcare professionals are often the first point of contact
with patients and provide holistic and personalised care for patients of
different age groups. They treat acute conditions such as upper respiratory
tract infections, manage chronic illnesses such as diabetes, and keep the
population healthy through preventive measures such as targeted health
screening. They also help to coordinate patient care with other providers and
guide patients with specialised medical needs to navigate the healthcare
system.

4.3 Under the Community Health Assist Scheme (CHAS), eligible Singapore
Citizens can also receive subsidised treatments at participating GPs and dental
clinics, without the need to travel to the polyclinics. CHAS enables all

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Singapore Citizens, including MG and Pioneer Generation (PG) cardholders, to

receive subsidies for medical and/or dental care at participating GPs and
dental clinics.

4.4 Besides subsidies for care at CHAS clinics, CHAS, MG and PG cardholders
enjoy subsidised referrals to public Specialist Outpatient Clinics (SOCs), as
well as subsidised referrals to the National Dental Centre Singapore and
National University Centre for Oral Health Singapore*, if required. The colour
of the CHAS card indicates the subsidy tier that cardholders are entitled to,
namely the CHAS Blue, Orange or Green tier.

*Only for CHAS Blue, CHAS Orange, MG and PG cardholders

4.5 Clinics participating in CHAS partner with MOH to provide common outpatient
medical treatments and basic dental services to eligible patients. The scheme
also covers treatments for chronic diseases under the Chronic Disease
Management Programme (CDMP), such as diabetes mellitus and
hypertension. To find out more, visit: www.chas.sg.

B. Hospital Services

4.6 Public hospitals account for 85% of all hospital beds in Singapore, while the
private sector accounts for 15%. The public hospitals are structured by regions
split into three clusters: National University Health System (NUHS), National
Healthcare Group (NHG) and SingHealth. There are ten public hospitals,
comprising eight general hospitals, a women’s and children’s hospital, and a
psychiatry hospital. General hospitals provide multi-disciplinary inpatient and
specialist outpatient services, and 24-hour emergency departments. In
addition, there are national specialty centres for cancer, cardiac, eye, skin,
neuroscience and dental care, as well as medical centres for multiple
disciplines (e.g. Jurong Medical Centre, Admiralty Medical Centre).

4.7 The Government has also introduced community hospitals to provide

rehabilitation and continuing care to patients, typically after their discharge
from acute hospitals. There are currently nine community hospitals in
Singapore, run by either VWOs or by healthcare clusters.

4.8 Within the public hospitals, patients can choose their preferred ward class
upon admission. The subsidies they receive will be based on their chosen
ward class The B2 and C ward classes, which offer basic amenities, enjoy
heavy subsidies of up to 80%. Those who desire more amenities can choose a
higher ward class but will receive less subsidies (Class B1 admissions are
subsidised at 20% while there is no subsidy for Class A ward admissions).
Private hospitals do not receive any subsidies from the Government.

4.9 The Government has restructured all its acute hospitals and specialty centres
to be operated as government-owned private companies. This enables public
hospitals to have more management autonomy and flexibility to respond
more promptly to patient needs. The public hospitals are different from the
other private hospitals in that they receive an annual Government subvention
or subsidy for the provision of subsidised medical services to the patients.

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They are managed as non-profit organisations and are subject to broad policy
guidance by the Government through MOH.

4.10 For more information on the regions and the healthcare institutions under
each, please visit the MOH website at:
https://www.healthhub.sg/directory/hospitals.

C. Aged Care Services

4.11 Aged care services are typically required for the elderly who need further care
and treatment after being discharged from an acute or community hospital, as
well as community-dwelling seniors who may be frail and need supervision or
assistance with their activities of daily living. These services also provide
respite for caregivers who need time to rest and recharge, or to tend to other
matters. The types of aged care services are:

(a) Home-based services, which are provided within the homes of frail and
home-bound seniors. These services address the health and social needs
of the elderly and support families in helping seniors age in place;
(b) Centre-based services, which cater to seniors who require care services
during the day, usually on a regular basis. These centres are mostly
located within the community, enabling those in need to receive services
in a familiar environment close to their homes, and allow working
caregivers to conveniently drop off their seniors during their work hours.
(c) Residential care facilities, for patients who stay in these facilities both in
the day and at night. They comprise chronic sick hospitals, nursing
homes, inpatient hospices, as well as rehabilitation homes and sheltered
homes for persons in mental health recovery; and
(d) Pallative care services, which support individuals at the end-of-life and
their caregiver across settings such as one’s home, day hospice centres,
and in inpatient hospices.

D. Other Healthcare Services

(a) Dental Services

4.12 Public dental services are available through the National Dental Centre and in
some polyclinics and hospitals. The Health Promotion Board primarily focuses
on preventive dentistry, targeted mainly at school pupils.

(b) Traditional and Complementary Medicine

4.13 MOH bases its healthcare services on Western medical science. However, the
ethnic groups in Singapore occasionally consult traditional medicine
practitioners for general ailments. Interest in Traditional Chinese Medicine
(TCM) and other traditional or alternative medical treatments is increasing
both here and around the world. MOH is therefore reviewing standards of
training and the practice of TCM in Singapore. Its aim is to ensure a higher
quality of TCM practice, for the benefit of patients who consult TCM
practitioners.

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(c) Support Services

4.14 Support services to hospitals and primary healthcare programmes include

forensic pathology, pharmaceutical services and blood transfusion services.

5. AFFORDABLE CARE IN SINGAPORE

5.1 MOH has made decisive changes to expand subsidy coverage

and improve affordability for more patients. For instance, higher
subsidies have been granted for long-term care services, with
more patients able to enjoy subsidies. In 2022 and 2023, revised
means-tested subsidy frameworks were implemented for the acute hospital
(AH), community hospital (CH) and specialist outpatient clinic (SOC) setting.
These subsidies provide patients with greater financial support so as to
encourage patients to access care at the most appropriate healthcare setting.
Subsidy enhancements in the public hospitals have allowed some patients
receiving specialist care to pay up to 40% less. Similarly, standard outpatient
drug subsidies in the public hospitals and polyclinics have allowed some
patients to pay up to 50% less.

5.2 Other initiatives to make healthcare costs more affordable include the use of
MediSave to reduce out-of-pocket cash payment. For example, Flexi-MediSave
allows seniors to use an additional S$300 per year for outpatient medical
treatment at public healthcare institutions and CHAS general practitioner
clinics. Individuals may also withdraw up to S$700 per year to pay for their
outpatient treatment of 23 chronic conditions (up from 20 conditions
previously).

5.3 MOH will continue to review the healthcare financing landscape to ensure that
healthcare remains affordable for all. No one will lose access to care due to an
inability to pay.

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CHAPTER
01
OVERVIEW OF HEALTHCARE
ENVIRONMENT IN SINGAPORE

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Singapore Government’s Through the Ministry of Health (MOH), the Singapore Government manages the
healthcare philosophy healthcare system based on five fundamental objectives:
1. To nurture a healthy nation by promoting good health;
2. To promote personal responsibility for one's health and avoid over-reliance on
state welfare or medical insurance;
3. To provide good and affordable basic medical services to all Singaporeans;
4. To rely on competition and market forces to improve service and raise
efficiency; and
5. To intervene directly in the health care sector, when necessary, should market
failures lead to unsustainable growth of healthcare costs for all.
Three key strategies • Improved Accessibility
for the Healthcare 2020 • Improved Quality
Masterplan • Enhanced Affordability
Beyond Healthcare 2020 Further changes were needed to ensure a sustainable healthcare system. In 2016,
MOH embarked on the “3 Beyonds”,for Better Health, Better Care and Better Life.
• Beyond Healthcare to Health
• Beyond Hospital to Community
• Beyond Quality to Value
Hospital services Five key features of Healthier SG
• Mobilise family doctors to deliver preventive care for residents.
• Develop health plans that include lifestyle adjustments, regular health
screening, and appropriate vaccinations which doctors will discuss with
residents.
• Activate community partners to support residents in leading healthier lifestyles.
• Launch a national enrolment exercise for residents to commit to seeing one
family doctor and adopt a health plan.
• Establish necessary enablers such as IT, manpower development, and financing
policy.
Healthcare System in There are three main types of healthcare services:
Singapore • Primary healthcare services and facilities
• Hospital services
• Aged Care services
Affordable Care in MOH has made decisive changes to expand subsidy coverage and improve
Singapore affordability for more patients. For instance, higher subsidies have been granted
for long-term care services, with more patients able to enjoy subsidies. In 2022 and
2023, revised means-tested subsidy frameworks were implemented for the acute
hospital (AH), community hospital (CH) and specialist outpatient clinic (SOC) setting.

Other initiatives to make healthcare costs more affordable include the use of
MediSave to reduce out-of-pocket cash payment.

1
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CHAPTER 2
MEDICAL EXPENSE INSURANCE

CHAPTER OUTLINE

1. Introduction
2. Health Insurance
3. Key Features Of Medical Expense Insurance
4. Underwriting
5. Healthcare Subsidy Level
6. Termination Of Cover
7. Claims
8. Notice NO.: MAS 117 - Training and Competency Requirements – Health Insurance
Appendix 2A – Sample Medical Expense Insurance Benefit Schedule
Appendix 2B – Sample Schedule Of Surgical Benefits
Appendix 2C – Subsidies for Acute Inpatient Care At Public Healthcare Institutions
Appendix 2D – Notice No: MAS 117 - Training and Competency Requirements – Health
Insurance

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ describe the three categories of Health Insurance
▪ know the types of coverage provided under a Medical Expense
Insurance policy
▪ understand the various benefits offered by insurers under a Medical Expense
Insurance policy
▪ describe the key features of Medical Expense Insurance:
- stand-alone or a rider
- choice of plans
- family coverage
- reimbursement of expenses
- expense participation (deductible, co-insurance and pro-ration factor)
- benefit limits
- covered charges
- geographical limit
- waiting period
- age limits
- premiums
- renewability
▪ know the common exclusions and limitations (co-ordination of benefits) under
Medical Expense Insurance
▪ know the sources of underwriting information for both individual and group covers

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▪ know the rationale for the subsidy distinction between citizens and non-citizens
▪ know when the coverage of an insured person under a Medical Expense Insurance
policy will terminate
▪ know the documents to be furnished in the event of a claim
▪ know the training and competency requirements for health insurance as stated in
Notice No.: MAS 117 - Training and Competency Requirements - Health Insurance.

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Contents
CHAPTER OUTLINE .......................................................................................................... 12
LEARNING OUTCOMES ................................................................................................... 12
1. INTRODUCTION ...................................................................................................... 16
2. HEALTH INSURANCE.............................................................................................. 16
A. What Is Medical Expense Insurance? .............................................................. 16
A1. What Is Covered Under Medical Expense Insurance? ............................. 16
A2. Inpatient and Outpatient Expenses .......................................................... 17
A3. Major Outpatient Treatment ..................................................................... 20
B. What Are The Limits On The Covered Expenses? .......................................... 21
3. KEY FEATURES OF MEDICAL EXPENSE INSURANCE ......................................... 22
A. Stand-alone ...................................................................................................... 22
B. Choice Of Plans ................................................................................................ 22
C. Family Coverage............................................................................................... 22
D. Reimbursement Of Expenses .......................................................................... 23
E. Expense Participation....................................................................................... 24
E1. Deductible .................................................................................................. 24
E2. Co-insurance .............................................................................................. 25
E3. Pro-ration Factor ........................................................................................ 26
F. Benefit Limits.................................................................................................... 27
G. Covered Charges .............................................................................................. 28
H. Geographical Limit ........................................................................................... 28
I. Waiting Period .................................................................................................. 29
J. Age Limits ......................................................................................................... 29
K. Premiums.......................................................................................................... 29
L. Renewability ..................................................................................................... 30
M. Exclusions & Limitations ................................................................................. 30
M1. Exclusions .................................................................................................. 30
M2. Limitations (Co-ordination Of Benefits).................................................... 31
4. UNDERWRITING ..................................................................................................... 31
5. HEALTHCARE SUBSIDY LEVEL .............................................................................. 31
6. TERMINATION OF COVER ...................................................................................... 32
7. CLAIMS .................................................................................................................... 32
8. NOTICE NO.: MAS 117 - TRAINING AND COMPETENCY REQUIREMENTS –
HEALTH INSURANCE.............................................................................................. 33
APPENDIX 2A ................................................................................................................... 34
APPENDIX 2B ................................................................................................................... 35
APPENDIX 2C ................................................................................................................... 36

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APPENDIX 2D ................................................................................................................... 41

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1. INTRODUCTION

1.1 Rising medical costs are a major concern globally including Singapore. Ageing
population, medical advancement and rising operation costs will continue to
put pressure on medical costs. Singaporeans who are relying solely on their
Medisave and MediShield Life to pay for their medical costs may find these
insufficient especially for treatments or a major surgery in a B1/ A class ward or
in a private hospital which has little to no government subsidy. Having other
sources of funds to meet unexpected medical costs will be important.

2. HEALTH INSURANCE

2.1 Health Insurance provides the insured with financial benefits to defray medical
costs as a result of an injury, illness or disability. Few insurers have also started
to offer support for extended care benefits (though app or service
partnerships) as a holistic support.

2.2 There are three categories which Health Insurance can offer:
(a) a reimbursement of medical treatment/care cost;
(b) a periodic income upon disability or hospitalisation; or
(c) a lump sum upon disability or suffering from a major illness or surgery.

2.3 Medical Expense Insurance is a type of health insurance which covers hospital
and surgical expenses. In this chapter, we will discuss the key benefits and
features of Medical Expense Insurance. The other types of Health Insurance will
be covered in the next few chapters.

2.4 Insurers and their financial adviser representatives providing advice on or

arranging contracts of insurance or both, in respect of Health Insurance
products, must comply with Notice No: MAS 117 on “Training And Competency
Requirement: Health Insurance”. This Notice outlines the minimum
examination requirements for health insurance, and Continuing Professional
Development (CPD) requirements related to shield plans.

A. What Is Medical Expense Insurance?

2.5 Medical Expense Insurance, also known as Hospital and Surgical (H&S)
Insurance, provides inpatient and some outpatient benefits. Besides covering
common expenses which are listed below, it also provides cover for complex
surgical procedures like heart bypass surgery and organ transplant, and other
costly outpatient treatments, such as kidney dialysis and cancer chemotherapy.
Examples of Medical Expense Insurance include Medisave-approved Integrated
Shield Plans (IPs) offered by private insurers, MediShield Life Scheme and
Managed Healthcare Schemes. Appendix 2A is an example of a Medical
Expense Insurance benefit schedule.

A1. What Is Covered Under Medical Expense Insurance?

2.6 Most of the Medical Expense Insurance plans in Singapore generally cover the
basic benefits as described below:

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(i) Inpatient and Outpatient Expenses

▪ daily room, board, and medical related
services;
▪ intensive care unit;
▪ short stay ward;
▪ surgical benefit;
▪ surgical implant and prosthesis charges;
▪ radiosurgery
▪ major organ transplant;
▪ stem cell transplant;
▪ accident inpatient dental treatment;
▪ pre-hospital treatment;
▪ post-hospital treatment;
▪ stay in community hospitals;
▪ inpatient congenital anomalies;
▪ inpatient pregnancy complications;
▪ living donor organ transplant;
▪ emergency overseas inpatient treatment;
▪ major outpatient treatment
▪ outpatient kidney treatment charges;
▪ outpatient cancer drug treatment benefit;
▪ outpatient cancer drug services;
▪ outpatient radiotherapy for cancer; and
▪ major organ transplant approved immunosuppressant drugs.

2.7 Some policies also extend cover to include:

▪ emergency medical evacuation; and
▪ private nursing home care.

2.8 Let us now look at each of the covered expenses. Do note that
the coverage descriptions may vary from one insurer to another. You can also
refer to Appendix 2B for a sample benefit schedule of an Integrated Shield Plan.

A2. Inpatient and Outpatient Expenses

2.9 If inpatient treatment is received in a luxury or deluxe suite or any other special
room of a hospital, the inpatient bill will be pro-rated based on the actual
charges that the insured person would have paid under his plan type. The lower
of either the reasonable expenses or the pro-rated amount of the total bill, will
be paid.

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(a) Daily Room, Board and Medical Services

These are charges for a standard room including, meals, treatment fees,
prescriptions, medical consumables, doctor’s fee, medical examination,
lab test and miscellaneous medical charges.

(b) Intensive Care Unit (ICU) Charges

This refers to charges incurred during confinement in the ICU of the
hospital.
Like Daily Room & Board, the reimbursement for ICU charges is also on a
per day basis up to a specified maximum number of days per
hospitalisation.

(c) Short-stay Ward

This means a ward in the emergency department of a hospital for a
patient who needs a short period of inpatient observation, monitoring and
treatment.

(d) Surgical Benefit

This refers to the surgeon’s fees, anaesthetist’s fees and operating theatre
and facility fees. Reimbursement of surgical fees depends on the type and
complexity of the surgery. To know more about reimbursement of this
benefit under MediShield Life, refer to the website of the Ministry of
Health (MOH) to view a full list of the types of Surgical Operations and the
Medisave withdrawal limits for each category. For Group Hospital and
Surgical (H&S) Insurance, reimbursement for surgical fees is usually set
out in a Schedule of Surgical Benefits attached to such a Group H&S
Insurance policy.

(e) Surgical Implant & Prosthesis Charges

This refers to the actual costs of surgical implant or prosthesis 1.

(f) Radiosurgery
This refers to charges for Gamma Knife and Novalis radiosurgery
(including day surgery) by a surgeon in a hospital.

(g) Major organ transplant

This refers to the costs of surgeries for the transplantation of kidneys,
lungs, heart, liver, skin, cornea or musculoskeletal tissue where the
insured person is the recipient of any of the organs.

This benefit is not payable if the transplantation is illegal or

arises from any illegal transaction or practice.

(h) Stem Cell Transplant

This refers to charges for stem cell transplant surgery including harvesting
for autologous stem cell transplant.

1
Prosthesis is an artificial device used to replace a missing part of the body.

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(i) Accident Inpatient Dental Treatment

This refers to charges to remove, restore or replace sound natural teeth
which have been lost or damaged in an accident. Treatment must be
received within 31 days following the accident.

(j) Pre-hospital treatment

This refers to the charges incurred before the insured person is admitted
for inpatient treatment for the same injury/illness. It includes charges for
 diagnostic and laboratory tests as prescribed by the doctor.
 consultation with a specialist as recommended by the attending
physician.

Benefit is payable if incurred within a specified number of days before the

date of hospitalisation.

(k) Post-hospital treatment

This refers to the expenses incurred by the insured person for follow-up
treatments after hospitalisation, e.g. physiotherapy after an arthroscopic
surgery. This benefit is payable for up to a specified number of days after
his discharge from the hospital.

(l) Stay In Community Hospital

This refers to charges incurred in a community hospital for
accommodation, meals and general nursing services. A referral from the
attending physician from the hospital, where the insured person has
received inpatient or A&E treatment is usually required, and admission to
the community hospital must be within a time frame following his
discharge from the hospital.

(m) Inpatient Congenital Anomalies

This refers to charges for inpatient treatment of any congenital anomalies,
including hereditary conditions. A waiting period applies before this
benefit is payable.

(n) Inpatient Pregnancy Complications

This refers to charges for inpatient treatment for pregnancy complications.
A waiting period may apply before this benefit is payable. Note that not
every pregnancy complication is covered. This benefit may be restricted to
a pre-defined list of pregnancy complications, including but not limited to:
▪ ectopic pregnancy;
▪ pre-eclampsia or eclampsia;
▪ disseminated intravascular coagulation;
▪ miscarriage after 13 weeks of pregnancy (not resulting from voluntary
or malicious act);
▪ antepartum haemorrhage;
▪ intrauterine death;

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▪ choriocarcinoma and hydatidiform mole, which is the occurrence of a

histologically confirmed choriocarcinoma and/or molar pregnancy;
▪ acute fatty liver pregnancy;
▪ breech delivery;
▪ still-birth;
▪ placenta previa; and
▪ postpartum haemorrhage.

(o) Living donor organ transplant

This refers to charges for major organ transplants of the kidney or liver,
where the life insured is a living donor, provided that:
 the transplantation is carried out at a hospital in Singapore;
 the recipient of the kidney or liver must be the insured person’s family
member (i.e. parent, sibling, spouse or child); and
 the recipient’s kidney or liver failure is first diagnosed by the attending
physician, or the symptoms of which first appeared, after a waiting
period of 24 months as specified in the policy.

This benefit is not payable if the transplantation is illegal or arises from

any illegal transaction or practice .

(p) Emergency Overseas Inpatient Treatment

This refers to charges for inpatient treatment resulting from an emergency
while overseas. It pays the lower of either the actual charges or
reasonable expenses for equivalent medical treatment in Singapore. Pre-
and post-hospital treatments which are given before and after emergency
overseas treatment are not covered.

A3. Major Outpatient Treatment

2.10 (a) Outpatient Kidney Dialysis

This refers to the charges incurred for kidney dialysis at a legally
registered dialysis centre. Cover may also include examination and tests
ordered by the attending physician for the course of treatment, as well as
erythropoietin, as part of the treatment for chronic renal failure and
ambulatory peritoneal dialysis ordered by the attending physician.

Any additional formulated solution not prescribed by the attending

physician or other prescribed medications (apart from erythropoietin) will
not be covered. In addition, the cost of purchase or rental of the dialysis
machine will not be covered.

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(b) Outpatient Cancer Drug Treatment Benefit (On the CDL)

This refers to charges incurred as an outpatient at a hospital or cancer
treatment centre registered with the MOH for cancer drug treatments that
are listed on the Cancer Drug List/ CDL.

(c) Outpatient Cancer Drug Services

These are charges for cancer drug services for outpatient cancer drug
treatments. The services are not required to be specific to treatments on
the CDL and are payable even if they were for a non-CDL treatment.

(d) Outpatient Radiotherapy for Cancer

These are charges for the following cancer treatments as an outpatient at
a hospital or legally registered cancer treatment centre:
 hemi-body radiotherapy
 external or superficial radiotherapy
 brachytherapy (with or without external radiotherapy)
 stereotactic radiotherapy

(e) Major Organ Transplant Approved Immunosuppressant Drugs

This refers to costs of immunosuppressant drugs approved by the Health
Science Authority as part of necessary medical treatment, as an outpatient
after a major organ transplant to reduce the rate of rejection episodes.

The major organ transplant must first be approved under the policy.

B. What Are The Limits On The Covered Expenses?

2.11 Medical Expense Insurance policies provide separate benefits for the different
expenses covered. While most insurers now offer plans that have “as charged”
(the actual amount incurred) benefits, there are still many plans that impose
sub-limits, e.g. based on a table of surgical operations and a maximum limit on
Room & Board benefit, etc. MediShield Life is just one of the Medical Expense
Insurance schemes with limits imposed. Besides the limits, deductibles and co-
insurance are also common features of these policies. Also, all policies are
subject to per policy year/period and lifetime claimable limits.

2.12 Note that the payment of this Medical Expense Insurance policy is on a
reimbursement basis. Hence, the insurer will reimburse the actual amount
incurred (for “as charged” plans) or the maximum limit specified in the
Schedule of Benefits, whichever is lower. The policy owner may not get a full
reimbursement for the medical expenses incurred by the insured person in
some cases. It is important to highlight this clearly to the prospective client and
explain what is specifically covered in the Schedule of Benefits.

2.13 Unlike a life insurance policy, where a policyholder can have multiple life
insurance policies on a single insured and the sum assured will be paid from all
the valid life insurance policies at the time of the insured’s death, this does not
apply to Medical Expense Insurance policies.

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3. KEY FEATURES OF MEDICAL EXPENSE INSURANCE

3.1 Although the Medical Expense Insurance policies offered in the market vary in
coverage and limits, they share common features as described below:

A. Stand-alone

3.2 In Singapore, Medical Expense Insurance is offered as a stand-alone policy.

B. Choice Of Plans

3.3 Medical Expense Insurance comes with choice of plans that may best meet
policy owners’ needs and budget in terms of the following:
▪ amount of general medical expenses provided by the policy, such as hospital
type and/or room and board charges;
▪ per policy year, per disability and per lifetime limits; and/or
▪ amount of deductible and/or co-insurance which he needs to bear.

3.4 These plans cover hospital charges for different wards. Plans with higher
benefits will cost more. Lower–tier plans suit individuals who choose the four to
six bedded wards in a public hospital, while the higher-tier plans are for those
who prefer double or single-bedded wards or private rooms.

3.5 The insured person is free to choose the hospital or ward type when he is
hospitalised. However, the insurer will reimburse the policy owner based only
on the plan which the insured person is insured for. Should the insured person
wish to stay in a higher-class ward (i.e. from Ward B to Ward A), the insurer will
apply the pro-ration factor accordingly.

C. Family Coverage

3.6 Unlike other types of Health Insurance, most Medical Expense Insurance
policies allow the policy owner to include immediate family members (i.e.
spouse and children) in the policy. Some insurers offer a family discount (e.g.
5%) if the application is submitted at the same time.

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3.7 Example 2.1 illustrates how the premium for a family coverage plan is
calculated.

Example 2.1: Illustration Of The Calculation Of The Premium For A Family

Coverage Plan

Assuming Mr Andy Ang is buying a policy for himself, his wife and two
children. The premium is calculated as follows:

Mr Ang S$800.00
Mrs Ang S$800.00
Two Children S$620.00
Total Gross Premium S$2,220.00
Less: 5% Family Discount (S$111.00)
Premium Payable S$2,109.00

D. Reimbursement Of Expenses

3.8 Expenses eligible for reimbursement under the Medical Expense Insurance are
those incurred during the period of insurance for medically and reasonably
necessary treatments resulting from accidents, illnesses or diseases.

3.9 Benefits under the Medical Expense Insurance are provided on a

reimbursement basis. In other words, the insurer will reimburse the policy
owner. The reimbursement is subject to a maximum dollar amount, or a limit
for each medical expense item covered under the policy and incurred by the
insured person.

3.10 For plans which do not specify the limits for each treatment, the insurer will
reimburse the actual amount of covered medical expenses incurred by the
insured person.

3.11 In other words, the policy owner is not allowed to claim more than the actual
medical treatment expenses incurred, nor can he claim more than the limits as
stated in his policy.

3.12 When the insured person receives medical treatment, he normally has to pay
the charges first, and thereafter seek reimbursement from the insurer by filing a
claim for the expenses covered under the plan. A patient claiming from an
Integrated Shield Plan approved under Medisave needs to inform the hospital
of the name of his insurer, and fill in a standard claim form. The hospital will
submit the claim for inpatient expenses on his behalf through an online network
called MediClaim System. This applies to public hospitals and major private
hospitals.

3.13 Insurers may also extend pre-authorised cashless service for planned
hospitalisation towards treatment of illness or surgery based on pre-submitted
doctor reports, diagnostics reports, and approximate amount to be incurred
within policy limits.

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E. Expense Participation

3.14 Some Medical Expense Insurance policies require the policy owner to share in
the payment of the medical expenses incurred. This requirement encourages
the insured person to keep medical expenses to a minimum, as well as filter out
small claims. In turn, this can reduce the premiums payable.

3.15 The three expense participation methods used by insurers are deductibles, co-
insurance and pro-ration factor, and all Integrated Shield Plans, including
MediShield Life Scheme, come with these features. Some insurers offer plans
with no expense participation, and these plans are payable by cash (i.e. not
Medisave approved). Obviously, these types of plans will cost a lot more. They
are more suitable for self-employed individuals who are unlikely to have any
form of Medical Expense Insurance, except maybe for their MediShield Life
Scheme and Medisave savings. Such plans will enable them to enjoy maximum
reimbursement for their hospitalisation expenses from the first dollar onwards.

3.16 Although the Integrated Shield Plans offered in Singapore come with
deductible, co-insurance and pro-ration factor, there are optional plans available
to cover the co-insurance components.

E1. Deductible

3.17 A deductible is a flat dollar amount of medical expenses that the policy owner
must pay out of his own pocket, before the insurer will begin making any
benefit payment under the policy. It is usually on a per year basis, i.e. it is
applicable again on the yearly renewal of the policy.

3.18 As mentioned, deductibles are found in all Integrated Shield Plans. It is

common to find that the deductible is tiered to the patient’s Class of Ward. The
higher the Class of Ward, the higher the deductible (e.g. Class C - S$1,500, Class
B2/B2+ - S$2,000, Class B1 - S$2,500, and Class A and private hospital -
S$3,500). The higher deductibles for higher Ward Classes are to ensure that
premiums remain affordable and that such insurance focuses on larger bills.

3.19 There are three types of deductibles as follows:

▪ per annum deductible;
▪ per disability (per year) deductible; and
▪ per disability (per claim) deductible.

3.20 Under a per annum deductible, all eligible expenses incurred by the insured
person for a variety of covered illnesses or injuries within a policy year will be
used to satisfy the deductible amount. This is the most common type of
deductible used by insurers in Singapore.

3.21 For the per disability/per year deductible, the deductible amount must be
satisfied by eligible medical expenses that are attributable to the same illness or
injury within the same policy year.

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3.22 The per disability deductible is the most restrictive, as the policy owner has to
bear the deductible for each claim, regardless of whether the claim is made
within the same policy year.

3.23 Example 2.2 illustrates how the three types of deductibles work.

Example 2.2: Illustration Of The Working Of Per Annum Deductible, Per

Disability/Per Year Deductible & Per Claim Deductible

Billy had a Medical Expense Insurance policy with a S$2,000 deductible for
the period 1 January 2023 to 31 December 2023. He suffered a high fever on
1 June 2023 and was admitted to the hospital for two days. The hospital bill
was S$800 which was within the deductible amount. On 16 July 2023, he
developed some skin problems and was hospitalised for observation and
treatment. The hospital bill was S$1,800.

For per annum deductible,

1st hospitalisation: Fever (1 June 2023)
Incurred S$800 (claims is not payable since it is within the deductible)

2nd hospitalisation: Skin (16 July 2023 – same policy year, different disability)
Incurred S$1,800
Deductible = S$1,200 (S$2,000 - S$800)
Claims payable = S$600 (S$1,800 - S$1,200)

For per disability/per year deductible, no amount would be paid from the
insurance because for each disability, the bill would be within the S$2,000
deductible.

Similarly, for per disability deductible, Billy would not be able to claim from
the insurance.

3.24 The higher the deductible, the cheaper will be the premium. Most insurers do
not impose deductibles on outpatient treatments.

3.25 Deductible is applicable separately on each of the family members insured

under the policy. For example, a husband cannot combine his medical expenses
with his wife’s medical expenses, to satisfy the deductible under the policy for
the same policy year.

E2. Co-insurance

3.26 Once the policy owner has satisfied the deductible, he is then eligible for
reimbursement under the policy. However, if there is co-insurance, he is
required to pay a specified percentage (e.g. 10%) of the total covered medical
expenses which are in excess of the deductible. This helps to reduce over-
consumption.

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3.27 Example 2.3 illustrates how the deductible and co-insurance principles are
applied to a Medical Expense Insurance policy.

Example 2.3: Illustration Of The Application Of Deductible & Co-insurance

Under A Medical Expense Insurance Policy

Charlie held a Medical Expense Insurance policy with a per annum

deductible of S$2,000 and a 20% co-insurance. He met with a car accident in
April 2023 and was admitted to the hospital for one day of observation. The
hospital charges were S$1,000. As this amount was below the deductible of
S$2,000, he had to pay the full cost of S$1,000 from his own pocket. Even
though this amount was not claimable, he was advised to file the claim with
the insurer, to count it as fulfilling part of the deductible amount for that
policy year.

In June 2023, Charlie was admitted to the hospital for removal of a kidney
stone. The total hospital bill was S$5,000. Assuming that the entire S$5,000
fell within the limit allowed under his policy, the amount payable to him by
the insurer would be S$3,200, calculated as follows:

Hospital charges S$5,000

Less: Deductible* (S$1,000)
Claimable Amount S$4,000
Less: Co-insurance (20%) (S$ 800)
Benefits Paid by Insurer S$3,200

In the 2nd hospitalisation, Charlie would need only to pay S$1,800 out of the
S$5,000 that he had incurred, and this could be settled using Medisave
and/or cash.

*Having fulfilled a S$1,000 deductible during the April 2023 hospital stay, the
deductible that Charlie must pay is the difference (i.e. S$2,000- S$1,000).

E3. Pro-ration Factor

3.28 When the insured person is admitted to a hospital and/or ward higher than
what he is entitled to under his existing insured plan, a percentage (expressed
as pro-ration factor in the benefit schedule) is applied on the actual charges
incurred and covered under the policy. Therefore, the benefit payable is
reduced, to take into account the differences in the Government subsidies
applicable to the ward type of the insured plan.

3.29 This ensures fairness within the portfolio, such that those who pay lower
premiums for lower-tier plans should be encouraged to use the services
available only on the selected plans.

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3.30 Example 2.4 illustrates how pro-ration factors, deductible and co-insurance
principles are applied to a Medical Expense Insurance policy.

Example 2.4: Illustration Of how Pro-ration Factors, Deductible and Co-

insurance works

Plan Entitlement: Restructured Hospital – any standard B1 ward

Hospitalisation: Private Hospital in Singapore
Pro-ration Factor: 35%
Ward of discharge: Standard Single Bed

Expenses Limits Amount Pro-rated Amount Amount

incurred amount covered by not
insurance covered by
Insurance
Daily room, board As charged S$4,000 S$1,400 S$1,400 S$2,600
and medical-
related services
Surgical Benefits As charged S$20,000 S$7,000 S$7,000 S$13,000
Total Bill S$24,000 S$8,400 S$8,400 S$15,600
Annual Deductibles S$3,500
Co-insurance : S$490
10% x (S$8,400 –
S$3,500)
Your Out-Of-Pocket S$19,590
Expenditure
Insurer Pays S$24,000 – S$19,590 = S$4,410

F. Benefit Limits

3.31 Some Medical Expense Insurance plans have maximum limits on the benefits
that can be claimed. The three main types of limits are as follows:

THREE MAIN TYPES OF BENEFIT LIMITS

Lifetime Annual Event

Limit Limit Limit

3.32 Lifetime limit is often set at a very high amount, e.g. S$1,000,000. This amount
is the maximum total amount of all reimbursements that the insurer is liable to
the policy owner throughout the life insured’s lifetime. Once this limit is
reached, the policy will terminate. There is no such limit in some Medical
Expense Insurance policies recently issued by some insurers.

3.33 Annual limit, lesser than lifetime limit, is the amount of reimbursable costs
payable over an annual period, either a calendar year or a policy year. Simply
stated, it is the maximum annual reimbursement for benefits payable by the
insurer as stated in the Schedule of Benefits of the policy.

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3.34 Event limit is the maximum amount payable per disability or illness under a
single claim (accumulated over a period of treatment) as defined in the policy.

3.35 There will also be limits on the individual items of the benefit schedule and
these are known as sub-limits. Examples of sub-limits are room and board
charges (S$300 per day) or surgical benefits (S$10,000 per claim). For benefits
that are represented as “as charged” (the actual amount incurred), sub-limits
are not applicable, but lifetime and annual limits will still apply.

G. Covered Charges

3.36 All Medical Expense Insurance policies will specify the expenses and its limits
covered under the plan. Charges, services and expenses are three interrelated
terms used. The covered services and treatments normally include all or some
of the following medical expenses:
▪ Room, board and medical related services;
▪ intensive care;
▪ surgery (including anaesthesia and oxygen administration);
▪ hospital consultation;
▪ ambulance services;
▪ in-hospital doctor’s fees; and
▪ specified outpatient expenses, such as specialist consultation, emergency
accidental treatment and post-hospitalisation treatment, etc.

H. Geographical Limit

3.37 Most Individual Medical Expense Insurance policies will automatically terminate
if the insured resides outside of Singapore for more than a specified period of
time (e.g. 180 days). However, some insurers will terminate the policy only if
the insured is not a Singapore Citizen or Singapore Permanent Resident (SPR).

3.38 In addition, some insurers will still pay for the medical treatments even though
the insured has resided outside of Singapore longer than the specified period
allowed. However, such medical expenses incurred overseas will be based on
the reasonable and customary charges for that specific treatment in Singapore,
and will be subject to the limits as stated in the policy.

3.39 Certain policies specify that the insured must seek treatment in Singapore.
Coverage for treatment outside Singapore is only limited to emergency medical
situations.

3.40 If the insured is a Singapore Citizen or SPR, who is stationed overseas after a
specified period of time, the insurer will usually allow policy renewal with an
additional premium. This is subject to the insured's written confirmation of the
insurance cover for the insured.

3.41 Some International Private Medical Insurance plans also allow the insured to
seek medical treatment overseas, even if the medical treatment is available in

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Singapore. However, the reimbursement of such incurred medical expenses will

be based on the reasonable and customary charges for that specific treatment
in the country of treatment, and will be subject to the limits as stated in the
policy.

I. Waiting Period

3.42 When an individual signs up for a new Health Insurance policy, the cover may
not start on the policy issue date. Insurers may impose a waiting period – a
period of time stated in the policy which must pass, before some or all of his
Health Insurance coverage can begin. In other words, the insurer is liable to pay
any claim amount filed only after this waiting period. The waiting period is not
applicable for accidental injury. This means that, in the case of injury caused by
an accident, the insured will be covered immediately.

3.43 A waiting period protects members within the portfolio, by ensuring that
individuals are not able to make claims shortly after joining and then cancelling
their membership. This kind of behaviour will result in increased premiums for
all members. Some insurers may impose a waiting period for pre-existing
conditions and maternity cover.

3.44 Waiting period are generally applied to avoid moral hazard, where the intention
of purchasing insurance is solely to claim for an ongoing treatment.

J. Age Limits

3.45 Most insurers issue this policy to people who are as young as 15 days old and
below a specified maximum age of entry, e.g. 74 or 75 years old. Children are
allowed to be insured under the parent’s policy up to the age 18 or 25 years,
provided he is still pursuing full-time tertiary education.

K. Premiums

3.46 The premiums for Medical Expense Insurance are usually age-banded and
increase as one ages. In other words, if a person crosses to the next age band,
he has to pay a higher premium upon renewal, based on the new age band that
he falls under. Premium rates are not guaranteed and may be adjusted on the
premium due date or next renewal date to account for higher claims, medical
inflation, etc. However, the insurer will need to give advance notice (e.g. 30
days) to the policy owner before effecting the premium increase.

3.47 Premiums can be payable on a monthly, quarterly, half-yearly or yearly basis,

and are normally higher for female policyholders. Note that insurers may use
the same premium tables for both male and female policyholders. Also,
premiums could be a bit higher if paid on monthly or quarterly basis to cover
administrative cost of processing premium collection multiple times in a year.

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L. Renewability

3.48 Some Medical Expense Insurance policies are issued on a guaranteed

renewable basis. This means that the insurer cannot terminate the policy owing
to poor claims experience, as long as the policy owner pays his premium to
keep the policy in force. All the IP policies are guaranteed renewable.

3.49 However, there are policies which are cancellable at the option of the insurer,
by giving a specified number of days’ notice (e.g. 60 days) to the policy owner.

M. Exclusions & Limitations

3.50 All Medical Expense Insurance policies have limitations and exclusions that
specify the circumstances under which a claim will not be payable.

3.51 Exclusions and limitations are designed for the following reasons:
▪ to avoid the possibility of a policy owner receiving reimbursement twice for
the same charges, or making a profit from his insurance;
▪ to make the premium more affordable;
▪ to define more clearly the necessary medical care and treatment; and
▪ to avoid the policy owner selecting against the insurer (i.e. anti-selection).

M1. Exclusions

3.52 The common exclusions under Medical Expense Insurance policies usually
include:
▪ pre-existing conditions that were present during a specified period (e.g. 12
months) prior to the inception of the insurance;
▪ congenital anomalies;
▪ cosmetic surgery, dental treatment and vision care;
▪ convalescent and special nursing care, general medical check-up;
▪ pregnancy, infertility, birth control, childbirth and their related complications
(unless covered under the plan);
▪ mental or nervous disorder, drug addiction and alcoholism;
▪ Acquired Immune Deficiency Syndrome (AIDS) and its related complications,
sexually transmitted diseases;
▪ flying or aerial activity, other than as a fare-paying passenger on a regularly
scheduled flight of a commercial aircraft;
▪ hazardous sports, such as mountaineering, scuba diving, ice skating, bungee
jumping, etc.;
▪ illnesses or injuries arising from war, nuclear disaster, participation in strike,
riot or civil commotion;
▪ self-inflicted injuries and injuries resulting from a criminal or unlawful act;

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▪ purchase of hospital-type equipment, such as wheelchair, dialysis machine,

etc.; and
▪ treatment for obesity, weight reduction or improvement.

3.53 Exclusions vary from insurer to insurer. Clients should be advised and
reminded to read the policy documents i.e. they need to understand the specific
exclusions imposed by their insurers.

M2. Limitations (Co-ordination Of Benefits)

3.54 Most Medical Expense Insurance policies are issued with the Co-ordination of
Benefits Clause. The purpose of this Clause is to ensure that the total claims
made by the policy owner cannot exceed the total actual medical expenses
incurred.

3.55 Hence, should the policy owner obtain payments from other sources (e.g.
employer’s Group H&S Insurance policy or Work Injury Compensation
Insurance policy, etc.), the amount payable by the insurer under a Medical
Expense Insurance policy will be reduced. This ensures that the total benefits
received will not exceed the total incurred medical expenses.

4. UNDERWRITING

4.1 The main source of underwriting information for individual Medical Expense
Insurance is the proposal form. Insurers may also ask for additional medical and
diagnostic reports. For group coverage, the employer is required to complete a
Group Insurance Fact-Finding (GIFF) Form which is the main source of
information for the underwriting assessment. For small groups (e.g. below 10
members/employees), the underwriter may also require the individual
employee to complete a health declaration form.

5. HEALTHCARE SUBSIDY LEVEL

5.1 Citizens, SPRs and foreigners in Singapore are charged differently for public
healthcare services. Citizens enjoy heavy subsidies in Class B2/B2+ and C
wards. SPRs receive significant subsidy, while foreigners are not subsidised at
all. The subsidy level differentiation reflects the privileges of citizenship, and
serves to emphasize the differentiation between citizens and SPRs. Refer to
Appendix 2C for the Table of Subsidy Level.

5.2 Owing to the differences in healthcare subsidy for citizens, SPR and foreigners,
some insurers apply a citizenship factor on the hospitalisation claims.
Citizenship factor refers to a percentage applied to the medical expenses of an
insured person (who is not a Singaporean), that is claimable under the policy.

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6. TERMINATION OF COVER

6.1 The coverage for an insured person will terminate when one of the following
events occurs:

▪ death of the insured person;

date on which the insured person

enters full-time military service,
except during National Service
reservist duty or training in
accordance with the Enlistment Act
1970;

▪ the end of the policy period during

which the insured person attains the
maximum age covered under the Applicable to both
policy (e.g. 80 years old); individual and group
policies
▪ date on which the policy is terminated;

▪ date of expiry of the period for which

the last premium payment is made on
account of the insured person’s
insurance;

▪ the total amount of claims made has

reached the lifetime limit;

▪ date of cessation of the insured Applicable to group

person as an employee. policies only

7. CLAIMS

7.1 In the event of a claim, the insured (policy owner/employer) is required to

furnish the following supporting documents to the insurer:
▪ claim form to be completed by the insured;
▪ physician’s statement by the attending doctor;
▪ discharge summary; and
▪ original medical bills.

7.2 These are the standard documents required by the insurer to assess the claim.
The insurer reserves the right to call for other necessary documents. As
mentioned previously, a patient claiming under an Integrated Shield Plan
approved under Medisave, only needs to inform the hospital of the name of the
insurer and fill in a standard claim form. The hospital will then file the claim on
his behalf for inpatient expenses, through the MediClaim System. This applies
to public hospitals and major private hospitals in Singapore.

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7.3 The policy owner is required to notify the insurer within a specified period of
time (e.g. 90 days) after the date of incurring the medical costs.

8. NOTICE NO.: MAS 117 - TRAINING AND COMPETENCY REQUIREMENTS –

HEALTH INSURANCE

8.1 This Notice issued on 26 January 2004 and last revised on 16 April 2020, is
issued pursuant to sections 71 and 154(4) of the Insurance Act 1966 and
(a) applies to:
(i) a direct insurer;
(ii) a direct insurance broker;
(iii) an exempt direct insurance broker;
(iv) a licensed financial adviser; or
(v) an exempt financial adviser,

who engages in health insurance product business, regardless of whether it

carries on any other business; and

(b) applies to—

(i) any person employed by or who acts as an insurance agent for a direct
insurer, other than a Trade Specific Agent;
(ii) any person employed by or who acts for a direct insurance broker or an
exempt direct insurance broker; or
(iii) any person employed by or who acts as an appointed representative for
a licensed financial adviser or an exempt financial adviser,

who provides advice or arranges insurance contracts, or both, in respect of

health insurance products.

8.2 This Notice sets out the minimum examination requirements and continuing
professional development (“CPD”) requirements in respect of shield plans.
Please refer to Appendix 2D for Notice No: MAS 117 which has been entirely
extracted from MAS website.

8.3 The last revision of Notice No: MAS 117 on 16 April 2020 also outlined certain
relief measures during the COVID-19 situation as detailed in paras 7A to 7D of
the Notice as detailed in Appendix 2D.

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APPENDIX 2A

ABCLife Ltd
21 Any Street, ABC Centre, Singapore 654321
Tel: (65) 6789 8181 Fax: (65) 6789 8282

SAMPLE MEDICAL EXPENSE INSURANCE (WITH SUB-LIMITS)

Core Benefits Benefit Limits

Room & Board Daily Limits
(max. 90 days per Disability $300
Period per Policy Year)
Intensive Care Unit
(max.15 days per Disability
Period per Policy Year)
In-Patient Doctor/ Specialist
Consultation
Pre-Hospitalisation Benefits
(max. 30 days before date of
hospitalisation)
Post-Hospitalisation Treatment
(max. 90 days after date of As Charged
discharge)
Surgical Benefits
Emergency Dental Treatment
Emergency Outpatient
Accidental Treatment
Emergency Ambulance Service
Miscellaneous Hospital
Expenses
Annual Limit for Core Benefits S$100,000
Additional Benefits
Outpatient
Kidney Dialysis Treatment S$50,000
(annual limit)
Outpatient Cancer Treatment S$50,000
In-Patient Organ Transplant S$50,000
Lifetime Limit for Core Benefit S$500,000
& Additional Benefits
Emergency Assistance Services Available

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APPENDIX 2B
SAMPLE SCHEDULE OF SURGICAL BENEFITS

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APPENDIX 2C

Subsidies for Acute Inpatient Care At Public Healthcare Institutions

Singapore
Singapore Permanent
Ward Class/ Citizen Residents
Service Type Subsidy Level Subsidy Level
Class B2+ 35 – 50% 15 – 25%
Class B2/C 50 – 80% 25 – 50%

Source: https://www.moh.gov.sg/healthcare-schemes-subsidies/subsidies-
for-acute-inpatient-care-at-public-healthcare-institutions

Only Singaporeans and Permanent Residents (PRs) are eligible for hospital
subsidies at public healthcare institutions. Subsidy depends on the choice
of ward class, resident status, and the monthly per capital household
income or annual value of your property.

Source: MOH Website

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APPENDIX 2D

Notice No : MAS 117

Issue Date : 26 January 2004

Last revised on: 16 April 2020*

(Refer to endnote for history of amendments)

TRAINING AND COMPETENCY REQUIREMENT: HEALTH INSURANCE

Introduction

1. This Notice is issued pursuant to sections 71 and 154(4) of the Insurance Act
1966 [“the Act”] and—

(a) applies to—

(a) a direct insurer;

(b) a direct insurance broker;
(c) an exempt direct insurance broker;
(d) a licensed financial adviser; or
(e) an exempt financial adviser,

who engages in health insurance product business, regardless whether it

carries on any other business; and

(b) applies to—

(i) any person employed by or who acts as an insurance agent for a

direct insurer, other than a Trade Specific Agent;

[MAS 117 (Amendment) 2010, wef 11 Aug 2010]

(ii) any person employed by or whos act for a direct insurance broker or
an exempt direct insurance broker; or
(iii) any person employed by or who acts as an appointed representative
for a licensed financial adviser or an exempt financial adviser,

[MAS 117 (Amendment) 2010, wef 26 Nov 2010]

who provides advice on or arranges contracts, of insurance, or both in respect of

health insurance products.

1A. This Notice sets out the following:

(a) minimum examination requirements; and
(b) continuing professional development (“CPD”) requirements in respect of
shield plans.

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

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Definitions

2. For the purpose of this Notice—

“Agents’ Registration Board” means the board set up by the General Insurance
Association of Singapore (“GIAS”) to register any general insurance agent
representing one or more licensed insurers engaged in general business;

[MAS 117 (Amendment) 2010, wef 11 Aug 2010]

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

“business day” means any calendar day, other than a Saturday, Sunday or
public holiday;
[MAS 117 (Amendment) 2020, wef 16 Apr 2020]

“exempt financial adviser” means a person exempt from holding a financial

adviser’s licence under section 23(1)(a) to (e) of the Financial Advisers Act
(Cap. 110);

“exempt direct insurance broker” means a person exempt from registration as

a direct insurance broker under section 35ZN(1)(a) to (ea) of the Act;

[MAS 117 (Amendment) 2010, wef 11 Aug 2010]

“health insurance product” means a life policy with accident and health
benefits or an accident and health policy, but excludes such policy where
accident and health benefits are paid out only—

(a) in the event of an injury to, or disability of, the insured as a result of an
accident;
(b) in the event that the insured becomes total and permanently disabled;
(c) on the death of the insured by accidental cause; or
(d) on the occurrence of a combination of the events set out in (a) to (c);

[MAS 117 (Amendment) 2010, wef 11 Aug 2010]

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

“integrated shield plan” has the same meaning as in regulation 2 of the

MediShield Life Scheme (Private Medical Insurance Scheme) Regulations;

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

“MediShield Life Scheme” means the Scheme established under section 3 of

the MediShield Life Scheme Act 2015 (No. 4 of 2015);

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

“non-integrated shield plan” has the same meaning as in regulation 2 of the

MediShield Life Scheme (Private Medical Insurance Scheme) Regulations;

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

“relevant date” means the earliest of the dates mentioned in paragraph 7A(c),

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(d) or (e);
[MAS 117 (Amendment) 2020, wef 16 Apr 2020]

“shield plan” means an integrated shield plan or non-integrated shield plan;

and

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

“Trade Specific Agent” means an insurance agent for a direct general insurer
who is —

(a) not carrying on business in Singapore as the insured core business;

and
(b) registered with the Agents’ Registration Board pursuant to paragraph 6
of MAS Notice 211.

[MAS 117 (Amendment) 2010, wef 11 Aug 2010]

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

3. The expressions used in this Notice shall, except where expressly defined in this
Notice or where the context otherwise requires, have the same respective meanings as
in the Act.

MINIMUM EXAMINATION REQUIREMENTS

Requirements to pass the health insurance module

4. Subject to paragraphs 6, 7 and 7A, any individual—

[MAS 117 (Amendment) 2020, wef 16 Apr 2020]
(a) who—

(i) is employed by or acts as an insurance agent for a direct insurer,

other than a Trade Specific Agent;

[MAS 117 (Amendment) 2010, wef 11 Aug 2010]

(ii) is employed by or acts for a direct insurance broker or an exempt

direct insurance broker; or

(iii) is employed by or acts as an appointed representative for a licensed

financial adviser or an exempt financial adviser;

[MAS 117 (Amendment) 2010, wef 11 Aug 2010]

and

(b) who wishes to provide advice on or arrange contracts, of insurance, or

both, in respect of health insurance products,

is required to pass the health insurance module conducted by the Singapore College of
Insurance (SCI).

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5. Subject to paragraph 7B, a direct insurer, a direct insurance broker, an exempt

direct insurance broker, a licensed financial adviser or an exempt financial adviser shall
ensure that any individual it employs or, where applicable, who acts for it, acts as its
insurance agent or acts as its appointed representative, complies with the requirement
in paragraph 4.

[MAS 117 (Amendment) 2010, wef 26 Nov 2010]

[MAS 117 (Amendment) 2020, wef 16 Apr 2020]

Exclusion

6. Any individual—

(a) who, prior to 1 January 2002,—

(i) is employed by or acts as an insurance agent for a direct insurer; or

(ii) is employed by or acts for a direct insurance broker or an exempt

direct insurance brokers;

and

(b) who has been providing advice or arranging contracts, of insurance, or

both, in respect of health insurance products that contain what is
commonly known as critical illness benefit as the only accident and health
benefits in the product,

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

is not required to comply with the requirement in paragraph 4 if the insured has
completed a non-examinable course on critical illness insurance conducted by SCI or
an approved in-house course covering SCI’s syllabus on critical illness insurance by 1
July 2002.

7. Any individual—

(a) who, —

(i) is employed by or acts as an insurance agent for a direct insurer;

(ii) is employed by or acts for a direct insurance broker or an exempt

direct insurance brokers;

(iii) is employed by or acts as an appointed representative for a licensed

financial adviser or an exempt financial adviser;

[MAS 117 (Amendment) 2004, wef 13 Feb 2004]

[MAS 117 (Amendment) 2010, wef 26 Nov 2010]

and

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(b) who provides advice on or arranges contracts of insurance, or both in

respect of health insurance products that contain what are commonly
known as critical illness benefit or hospital income benefit, or both, as the
only accident and health benefits in the product,

is not required to comply with the requirement in paragraph 4 if the insured has
obtained passes in any of the following modules:

(i) Certificate in General Insurance - Basic Insurance Concepts &

Principles and Personal General Insurance;
(ii) Capital Markets & Financial Advisory Services Module 9: Life
Insurance and Investment-Linked Policies.

[MAS 117 (Amendment) 2004, wef 13 Feb 2004]

Relief Measures During the COVID-19 Situation

7A An individual

(a) who —

(i) is employed by or is appointed to act as an insurance agent for a

direct insurer;
(ii) is employed by or is appointed to act for a direct insurance broker or
an exempt direct insurance broker; or
(iii) is employed by or is appointed to act as an appointed representative
for a licensed financial adviser or an exempt financial adviser, and

(b) who wishes to commence providing advice on or arranging contracts of

insurance, or both, in respect of health insurance products, between 16
April 2020 and 30 September 2020 (both dates inclusive),

is not required to comply with the requirement in paragraph 4, for a period of six
months (or such longer period as may be allowed by the Authority in writing) from the
earliest of the following dates:

(a) the date the individual commences providing advice on health insurance
products;
(b) the date the individual commences arranging contracts of insurance in
respect of health insurance products;
(c) the date the individual commences providing advice on health insurance
products and arranging contracts of insurance in respect of health insurance
products.

[MAS 117 (Amendment) 2020, wef 16 Apr 2020]

7B Any –
(a) direct insurer which employs, or appoints to act as its insurance agent, an
individual mentioned in paragraph 7A(a)(i) who wishes to commence
activities mentioned in paragraph 7A(b);
(b) direct insurance broker or exempt direct insurance broker, which employs, or

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appoints to act for it, an individual mentioned in paragraph 7A(a)(ii) who

wishes to commence activities mentioned in paragraph 7A(b);

(c) licensed financial adviser or exempt financial adviser, which employs, or

appoints to act as its appointed representative, an individual mentioned in
paragraph 7A(a)(iii) who wishes to commence activities mentioned in
paragraph 7A(b);

is not required to comply with the requirement in paragraph 5 in respect of that

individual for a period of six months from the relevant date (or such longer period as
may be allowed by the Authority in writing).
[MAS 117 (Amendment) 2020, wef 16 Apr 2020]

7C A direct insurer, a direct insurance broker, an exempt direct insurance broker, a

licensed financial adviser or an exempt financial adviser which relies on the
exemption under paragraph 7B must for the duration where the individual relies
on the exemption under paragraph 7A (called in this paragraph the “relevant
individual”) –

(a) put in place measures1 to properly supervise the activities and conduct of the
relevant individual, including measures to ensure that all obligations
assumed and liabilities incurred by the relevant individual are properly
fulfilled, whether actual or contingent and howsoever arising, in relation to
the provision of advice on or arrangement of contracts of insurance or both,
in respect of health insurance products, by the relevant individual;

and

(b) put in place measures, including proper training, to ensure that the relevant
individual understands and complies with all Singapore laws that are
relevant to the provision of advice on or arrangement of contracts of
insurance or both, in respect of health insurance products, by the relevant
individual.

[MAS 117 (Amendment) 2020, wef 16 Apr 2020]

____________________

1
The direct insurer, direct insurance broker, exempt direct insurance broker, licensed
financial adviser and exempt financial adviser may refer to the Frequently Asked
Questions (FAQs) on Relief Measures Relating to COVID-19 Situation - General
Insurance and Health Insurance Examinations and Continuing Professional
Development Requirements.

7D Where a direct insurer, a direct insurance broker, an exempt direct insurance

broker, a licensed financial adviser or an exempt financial adviser (called in this
paragraph a “relevant person”) employs or, where applicable, appoints to act for
it, or appoints to act as its insurance agent or appointed representative, as the
case may be, an individual who relies on the exemption under paragraph 7A, the
relevant person must submit to the Authority all of the following information,
within three business days from the relevant date –

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(a) the individual’s name;

(b) the relevant date;
(c) the individual’s representative number, if applicable.
[MAS 117 (Amendment) 2020, wef 16 Apr 2020]
Additional requirements

8. A direct insurer shall not accept any business in respect of any health insurance
product from any individual whom it employs or who acts as its insurance agent and
who has not complied with the requirement in paragraph 4 and does not fall under
paragraphs 6, 7 or 7A of this Notice.

[MAS 117 (Amendment) 2020, wef 16 Apr 2020]

9. A direct insurance broker, an exempt direct insurance broker, a licensed

financial adviser or an exempt financial adviser shall not pass on any business in
respect of any health insurance product to an insurer if it is received from any
individual whom it employs or, where applicable, who acts for it or acts as its
appointed representative, and who has not complied with the requirement in paragraph
4 and does not fall under paragraphs 6, 7 or 7A of this Notice.

[MAS 117 (Amendment) 2010, wef 26 Nov 2010]

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]
[MAS 117 (Amendment) 2020, wef 16 Apr 2020]

CPD REQUIREMENTS IN RESPECT OF SHIELD PLANS

Minimum number of CPD training hours required

9A. Any individual—

(a) who—

(i) is employed by or acts as an insurance agent for a direct insurer,

other than a Trade Specific Agent;
(ii) is employed by or acts for a direct insurance broker or an exempt
direct insurance broker; or
(iii) is employed by or acts as an appointed representative for a licensed
financial adviser or an exempt financial adviser;

and

(b) who wishes to provide advice on or arrange contracts of insurance, or

both, in respect of shield plans,

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Health Insurance

is required to complete a minimum of 2 hours of structured CPD training2 on –

(i) MediShield Life Scheme content;

(ii) shield plan content; or
(iii) a combination of MediShield Life Scheme content and shield plan
content,

before the end of each calendar year (or within such longer period as may be allowed
by the Authority in writing).

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

[MAS 117 (Amendment) 2020, wef 16 Apr 2020]

Exclusion

9B. Any individual—

(a) who—

(i) is employed by or acts as an insurance agent for a direct insurer,

other than a Trade Specific Agent;

(ii) is employed by or acts for a direct insurance broker or an exempt

direct insurance broker; or

(iii) is employed by or acts as an appointed representative for a licensed

financial adviser or an exempt financial adviser;

and

(b) who wishes to provide advice on or arrange contracts of insurance, or

both, in respect of shield plans,

is not required to comply with the requirement in paragraph 9A,

(i) for the calendar year that he passes the health insurance module
conducted by SCI; or

(ii) for the calendar year that he was appointed, if he was appointed
anytime between 1 October and 31 December (both dates inclusive)
of that calendar year.

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

_________________
2
Structured CPD training includes lectures, conferences, workshops and courses, which
have clear learning objectives and outcomes, and such learning objectives and
outcomes are clearly documented and independently verified. Structured CPD training
excludes activities that are part of the job scope of the individual referred to in
paragraph 9A such as carrying out research on products and services for clients but will
include product seminars prior to the launch of new products and e-learning courses.

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 2. Medical Expense Insurance

9C. A direct insurer, a direct insurance broker, an exempt direct insurance broker, a
licensed financial adviser or an exempt financial adviser shall ensure that any individual
it employs or, where applicable, who acts as its insurance agent or appointed
representative complies with the requirements in paragraph 9A.

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

9D. A direct insurer, a direct insurance broker, an exempt direct insurance broker, a
licensed financial adviser or an exempt financial adviser shall obtain, and retain for a
period of 5 years from the date of the written records, written records and supporting
documents that show that any individual which it employs or who acts as its insurance
agent or appointed representative has complied with the requirements in paragraph
9A.

[MAS 117 (Amendment) 2015, wef 1 Jan 2016]

Contravention of requirements imposed

10. Contravention of any requirement imposed under this Notice is an offence and
attracts the penalty specified in section 55(2) of the Act.

Commencement and cancellation

11. This Notice shall take effect on 26 January 2004. Notice MAS 117 on “Training
and Competency Requirement: Health Insurance Module” dated 31 December 2002 is
cancelled.

*Endnotes of History of Amendments

1. MAS Notice 117 (Amendment) 2004 dated 13 February 2004 with effect from 13
February 2004
2. MAS Notice 117 (Amendment) 2010 dated 11 August 2010 with effect from 11
August 2010
3. MAS Notice 117 (Amendment) 2010 dated 26 November 2010 with effect from 26
November 2010
4. MAS Notice 117 (Amendment) 2015 dated 28 December 2015 with effect from 1
January 2016
5. MAS Notice 117 (Amendment) 2020 dated 16 April 2020 with effect from 16 April
2020

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CHAPTER
02
MEDICAL EXPENSE INSURANCE

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Three broad categories of • A reimbursement for the cost of medical treatment or nursing care; or
Health Insurance • A periodic income upon disability or hospitalisation; or
• A fixed cash amount upon disability or suffering from a major illness.
Types of coverage • Inpatient expenses.
provided under a Medical • Outpatient expenses.
Expense Insurance policy • Major Outpatient Treatment
Some policies also extend cover to include:
• Emergency medical evacuation.
• Private nursing home care.
Limits on the covered Medical Expense Insurance policies provide separate benefits for the different
expenses expenses covered. While most insurers now offer plans that have “as charged” (the
actual amount incurred) benefits, there are still many plans that impose sub-limits,
e.g. based on a table of surgical operations and a maximum limit on Room & Board
benefit, etc. MediShield Life is just one of the Medical Expense Insurance schemes
with limits imposed. Besides the limits, deductibles and co-insurance are also
common features of these policies. Also, all policies are subject to per policy year/
period and lifetime claimable limits.

Key features of Medical Expense Insurance

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Stand-alone In Singapore, Medical Expense Insurance is offered as a stand-alone policy.
Choice of plans Insurers normally offer Medical Expense Insurance with a variety of plans, giving the
policy owner the option to choose a plan that best meets his needs and budget.
Family coverage Unlike other types of Health Insurance, most Medical Expense Insurance policies
allow the policy owner to include immediate family members (i.e. spouse and
children) in the policy. Most insurers also give the policy owner the flexibility of
selecting different plans for his family members. In addition, some insurers give a
family discount (e.g. 5%) if the application is submitted at the same time.
Reimbursement of Benefits under the Medical Expense Insurance are provided on a reimbursement
expenses basis, i.e. the insurer will reimburse the policy owner up to a maximum dollar
amount, or limit for each medical expense item covered under the policy which the
insured person incurs.
Expense participation • A deductible is a flat dollar amount of medical expenses that the policy owner
(deductible, co-insurance must pay out of his own pocket, before the insurer will begin making any
and pro-ration factor) benefit payment under the policy. It is usually on a per year basis, i.e. it is
applicable again on the yearly renewal of the policy.
• Once the policy owner has satisfied the deductible, he is then eligible for
reimbursement under the policy. However, if there is co-insurance, he is
required to pay a specified percentage (e.g. 10%) of the total covered medical
expenses which are in excess of the deductible. This helps to reduce over-
consumption.
• When the insured person is admitted to a hospital better than and/or ward
higher than what he is entitled to under his existing insured plan, a percentage
(expressed as pro-ration factor in the benefit schedule) is applied on the actual
charges incurred and covered under the policy. Therefore, the benefit payable
is reduced, to take into account the differences in the Government subsidies
applicable to the ward type of the insured plan.

2
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Benefit limits • Lifetime limit. This amount is the maximum total amount of all reimbursements
that the insurer is liable to the policy owner throughout the life insured’s
lifetime.
• Annual limit. It is the maximum annual reimbursement for benefits payable by
the insurer as stated in the Schedule of Benefits of the policy.
• Event limit. The maximum amount payable per disability or illness as defined in
the policy
Covered charges All Medical Expense Insurance policies will specify the expenses and its limits
that will be covered under the plan. Charges, services and expenses are three
interrelated terms used.
Geographical limit Most Individual Medical Expense Insurance policies will automatically terminate if
the insured resides outside of Singapore for more than a specified period of time
(e.g. 180 days). However, some insurers will terminate the policy only if the insured
is not a Singapore Citizen or Singapore Permanent Resident (SPR).
Waiting period A period of time stated in the policy which must pass, before some or all of his
Health Insurance coverage can begin. In other words, the insurer is liable to pay
any claim amount filed only after this waiting period. The waiting period is not
applicable for accidental injury. This means that, in the case of injury caused by an
accident, the insured will be covered immediately.
Age limits Most insurers issue this policy to people who are as young as 15 days old and below
a specified maximum age of entry, e.g. 74 or 75 years old. Children are allowed
to be insured under the parent’s policy up to the age 18 or 25 years, if he is still
pursuing full-time tertiary education.
Premiums The premiums for Medical Expense Insurance are usually based on age band and
increase as one ages, i.e. if a person crosses to the next age band, he has to pay
a higher premium upon renewal, based on the new age band that he falls under.
Premium rates are not guaranteed and may be adjusted on the premium due date
or next renewal date to account for higher claims, medical inflation, etc.
Renewability Some Medical Expense Insurance policies are issued on a guaranteed renewable
basis. This means that the insurer cannot terminate the policy owing to poor claims
experience, so long as the policy owner pays his premium to keep the policy in
force. All the IP policies are guaranteed renewable.
Common exclusions under • Pre-existing conditions that were present during a specified period (e.g. 12
Medical Expense Insurance months) prior to the inception of the insurance;
• Congenital anomalies;
• Cosmetic surgery, dental treatment and vision care;
• Convalescent and special nursing care, general medical check-up;
• Pregnancy, infertility, birth control, childbirth and their related complications;
• Mental or nervous disorder, drug addiction and alcoholism;
• Acquired Immune Deficiency Syndrome (AIDS) and its related complications,
sexually transmitted diseases;
• Flying or aerial activity, other than as a fare-paying passenger on a regularly
scheduled flight of a commercial aircraft;
• Hazardous sports, such as mountaineering, scuba diving, ice skating, bungee
jumping, etc.;
• Illnesses or injuries arising from war, nuclear, participation in strike, riot or civil
commotion;
• Self-inflicted injuries and injuries resulting from a criminal or unlawful act;
• Purchase of hospital-type equipment, such as wheelchair, dialysis machine, etc.;
and
• Treatment for obesity, weight reduction or improvement.

Exclusions vary from insurer to insurer. Clients should be advised and reminded
to read the policy documents i.e. they need to understand the specific exclusions
imposed by their insurers.

3
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Limitations (co-ordination • The purpose of this Clause is to ensure that the total claims made by the policy
of benefits) under Medical owner cannot exceed the total actual medical expenses incurred.
Expense Insurance • Should the policy owner be able to obtain payments from other sources, the
amount payable by the insurer under a Medical Expense Insurance policy will
be reduced, so that the total benefits received will not exceed the total incurred
medical expenses.
Underwriting The main source of underwriting information for individual Medical Expense
requirements for both Insurance is the proposal form. For group coverage, the employer is required to
individual and group complete a Group Insurance Fact-Finding (GIFF) Form which is the main source
covers of information for the underwriting assessment. For small groups (e.g. below 10
members/employees), the underwriter may also require the individual employee to
complete a health declaration form.
Subsidy distinction Owing to the differences in healthcare subsidy for citizens, SPR and foreigners,
between citizens and non- some insurers apply a citizenship factor on the hospitalisation claims. Citizenship
citizens factor means a percentage applied to the medical expenses of an insured person
(who is not a Singaporean), that is claimable under the policy.
When the coverage of an • Death of the insured person.
insured person under a • Date on which the insured person enters into full-time military service, except
Medical Expense Insurance during National Service reservist duty or training in accordance with the
policy will terminate Enlistment Act 1970.
• The end of the policy period during which the insured person attains the
maximum age covered under the policy (e.g. 80 years old).
• Date on which the policy is terminated.
• Date of expiry of the period for which the last premium payment is made on
account of the insured person’s insurance.
• The total amount of claims made has reached the lifetime limit.
• Date of cessation of the insured person as an employee. Applicable to group
policies only.
Documents to be • Claim form to be completed by the insured;
furnished in the event of a • Physician’s statement by the attending doctor;
claim • Discharge summary; and
• Original medical bills.

These are the standard documents required by the insurer to assess the claim. The
insurer reserves the right to call for other necessary documents.

4
Health Insurance

CHAPTER 3
GROUP HOSPITAL AND SURGICAL INSURANCE

CHAPTER OUTLINE

1. Introduction
2. Group Insurance
3. Group Hospital & Surgical (GHS) Insurance
4. Medical Insurance Requirements for Migrant Workers
5. Portable Medical Benefits

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ know the criteria for a group to be eligible for Group Insurance cover
▪ state the characteristics of a Group Insurance policy
▪ understand the Medical Insurance requirements for foreign workers
▪ explain the differences between a compulsory and a voluntary plan
▪ list the advantages of a compulsory plan and a voluntary plan
▪ understand the differences between Individual Medical Expense Insurance and GHS
Insurance
▪ know how the medical insurance for migrant workers works
▪ understand the three options available to employers to qualify for tax deductions
and help employees keep their medical benefits
▪ know how Portable Medical Benefit Scheme (PMBS) works
▪ understand how the Transferable Medical Insurance Scheme (TMIS) works
▪ know the criteria for an employer to be eligible for the TMIS
▪ explain the two main features under the TMIS, namely:
- continuation benefit
- transferability benefit
▪ list the medical expenses that qualify under the TMIS Special Benefit
▪ state the differences between PMBS and TMIS
▪ understand tax deductions with Shield Plan provision
▪ understand tax deductions for ad-hoc MediSave contributions

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Contents
CHAPTER OUTLINE .......................................................................................................... 50
LEARNING OUTCOMES ................................................................................................... 50
1. INTRODUCTION ...................................................................................................... 52
2. GROUP INSURANCE ............................................................................................... 52
3. GROUP HOSPITAL & SURGICAL (GHS) INSURANCE........................................... 53
A. Compulsory & Voluntary Plans ....................................................................... 53
A1. Advantages Of A Compulsory (Non-Contributory) Plan ......................... 54
A2. Advantages Of A Voluntary (Contributory) Plan...................................... 54
B. Individual Versus Group Insurance ................................................................. 54
4. MEDICAL INSURANCE REQUIREMENTS FOR MIGRANT WORKERS .................. 55
5. PORTABLE MEDICAL BENEFITS ............................................................................ 56
A. Portable Medical Benefits Scheme (PMBS) .................................................... 57
B. Transferable Medical Insurance Scheme (TMIS)............................................ 58
B1. How To Qualify For The TMIS?................................................................. 58
B2. How Can The Two TMIS Features Benefit The Employees? ................... 58
B3. What Are The Medical Expenses That Qualify Under TMIS Special
Benefits? .................................................................................................... 60
B4. Who Are The Employees Eligible For TMIS Benefits?............................. 60
B5. How Are The Claims Paid? ........................................................................ 60
B6. How Insurers Verify The Eligibility Of An Employee Under The TMIS? . 60
B7. Will It Cost More For A Company To Adopt The TMIS?.......................... 60
C. PMBS Versus TMIS .......................................................................................... 61
D. Providing a Shield Plan .................................................................................... 61
E. Ad-hoc Contributions To Employees' MediSave Accounts ........................... 62

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1. INTRODUCTION

1.1 This chapter aims to give you an understanding of Group Hospital & Surgical
(GHS) Insurance You will also learn about three schemes that will not only
help employer qualify for tax deductible but also employees to keep their
medical benefits if they change jobs.

Portable Transferable

2. GROUP INSURANCE

2.1 Group Insurance, one example being the Employee Benefit

Insurance, provides coverage to many people under one
master policy. The requirement is that several people must first be members
of a group, before they can be eligible to purchase the insurance. The group
must have been formed for some purposes other than to obtain insurance,
such as companies, trade unions, professional associations and clubs.

2.2 The characteristics of Group Insurance include:

(a) Master Contract – Group Insurance is issued under a single contract
called the master contract which is kept by the master, i.e. employer,
club or association. Unlike individual insurance, when an insured
member of the contract dies or leaves the group, only this member’s
coverage is terminated. The plan itself will still carry on, because it
belongs to the holder of the master contract. For example, under a
company’s Group Insurance policy, the employer is the policy owner,
while the employees or any of their immediate family members (spouse
and children) if included are the insured persons.

(b) Minimal Underwriting Requirements – If the group size is large enough,

the underwriter may either require the members to complete a health
declaration form, a simplified application form, or waive all underwriting
requirements and rely on the pre-existing condition exclusion clauses in
their policies. This is to avoid anti-selection risks.

(c) Experience-rating – It is usually underwritten based on the past claims

experiences of the group to be insured. Such a practice is called
experience-rating.

(d) Cost Effectiveness – It provides low-cost protection owing to savings in

administrative costs, since only one Group Insurance policy is issued.

(e) Plan Continuation – The plan is usually renewable on a yearly basis. As

such, at the end of each policy period, your corporate client will need to
review the plan to assess the comprehensiveness of the coverage. You
have to advise your client on this aspect.

(f) Eligibility Requirements – Group Insurance policies usually define

eligible members as those in a specified class. For example, most Group
Insurance policies state that an employee must work full-time, in order to

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 3. Group Hospital And Surgical Insurance

be eligible for coverage. Part-time workers will be excluded from the

class of eligible employees. Others include age specifications, e.g. from
the age of 16 to 65 years and that the insured employees have to be
Singaporeans, Singapore Permanent Residents (SPRs), or holders of
valid employment passes in order to be eligible.

2.3 In addition, Group Insurance policies have an “actively-at-work” clause which

requires an employee to be actively at work on the day insurance coverage
takes effect to be eligible. . If an employee is on sick leave or annual leave on
the day that the insurance coverage takes effect, he will not be covered by the
Group Insurance policy.

3. GROUP HOSPITAL & SURGICAL (GHS) INSURANCE

3.1 GHS Insurance policies are more often purchased by employers as part of
their employee benefits package. The coverage of GHS policies can be
extended to the employees’ immediate family members (spouses and
children). An example on how the cover may be arranged for an employee
and his immediate family members under a GHS policy is shown in Table 3.1.

Table 3.1: Example On How The Cover May Be Arranged For An Employee
And His Immediate Family Members Under A Group Medical Insurance Policy

Insured Person Commencement Date Of Cover

New employee and Date of employment or date of
dependants confirmation upon probation.
New dependants (provided Spouse – at any time within a specified
that employee is already period of time after marriage.
insured)
Child – at any time between 15 and 30
days after birth.
Employer effects a new Group Medical Insurance policy
Compulsory Plan – Employee and dependants will be covered from the date
of commencement of the policy, as long as the employee is actively at work
or on normal paid leave.

Voluntary Plan – Employee and dependants can join the scheme at any time
within a specified period of time (usually 30 days) from the commencement
date of the policy or the enrolment period.

Note: Most insurers will grant the cover only to the employee’s dependants
who are residing in Singapore.

A. Compulsory & Voluntary Plans

3.2 Group Insurance policies can be issued on a compulsory or voluntary basis.

For a compulsory (also known as non-contributory) plan, all eligible

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Health Insurance

employees must be covered under the plan, and the premiums have to be
paid solely by the employer. A voluntary (also known as contributory) plan, on
the other hand, does not require full participation from the employees who
may be expected to pay part of the premiums. However, the insurer will
normally require a minimum number of employees or percentage (e.g. 75%)
of participation in the plan. The advantages of both types of plans are
described below:

A1. Advantages Of A Compulsory (Non-Contributory) Plan

(a) It provides ease of administration, since there is no regular payroll

deduction to monitor.
(b) It comes with lower costs owing to less administrative work involved,
and the greater pooling effect of risks as a result of many lives insured.
(c) It helps the employer to retain greater control of the benefit structures
and provisions.

A2. Advantages Of A Voluntary (Contributory) Plan

(a) Employer
▪ Participating employees assume part of the costs of the benefits as
provided under the Group Insurance plan.
▪ It generates interest and appreciation from the participating
employees of the Group Insurance plan.

(b) Employees
▪ It gives the participating employees some control over the Group
Insurance plan.
▪ They can obtain coverage at a lower premium rate than buying it
individually.

B. Individual Versus Group Insurance

3.3 There are some differences between Individual and Group Insurance. Table
3.2 shows the differences between them.

Table 3.2: Differences Between Individual & Group Insurance

Individual Insurance Group Insurance

Eligibility Only the individual who Only members who belong to the
applies for the coverage group and are actively at work are
is covered. covered.

An individual needs Members under a group must

only to be insurable, in satisfy the eligibility requirements
order to be granted the as stated in the Group Insurance
coverage. policy, before they are granted the
coverage.

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 3. Group Hospital And Surgical Insurance

Individual Insurance Group Insurance

Contract Each individual policy Only one master contract is issued
owner gets a policy to the employer or an affiliated
contract. organisation. The number of
insured members is more than
one.
Choice of An individual policy Insured members may or may not
Plan owner has the right to have the right to decide on the
select the amount of amount of coverage that they
coverage that he wants. want. In the employer-paid
plans/compulsory plans, the
amount of coverage is determined
by the employer.
Underwriting Individual’s health Group as a whole is evaluated
history, lifestyle and depending on the gender and age
financial status are distribution of the group,
evaluated. occupation mix and past claims
experience.
Termination Coverage continues The individual life insured’s
of Cover until the individual or coverage stops when he leaves
insurer chooses to the group. However, the insurance
terminate it. plan continues for the remaining
members.
Premium Cost of coverage is Cost of coverage is lower because
higher because of of group underwriting and lower
individual underwriting administrative costs.
and higher
administrative costs. Premium is unit-related.

Premium is age-related.

3.4 The above information is a general description of how a Group Insurance

policy works. It applies not only to GHS policies, but also to all other types of
Health Insurance policies, which you will learn about in the chapters that
follow.

4. MEDICAL INSURANCE REQUIREMENTS FOR MIGRANT WORKERS

4.1 Since 1 January 2008, subsidies on hospital bills for foreigners have been
removed. With this revision, the Ministry of Manpower (MOM) requires every
employer to buy, pay and maintain a minimum Medical Insurance coverage
for its foreign workers and foreign domestic workers (maids) during their
employment stay in Singapore This insurance is compulsory for every S Pass
holder and Work Permit holder before MOM issues or renews their work
permit.

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4.2 From 1 July 2023, this insurance coverage has been enhanced for all new and
existing work permit holders in two stages as shown in the table below:

To implement for MI policies, Enhanced MI requirements

renewals or extensions with start
date effective from
1 July 2023 (Stage 1) Higher annual claim limit of at least
S$60,000, with a co-payment of 75%
by insurers and 25% by employers for
claim amounts above S$15,000.
1 July 2025 (Stage 2)  Standardisation of allowable
exclusion clauses
 Introduction of age-differentiated
premiums for those aged 50 and
below, and those aged above 50
 Requirement for insurers to
reimburse hospitals directly upon
the admissibility of the claim
Source: https://www.mom.gov.sg/passes-and-permits/work-permit-for-foreign-
worker/sector-specific-rules/medical-insurance

4.3 Employers may purchase a medical insurance coverage of between S$15,000

to S$60,000 per year for each migrant worker which covers medical bill
incurred for inpatient and day surgery, including hospital bills for conditions
that may not be work related. For coverages above S$15,000, employers co-
pay 25%.

4.4 Employers can have a co-payment arrangement with the Work Permit holder
(excluding migrant domestic workers) if the following conditions are met:
 The co-pay amount is reasonable and does not exceed 10% of the
employee’s monthly salary.
 The duration of co-payment does not exceed six (6) months (for every 2
years of employment).
 The co-payment option is explicitly in the employment contract or
collective agreement and has the worker’s full consent.

5. PORTABLE MEDICAL BENEFITS

5.1 From 1 July 2023, this insurance coverage has been enhanced for all new and
existing work permit holders in two stages.

5.2 With shorter employment tenure and frequent job changes in the tight labour
market, employees will need continuous inpatient medical provision, when
they change jobs or during the period of unemployment. With each change,
the employee may lose his medical benefits provided by the respective
employer.

5.3 This will result in the employee being left with no cover while waiting to join
his new employer, or he may become uninsurable and unable to be covered
under his new employer’s GHS policy. To incentivise employers to make the
move towards enhancing the portability of inpatient or hospitalisation medical

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 3. Group Hospital And Surgical Insurance

benefits for their employees, the Singapore Government, since 1 April 2004,
has revised the tax policy to allow employers implementing any of the
following portable medical benefits options to enjoy higher tax deduction for
medical expenses of up to 2% of the total employees’
remuneration:
▪ Portable Medical Benefits Scheme (PMBS);
▪ Transferable Medical Insurance Scheme (TMIS);
▪ Provision of a Shield Plan; or
▪ Ad-hoc Contributions to Employees' MediSave Accounts.

Let us now look at the schemes in greater detail.

A. Portable Medical Benefits Scheme (PMBS)

5.4 Under PMBS, employers, instead of providing their employees with GHS
coverage, make additional monthly contributions to the employees' respective
MediSave accounts. Employees can then use the MediSave contributions to
pay premiums for MediShield Life or Integrated Shield Plans

5.5 Any surplus MediSave contribution will accumulate in the employee’s

MediSave Account and generate interest. The savings in the employee’s
MediSave Account can be used to meet his future medical needs, as well as
the medical needs of his dependants.

5.6 The advantage of this scheme is that the employee can continue to be
medically insured, even though he may be unemployed or is in-between jobs.
This is because the coverage will continue as long as the premium is paid,
regardless of his employment status. It also reduces duplication of insurance
plans and premium payments.

5.7 The employer will enjoy a 2% tax deduction. To be eligible for the tax
deduction, the employer must satisfy the following conditions:
▪ The scheme must cover at least 20% of the local employees1 recruited as at
the first day of financial year being assessed, and all local employees who
commence their employment during that financial year;
▪ For full-time employees, the additional monthly contributions to MediSave
accounts should be at least 1% of each employee’s gross monthly salary,
subject to a minimum amount of S$16 per calendar month; and
▪ For part-time employees 2, the additional monthly MediSave contributions
should be computed based on 1% of their actual gross salary for the
calendar month.

1
Local employees refer to Singapore citizens or Singapore Permanent Residents employed on a full-
time or part-time contract of employment, regardless of the number of hours worked.
2
Part-time employees refer to employees who are required under their contract of service with their
employers to work regularly for less than 30 hours a week.

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5.8 An employer who wishes to make additional MediSave contribution for his
employees may register with the Employer Registration Section of the CPF
Board with a new CPF Submission Number.

5.9 However, for employers who choose not to implement either the PMBS or
TMIS, their tax deductibility in respect of medical expenses will be maintained
at the present 1% of the total employees’ remuneration.

B. Transferable Medical Insurance Scheme (TMIS)

5.10 The TMIS is an enhanced GHS that extends inpatient coverage for up to 12
months when an employee leaves employment.

5.11 TMIS has two features:

▪ continuation of coverage; and
▪ transferability of benefits.
Employees are
not given option
5.12 Let us look at how the TMIS works. as to whether
they wish to be
insured under the
B1. How To Qualify For The TMIS? Group MEI Plan.

5.13 To qualify for the TMIS, the employer must:

 have a group size of 11 or more employees;
 take up a GHS Insurance plan;
 insure at least 50% (computed using X/Y x 100%, where X = all local
employees who are on the PMBS or TMIS, and Y = total number of local
employees in the employing company) of its local employees, subject to a
minimum total of 11 employees. The benefits can be provided for pre-
defined categories of employees, e.g. rank-and-file employees or
executives;
 pay 100% of the premium for the GHS Insurance coverage (Note:
Employers are allowed to recover the premiums for continuation benefits
after the termination of employment, wholly or partly from the
employees, based on agreement with the employees); and
 not give their employees the option as to whether they wish to be insured
under the GHS Insurance plan.

B2. How Can The Two TMIS Features Benefit The Employees?

5.14 Continuation Of Coverage Benefits

This feature enables an employee whose employment is terminated either by

his employer, or on his own accord, to continue enjoying hospitalisation
coverage from the employment termination date up to a period of 12 months
(not exceeding the prescribed statutory age).

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 3. Group Hospital And Surgical Insurance

5.15 Transferability Of Benefits

This feature enables an employee who resigns from one employing company
which holds a TMIS policy, and joins another which also holds a TMIS policy,
to enjoy the following benefits:
(a) automatic coverage under the new employer’s GHS Insurance plan,
without the need to provide evidence of good health; and
(b) waiver of any exclusion on pre-existing medical conditions if the
employee has been continuously insured under one or more TMIS plans
for 12 months before joining his new employer. If he has not been
insured continuously for at least 12 months under the TMIS plans before
joining his new employer, he will be entitled to the waiver when he
completes the 12 months of continuous coverage under the new
employer’s TMIS plan.

5.16 However, if the employee is hospitalised for treatment of a condition which is

pre-existing when he joins the new employer, he will enjoy a lower benefit
within the first 12 months of cover under the new employer’s plan. The cover
is the lower entitlement of either the:
▪ new employer’s TMIS plan; or
▪ prior employer’s TMIS plan.

5.17 Example 3.1 illustrates how an employee’s medical fees are covered should
he contract an illness while working for his previous employer.

Example 3.1

Danny changed his job in year 2023. Below are the details:

Date of termination with Employer A – 1 January 2023

Date of employment with Employer B – 15 January 2023

Benefit Entitlement Employer A Employer B

Daily Room & Board S$250 per day S$350 per day
Total of eligible benefits S$5,000 S$8,000

Danny was hospitalised on 1 April 2023 due to an illness he contracted while

in Employer A’s employment. He received a total benefit of S$5,000 as he
has not been continuously insured by Employer B for 12 months as at 1 April
2023

Should Danny be once again hospitalised for the same condition after 15
January 2024, he will be able to fully utilise Employer B benefits. .

5.18 Note that the transferability of benefits will not be available, if the employee
moves from an employer with a non-TMIS GHS Insurance plan to an employer
with a TMIS plan, and vice versa.

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Health Insurance

B3. What Are The Medical Expenses That Qualify Under TMIS Special Benefits?

5.19 The following are the medical expenses that qualify under the TMIS benefits:
▪ daily room and board charges;
▪ intensive care unit charges;
▪ charges for miscellaneous hospital services;
▪ charges for in-hospital doctor’s visits; and
▪ charges for inpatient and outpatient benefits.

5.20 All pre/post hospitalisation outpatient, emergency outpatient accident and

outpatient kidney dialysis/cancer treatment expenses are not eligible for TMIS
benefits, even if they can be reimbursed under the TMIS plan.

B4. Who Are The Employees Eligible For TMIS Benefits?

5.21 To be eligible for the TMIS benefits, an employee must be:

▪ below the prescribed statutory retirement age;
▪ a Singapore Citizen or SPR based in Singapore;
▪ working full-time with the same employer; and
▪ working on a permanent employment contract, or on a temporary
employment contract with a term of 24 months or more.

B5. How Are The Claims Paid?

5.22 Claims for continuation of benefits will be payable from the

previous employer’s TMIS plan.

5.23 Claims for transferability of benefits on or after the employee has joined the
new employer will be payable from the new employer’s TMIS plan.

B6. How Insurers Verify The Eligibility Of An Employee Under The TMIS?

5.24 An employer has to issue a Transferable Medical Insurance Certification

(TMIC) at the request of an employee upon the termination of his
employment. The TMIC must be submitted to the insurer when the employee
submits a claim for Continuation Benefit, or to the new employer’s insurer
should a claim arising from a pre-existing condition be made within 12
months of joining the new employer.

B7. Will It Cost More For A Company To Adopt The TMIS?

5.25 The insurer will charge an additional premium if a policy is issued under the
TMIS. However, this will be partially offset by the additional tax deduction
(1%) which the employer is entitled to.

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C. PMBS Versus TMIS

5.26 The differences between PMBS and TMIS are described below:

PMBS TMIS
The employer makes an additional The employer purchases the
contribution to the Employee’s policy.
MediSave Account for him to
purchase the policy on his own.

Can purchase only a Medical Can purchase any GHS Insurance

Insurance policy approved under the policy offered in the market other
MediSave Scheme (e.g. an Integrated than those approved under the
Shield Plan from an approved private MediSave Scheme.
insurer).

The coverage is lifetime for most The coverage expires at the

Integrated Shield Plans in the prescribed statutory retirement
insurance market. age.

The coverage continues even when The coverage continues up to a

the employee is between jobs or out maximum period of 12 months
of a job, as long as the premium is from the date of termination from
paid. a job.

There are deductibles and co- It is unlikely to have deductibles

insurance features. Riders can be and co-insurance features, as GHS
purchased to offset the deductibles Insurance policies rarely have
and co-insurance. these features.

Treatment for pre-existing illnesses is Waiver on pre-existing conditions

typically excluded. is allowed, when employees
change jobs and where both
employers provide TMIS benefits.

The employer has no control over the The employer continues to have
policy which the employee has full control over the GHS Insurance
purchased. policy, and the level of benefits can
be structured according to the
corporate employee benefit
philosophy.

D. Providing a Shield Plan

5.27 Employer may choose to pay for a MediShield Life or Integrated Shield Plan
(IP) for the employees. An employer providing employees with an IP can claim
tax deduction for medical expenses incurred, up to 2% of the total employees’
remuneration, upon meeting the following qualifying conditions:

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▪ provide an IP for at least 20% of the local employees as at the first day of
the financial year being assessed, and all local employees who commence
their employment during that financial year; and
▪ pay IP premiums on behalf of the employees directly to the approved
insurer or reimburse the premiums into the respective employees’
MediSave Accounts.

5.28 However, the additional tax deduction as mentioned above excludes

premiums for the “Riders on IPs” that cover deductibles and co-insurance
payments.

E. Ad-hoc Contributions To Employees' MediSave Accounts

5.29 An employer can make ad-hoc MediSave contributions to the

employees' MediSave Accounts, even if they are not adopting any
of the portable medical benefits options as described earlier.

5.30 To encourage such contributions, the employer can get an additional tax
deduction beyond the 1% limit for the amount of ad-hoc MediSave
contributions made. Additional contributions are subject to a limit
of S$2,730 per employee per year. The overall tax deduction for medical
expenses will be subject to the overall cap of 2%.

5.31 If the employer wishes to make additional MediSave contributions for the
employees, the employer will need to register with the Employer and
Accounts Management Section of the CPF board for a new CPF Submission
Number. Such contributions are tax-free and are subject to a cap per
employee per year. Refer to the MOM website under schemes for employers
and employees for the cap amount: http://www.mom.gov.sg

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CHAPTER
03
GROUP HOSPITAL AND SURGICAL (GHS) INSURANCE

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Criteria for a group to The requirement is that several people must first be members of a group, before
be eligible for Group they can be eligible to purchase the insurance. The group must have been formed
Insurance cover for some purposes other than to obtain insurance, such as companies, trade
unions, professional associations and clubs.
Characteristics of a Group • Master Contract.
Insurance policy • Minimal Underwriting Requirements.
• Experience-rating.
• Cost Effectiveness.
• Plan Continuation.
• Eligibility Requirements.

In addition, Group Insurance policies have an actively-at-work clause.

GHS Insurance GHS Insurance policies are more often purchased by employers as part of their
employee benefits package. The coverage of GHS policies can be extended to the
employees’ immediate family members (spouses and children).
Differences between • For a compulsory (also known as non-contributory) plan, all the eligible
a compulsory and a employees must be covered under the plan, and the premiums have to be paid
voluntary plan solely by the employer.
• A voluntary (also known as contributory) plan, on the other hand, does not
require full participation from the employees who may be expected to pay part
of the premiums.
Advantages Of A • It provides ease of administration, since there is no regular payroll deduction to
Compulsory (Non- monitor.
Contributory) Plan • It comes with lower costs owing to less administrative work involved, and the
greater pooling effect of risks as a result of many lives insured.
• It helps the employer to retain greater control of the benefit structures and
provisions.

5
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Advantages Of A Voluntary • Employer
(Contributory) Plan » Participating employees assume part of the costs of the benefits as
provided under the Group Insurance plan.
» It generates interest and appreciation from the participating employees of
the Group Insurance plan.
• Employees
» It gives the participating employees some control over the Group Insurance
plan.
» They can obtain coverage at a lower premium rate than buying it
individually.
Medical Insurance Since 1 January 2008, subsidies on hospital bills for foreigners have been removed.
Requirements for Migrant With this revision, the Ministry of Manpower (MOM) requires every employer to buy,
Workers pay and maintain a minimum Medical Insurance coverage for its foreign workers
and foreign domestic workers (maids) during their employment stay in Singapore
This insurance is compulsory for every S Pass holder and Work Permit holder
before MOM issues or renews their work permit.

Employers may purchase a medical insurance coverage of between S$15,000 to

S$60,000 per year for each migrant worker which covers medical bill incurred for
inpatient and day surgery, including hospital bills for conditions that may not be
work related. For coverages above S$15,000, employers co-pay 25%.

Employers can have a co-payment arrangement with the Work Permit holder
(excluding migrant domestic workers) if the following conditions are met:
• The co-pay amount is reasonable and does not exceed 10% of the employee’s
monthly salary.
• The duration of co-payment does not exceed six (6) months (for every 2 years of
employment).
• The co-payment option is explicitly in the employment contract or collective
agreement and has the worker’s full consent.

6
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Differences between • Individual insurance policies are issued to individuals.
Individual and Group • Group Medical Expense Insurance policies are more often purchased by
Medical Expense Insurance employers as part of their employee benefits to attract and retain their
employees.
• Can be extended to include the individual’s immediate family members (usually
spouse and children).

Individual Insurance Group Insurance

Eligibility Only the individual who Only members who
applies for the coverage belong to the group and
is covered. are actively at work are
covered.
An individual needs
only to be insurable, in Members under a group
order to be granted the must satisfy the eligibility
coverage. requirements as stated
in the Group Insurance
policy, before they are
granted the coverage.
Contract Each individual policy Only one master
owner gets a policy contract is issued to
contract. the employer or an
affiliated organisation.
The number of insured
members is more than
one.
Choice of Plan An individual policy Insured members may or
owner has the right to may not have the right to
select the amount of decide on the amount of
coverage that he wants. coverage that they want.
In the employer-paid
plans/compulsory plans,
the amount of coverage
is determined by the
employer.
Underwriting Individual’s health Group as a whole is
history, lifestyle and evaluated depending
financial status are on the gender and age
evaluated. distribution of the group,
occupation mix and past
claims experience.
Termination of Cover Coverage continues until The individual life
the individual or insurer insured’s coverage stops
chooses to terminate it. when he leaves the
group. However, the
insurance plan continues
for the remaining
members.
Premium Cost of coverage Cost of coverage is
is higher because lower because of group
of individual underwriting and lower
underwriting and higher administrative costs.
administrative costs.
Premium is unit-related.
Premium is age-related.

7
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
How the Portable Medical This scheme rides on the Medisave/MediShield Life framework. Under this scheme,
Benefits Scheme (PMBS) the employers, instead of providing their employees with Group Medical Insurance
works coverage, make additional monthly contributions to the employees' respective
Medisave accounts. Employees can then use the Medisave contributions to
purchase MediShield Life or any one of the private insurers’ Integrated Shield Plans,
to cover their inpatient or hospitalisation needs.
Advantages of the PMBS • Any surplus Medisave contribution will accumulate in the employee’s Medisave
Account and generate interest.
• Employee can continue to be medically insured, even though he may be
unemployed or is in-between jobs. This is because the coverage will continue
as long as the premium is paid, regardless of his employment status. It also
reduces duplication of insurance plans and premium payments.
• The employer will enjoy a 2% tax deduction, subject to conditions.
How the Transferable The TMIS is a private hospitalisation insurance arrangement among participating
Medical Insurance Scheme insurers. It is to provide continuous Medical Expense Insurance coverage to an
(TMIS) works employee, starting from the date of leaving the service of his employer for whatever
reasons up to a period of 12 months, as long as the insurance premium is paid. A
TMIS policy is an enhancement of the existing employer-sponsored Group Medical
Expense Insurance outside of the CPF Medisave framework.
Areas that an employer To qualify for the TMIS, the employer must:
must do in order to be • have a group size of 11 or more employees;
eligible for the TMIS • take up a Group Medical Expense Insurance plan;
• insure at least 50% (computed using X/Y x 100%, where X = all local employees
who are on the PMBS or TMIS, and Y = total number of local employees in
the employing company) of its local employees, subject to a minimum total
of 11 employees. The benefits can be provided for pre-defined categories of
employees, e.g. rank-and-file employees or executives;
• pay 100% of the premium for the Group Medical Expense Insurance coverage
(Note: Employers are allowed to recover the premiums for continuation benefits
after the termination of employment, wholly or partly from the employees,
based on agreement with the employees); and
• not give their employees the option as to whether they wish to be insured
under the Group Medical Expense Insurance plan.
Two main features under Continuation Of Coverage Benefits
the TMIS, namely: • This feature enables an employee whose employment is terminated either
• continuation benefit by his employer, or on his own accord, to continue enjoying hospitalisation
• transferability benefit coverage from the employment termination date up to a period of 12 months
(not exceeding the prescribed statutory age).

Transferability Of Benefits
• This feature enables an employee who resigns from one employing company
which holds a TMIS policy, and joins another which also holds a TMIS policy, to
enjoy the following benefits:
• automatic coverage under the new employer’s Group Medical Expense
Insurance plan, without the need to provide evidence of good health; and
• waiver of any exclusion on pre-existing medical conditions if the employee
has been continuously insured under one or more TMIS plans for 12 months
before joining his new employer. If he has not been insured continuously for
at least 12 months under the TMIS plans before joining his new employer, he
will be entitled to the waiver when he completes the 12 months of continuous
coverage under the new employer’s TMIS plan.
Medical expenses that • Daily room and board charges;
qualify under the TMIS • Intensive care unit charges;
Special Benefit • Charges for miscellaneous hospital services;
• Charges for in-hospital doctor’s visits; and
• Charges for inpatient and outpatient benefits.

All pre/post hospitalisation outpatient, emergency outpatient accident and

outpatient kidney dialysis/cancer treatment expenses are not eligible for TMIS
benefits, even if they can be reimbursed under the TMIS plan.

8
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Differences between PMBS PMBS TMIS
and TMIS
The employer makes an additional The employer purchases the policy.
contribution to the Employee’s
Medisave Account for him to purchase
the policy on his own.
Can purchase only a Medical Insurance Can purchase any Group Medical
policy approved under the Medisave Expense Insurance policy offered in
Scheme (e.g. an Integrated Shield Plan the market other than those approved
from an approved private insurer). under the Medisave Scheme.
The coverage is lifetime for most The coverage expires at the prescribed
Integrated Shield Plans in the statutory retirement age.
insurance market.
The coverage continues even when the The coverage continues up to a
employee is between jobs or out of a maximum period of 12 months from
job, as long as the premium is paid. the date of termination from a job.
There are deductibles and co- It is unlikely to have deductibles and
insurance features. Riders can be co-insurance features, as Group
purchased to offset the deductibles Medical Expense Insurance policies
and co-insurance. rarely have these features.
Treatment for pre-existing illnesses is Waiver on pre-existing conditions is
typically excluded. allowed, when employees change jobs
and where both employers provide
TMIS benefits.
The employer has no control over The employer continues to have
the policy which the employee has full control over the Group Medical
purchased. Expense Insurance policy, and the level
of benefits can be structured according
to the corporate employee benefit
philosophy.
Provisions of an Integrated An employer providing employees with an IP can claim tax deduction for medical
Shield Plan on tax expenses incurred, up to 2% of the total employees’ remuneration, upon meeting
deductions the following qualifying conditions:
• provide an IP for at least 20% of the local employees as at the first day of the
financial year being assessed, and all local employees who commence their
employment during that financial year; and
• pay IP premiums on behalf of the employees directly to the approved insurer,
or reimburse the premiums into the respective employees’ Medisave Accounts.
Tax deductions for ad-hoc An employer can make ad-hoc MediSave contributions to the employees' MediSave
MediSave contributions Accounts, even if they are not adopting any of the portable medical benefits options
as described earlier.

To encourage such contributions, the employer can get an additional tax deduction
beyond the 1% limit for the amount of ad-hoc MediSave contributions made.
Additional contributions are subject to a limit of S$2,730 per employee per year.
The overall tax deduction for medical expenses will be subject to the overall cap of
2%.

If the employer wishes to make additional MediSave contributions for the

employees, the employer will need to register with the Employer and Accounts
Management Section of the CPF board for a new CPF Submission Number. Such
contributions are tax-free and are subject to a cap per employee per year. Refer
to the MOM website under schemes for employers and employees for the cap
amount: http://www.mom.gov.sg

9
 4. Disability Income Insurance

CHAPTER 4
DISABILITY INCOME INSURANCE

CHAPTER OUTLINE

1. Introduction
2. What Is Disability Income Insurance?
3. Disability Income Insurance & Total And Permanent Disability
4. Computation Of Disability Income Insurance Benefit
5. Definitions
6. Benefits Offered Under Disability Income Insurance
7. Features Of A Disability Income Insurance Policy
8. Underwriting
9. Cessation Of Benefits
10. Exclusions
11. Termination Of Cover
12. Group Disability Income Insurance
13. General Underwriting Principles For Group Disability Income Insurance
14. Disability Income Claims
15. Conclusion
Appendix 4A - Clinical Abstract Form

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ describe what Disability Income Insurance is
▪ differentiate between Disability Income Insurance and Total and
Permanent Disability Benefit
▪ understand how Disability Income Insurance works
▪ briefly describe:
- total disability
- partial disability
- recurrent disability (linked claims)
- benefit period
- deferred/elimination period
▪ know the difference between “own occupation”, “modified own occupation”, “any
occupation” and “severe disability“ definitions
▪ list the eligibility criteria for payment of Disability Income Insurance benefit
▪ describe the types of benefits offered by Disability Income Insurance:
- total disability benefit
- partial disability benefit

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- rehabilitation expense benefit

- escalation benefit
- waiver of premium benefit
- death benefit
▪ know how to compute the partial disability benefit
▪ know how the escalation benefit works
▪ explain how the limitation of disability benefit clause works
▪ list the features of Disability Income Insurance
▪ list the documents required for the underwriting of Disability Income Insurance for
an individual employee, as well as for the self-employed person
▪ briefly describe the following underwriting considerations for Disability Income
Insurance:
- occupation
- benefit amount
- benefit period
- deferred/elimination period
▪ know when the benefits under a Disability Income Insurance policy cease to be
payable
▪ list the exclusions commonly found under Disability Income Insurance
▪ list the events that will cause a Disability Income Insurance policy to be terminated
▪ understand the coverage and features of Group Disability Income Insurance
▪ know the general underwriting principles and claims procedures for both Individual
and Group Disability Income Insurance

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 4. Disability Income Insurance

Contents
CHAPTER OUTLINE .......................................................................................................... 63
LEARNING OUTCOMES ................................................................................................... 63
1. INTRODUCTION ...................................................................................................... 67
2. WHAT IS DISABILITY INCOME INSURANCE? ....................................................... 67
3. DISABILITY INCOME INSURANCE & TOTAL AND PERMANENT DISABILITY .... 67
4. COMPUTATION OF DISABILITY INCOME INSURANCE BENEFIT ........................ 68
5. DEFINITIONS ........................................................................................................... 69
A. Total Disability .................................................................................................. 69
A1. Own Occupation ........................................................................................ 70
A2. Modified Own Occupation ........................................................................ 70
A3. Any Occupation ......................................................................................... 70
A4. Severe Disability ........................................................................................ 71
B. Partial Disability................................................................................................ 71
C. Recurrent Disability (Linked Claims) ............................................................... 71
D. Benefit Period ................................................................................................... 72
E. Deferred/Elimination Period ............................................................................ 72
6. BENEFITS OFFERED UNDER DISABILITY INCOME INSURANCE ......................... 73
A. Eligibility Criteria For Payment Of Disability Income Insurance Benefit ....... 73
B. Types Of Benefits Offered ................................................................................ 73
B1. Total Disability Benefit .............................................................................. 73
B2. Partial Disability Benefit ............................................................................ 74
B3. Rehabilitation Expense Benefit ................................................................. 74
B4. Escalation Benefit ...................................................................................... 75
B5. Waiver Of Premium Benefit ...................................................................... 76
B6. Death Benefit ............................................................................................. 76
C. Limitation Of Disability Benefit Clause ........................................................... 76
7. FEATURES OF A DISABILITY INCOME INSURANCE POLICY ............................... 76
8. UNDERWRITING ..................................................................................................... 77
A. Underwriting Requirements ............................................................................ 77
A1. Individual (Salaried Employee)................................................................. 78
A2. Self-employed Person ............................................................................... 78
B. Underwriting Considerations .......................................................................... 78
B1. Occupation ................................................................................................. 78
B2. Benefit Amount.......................................................................................... 80
B3. Benefit Period ............................................................................................ 80
B4. Deferred/Elimination Period...................................................................... 80

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9. CESSATION OF BENEFITS ........................................................................................... 80

10. EXCLUSIONS ................................................................................................................ 80
11. TERMINATION OF COVER ............................................................................................ 81
12. GROUP DISABILITY INCOME INSURANCE ................................................................. 81
A. Coverage Provided By Group Disability Income Insurance ................................. 82
13. GENERAL UNDERWRITING PRINCIPLES FOR GROUP DISABILITY INCOME
INSURANCE .................................................................................................................. 82
14. DISABILITY INCOME CLAIMS ...................................................................................... 82
A. Claims Procedure For Disability Income Policy .................................................... 82
B. Foreign Residency During Claims Period ............................................................. 83
15. CONCLUSION ................................................................................................................ 84
APPENDIX 4A ......................................................................................................................... 85

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 4. Disability Income Insurance

1. INTRODUCTION

1.1 While an individual should plan for his retirement and premature death, it is
also critical for one to protect his earning capacity, whether he is an employee
or a self-employed individual. This is because he could lose his earning power
should he become disabled from an accident or illness and be incapable of
paying his living and medical expenses, including the premiums to keep his
insurance policies in force. On top of this, his family’s ongoing expenses
continue including repayment of any outstanding loans. Expenses may even
increase due to his medical treatments or added cost of a caregiver. The
family would be financially strained with the incapacity of the breadwinner.

1.2 Disability Income Insurance helps to safeguard a person’s income when he

cannot work for medical reasons. Let’s look at both Individual and Group
Disability Income Insurance, including their underwriting and claim
procedures.

2. WHAT IS DISABILITY INCOME INSURANCE?

2.1 Disability Income Insurance is an income-protection in the event of

incapacitation due to accident or illness. It helps replace a portion of lost
income when the insured is unable to work. It is subject to certain conditions
which will be discussed later on. It is also known as Permanent Health
Insurance because the insurer cannot cancel the policy, no matter how many
times the insured makes a claim. The policy will continue to pay out until he
returns to work, dies, when the benefit period ends or when the policy ends,
whichever happens first.

3. DISABILITY INCOME INSURANCE & TOTAL AND PERMANENT DISABILITY

3.1 While both Disability Income Insurance and Total and Permanent Disability
(TPD) Benefits provide the insured with a cash benefit on disability arising
from an accident or illness, there are distinct differences between the two
benefits.

3.2 The main difference between Disability Income Insurance and Total and
Permanent Disability Benefit lies in the purpose of the insurance and the
definition of “disability”. Disability Income Insurance provides an income
replacement if the insured cannot work. On the other hand, TPD Benefit
serves to accelerate the death benefit payable under a Life Insurance policy, to
alleviate the financial burden or hardship of the insured and his dependants.
TPD Benefit is payable in one lump sum whereas, Disability Income Insurance
benefits are payable on a monthly basis for up to an agreed benefit period.
The differences are shown in Table 4.1.

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Table 4.1: Differences Between Disability Income Insurance & Total And
Permanent Disability Benefit

Disability Income Insurance Total And Permanent Disability Benefit

Disability means the Disability is defined to be total and
reduced/limited capacity at which permanent, such as loss of limbs or loss
the insured can fulfil the duties of of eyesight.
his occupation.
It can be purchased as a stand- It is embedded into the Life Insurance
alone policy or as a rider. policies or as a rider.
Benefit is payable monthly Benefit is payable in one lump sum

Maximum monthly benefit is Sum assured is not pegged to salary.

mostly up to 75% of salary.
Escalation benefit is available. No escalation of benefit.

Partial disability benefit is No partial disability benefit

available.
Choice of deferred/elimination No deferred period as specified (but
period is available (e.g. one month, usually there is a 6-month waiting period
three months, six months, etc.). requirement as proof of permanent
disability).

Available only to someone with No restriction on non-working people,

earned income/salary. e.g. children and housewives, as it is
bundled with the death benefit under a
Life Insurance policy.

4. COMPUTATION OF DISABILITY INCOME INSURANCE BENEFIT

4.1 Disability Income Insurance policy pays a monthly income to the insured upon
his disability. Let us look at how it actually works, using the case of an
employed individual. See Example 4.1.

Example 4.1: Example Of Computation Of Disability Income Insurance

Benefit

Tommy Tang, aged 35 years, is an assistant accountant in a finance

company. His monthly income is S$6,000. He wishes to purchase a Disability
Income Insurance policy to provide maximum coverage.

However, the maximum amount of monthly benefit that he can purchase

cannot be 100%. Why?
Insurers will allow the benefit amount to cover only up to 75% of the
insured’s average income over the past 12 months immediately prior to his
disability. A ceiling on the income to be covered may also be imposed and a
self-employed person may be granted a lower benefit, The purpose of

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 4. Disability Income Insurance

replacing only a certain percentage of the insured’s income is to ensure that

the insured will not be better off financially from the benefit which he
receives under his Disability Income Insurance policy, so that he will have the
incentive to go back to work.

Details of his policy are as follows:

Male, Age Next Birthday 35 years old

Monthly Income S$6,000
Monthly Benefit S$4,500 (75% of his monthly income
being the maximum amount as
allowed by Alpha Insurance
Company and assuming that he has
no other disability benefits).
Escalation Benefit 5% per year
Benefit Period Up to the age of 65 years next
birthday
Deferred/Elimination Period 6 months
Monthly Premium S$125.50

4.2 If Tommy becomes disabled (according to the definition of “disability” of the

policy) and is out of work, he will receive the benefit amount every month
after the Deferred/Elimination Period, as long as he is unable to work.
Assuming he is disabled throughout the Benefit Period (30 years) (Benefit
period 65 years – Age next birthday 35 years), he would receive a total of
S$2,989,746 (S$3,750 x 12 x 66.4388 1), although he would have paid only five
years of premiums amounting to S$7,530 (S$125.50 x 60). Premiums are
waived upon disability.

5. DEFINITIONS

A. Total Disability

5.1 Disability Income Insurance provides income when an insured is totally

disabled and unable to work. “Total Disability” is defined in the policy and
may take one of the following forms:
▪ own occupation disability;
▪ modified own occupation disability;
▪ any occupation disability; and
▪ severe disability

5.2 Let us look at each of the definitions in turn.

1
66.4388 is the future value annuity interest factor derived from the formula [(1+i)n-1]/i (where i =
escalation benefit, n = number of years). Alternatively, you may refer to Table A1 on Future Value Of
Annuity Factors at the back of this Study Text.

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A1. Own Occupation

5.3 Considering the insured’s occupation, total disability is defined as:

“the insured’s inability to perform the material duties of his own
occupation”

5.4 This refers to the insured’s own occupation at the time that the disability
begins. For example, Penny, a pianist, had an accident which caused the
severing of three fingers on her left hand, which, in turn, resulted in her
inability to work as a pianist. Thus, she had met the above definition of
“disability” and would be able to claim under her Disability Income Insurance
policy.

5.5 The policy will state the insured’s occupation, and the insurer has to be
notified of any occupation change while the policy is in force. Some insurers
specify that the insured must either be unable to work in the pre-disabilty
occupation or any other occupation.

A2. Modified Own Occupation

5.6 Here “Total Disability” is defined as:

“the insured’s inability to perform any gainful occupation or a similar
occupation for which the insured is reasonably suited by reason of
education, training or experience”

5.7 This definition is more stringent than ”Own Occupation” as it includes “a

similar occupation”. Thus, if an insured manages to find a job which is similar
in nature to the previous occupation after his recovery, he will not be able to
meet the definition of “Total Disability”.

A3. Any Occupation

5.8 This is a more restrictive definition of Total Disability. It means:

“the insured’s inability to perform any occupation”

5.9 Consider Penny, the pianist, whose fingers were severed. Under the previous
definition, she was totally disabled because she was unable to perform the
duties of her own occupation. However, suppose that she is able to teach, i.e.
prepare students for the piano theory examination. Under “Any Occupation”
definition, she will no longer be considered as being totally disabled.

5.10 The wording used may vary from insurer to insurer, and there are many
hybrids in the insurance market, which may not be easy to classify. Therefore,
it is important that you find out the exact definition as used by your insurer
and be able to explain it clearly to your prospective clients.

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A4. Severe Disability

5.11 This definition follows the Long-Term Care Insurance definition where the
insured is unable to perform at least three of the six Activities of Daily Living
(ADLs) – washing, dressing, feeding, toileting, mobility, and transferring.

5.12 The insurer uses this definition when the insured’s disability occurred during a
non-working period (a period of time in-between jobs, where the insured is
still covered under the plan). When a disability occurs during the non-working
period, the benefit amount will not be based on the last drawn salary, but will
be a smaller pre-determined amount as stated in the policy.

B. Partial Disability

5.13 This is when the insured recovers from a total disability and can start to do
some duties of his occupation, but at a salary which is at least 25% lower than
the pre-disability salary. For example, Walter was paid S$2,500 a month as a
warehouse worker. His work involved moving materials both with a
mechanical forklift and by hand.

5.14 After an accident, Walter’s spine was injured resulting in him having
movement difficulties. Since then, he could operate only the forklift, but was
not able to move the materials using his hands. As such, he was given a lower
pay of S$1,800 (S$1,800 ÷ S$2,500 x 100 = 72% i.e. 28% less than his original
pay). In this case, Walter was considered to be partially disabled.

Before
Disability
Income
Income
After disability, income
= S$2,500
was reduced to S$1,800
(being 72% of
pre-disability income).

5.15 Partial Disability benefit may be payable to the insured who works in other
occupation (not related to his own occupation) on a part-time or full-time
basis, and which pays him a salary of 75% (or less) of his Pre-disability
Earnings.

C. Recurrent Disability (Linked Claims)

5.16 If the insured who has been receiving the disability benefits returns to work
but suffers a relapse from the same cause within a specified period of time
(usually 180 days), most insurers will waive the deferred/elimination period,
and the benefit payments will re-commence immediately.

5.17 In such a case, the claim will be treated as a continuation of the earlier claim
for the purpose of determining the duration of the benefit payment period.

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D. Benefit Period

5.18 Benefit period is the maximum period for which disability benefits are payable
to the insured for any one episode of disability. It can be short term (e.g. five
years) or long term (e.g. up to age of 65 years). The shorter the benefit term,
the lower will be the premiums.

= Longer Benefit
Period
Premium

= Shorter Benefit
Premium Period

E. Deferred/Elimination Period

5.19 A Disability Income Insurance policy will start paying its benefits after the
insured has been disabled for a specified period known as the deferred,
elimination or pre-benefit period. The condition for a deferred period
eliminates costly claims for disabilities which are only short term. Insurers
may offer to the insured different deferred/elimination periods (e.g. 45, 90 or
180 days), or by number of months (e.g. three months).

5.20 Insurers offer these various deferred/elimination periods to meet the different
individual’s specific needs. For example, a self-employed person may need a
short deferred period, as his income may be immediately affected by his
inability to work. An employed person, on the other hand, will usually
continue to receive his salary for some specified period (e.g. three or six
months). As such, you should advise your prospective client to find out from
his employing company or his employment contract to see how long his
company will continue to pay him his salary in the event that he is disabled,
so that he can select the right deferred period. This will help him to save on
the premium, as the longer the deferred period, the cheaper will be the
premium, since the duration and frequency of claims are thereby reduced.

5.21 You can also advise prospective clients with financial constraints to purchase
a policy with a longer deferred period, where the premium is affordable to
them, instead of not having the cover at all.

= Short Deferred
Period
Premium

= Long Deferred
Premium Period

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6. BENEFITS OFFERED UNDER DISABILITY INCOME INSURANCE

A. Eligibility Criteria For Payment Of Disability Income Insurance Benefit

6.1 To be eligible for the disability income benefit payment, the insured MUST:
(a) keep the policy in force;
(b) be employed or in in-between jobs when they become disabled;
(c) still be disabled after the deferred/elimination period;
(d) meet the definition of total or partial disability as stated in the policy;
(e) not have reached the expiry age as stated in the policy;
(f) not have resided outside Singapore for more than a certain period of
time (usually not more than six months); and
(g) not have other sources of income (e.g. payment from Work Injury
Compensation Insurance), which when totalled up, is more than the
benefits due to him under his Disability Income Insurance policy.
Income Insurers
B. Types Of Benefits Offered usually
insure up
to 75% of
B1. Total Disability Benefit income

6.2 The main benefit offered by Disability Income Insurance is the monthly cash
benefit to replace up to 75% of lost income when the insured becomes totally
disabled through an accident or illness.

6.3 The benefit will be paid regardless of whether the insured is hospitalised.
However, his disability has to be certified by a registered medical practitioner 2
in order for him to make a claim under his policy.

6.4 If the insured’s total disability continues after the expiry of the deferred period,
the insurer will pay the monthly benefit at the end of each month. For
example, if the policy is issued for a monthly benefit of S$1,000 (as stated in
the policy schedule), this will be the amount that the insured will get for that
month. If the period of disability is less than one month, the insurer will
usually pay a pro-rata amount based on a daily rate of one-thirtieth (1/30) of
the disability benefit.

6.5 The benefit ceases when the insured recovers and returns to work, either full-
time or part-time, and even to a different occupation.

2
A registered medical practitioner is a doctor who is qualified by degree in western medicine and is
legally licensed to practice medicine and surgery in the geographical area of his country, but does not
refer to a medical practitioner who is the insured himself, as well as his spouse, child or parent of the
insured.

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B2. Partial Disability Benefit

6.6 Partial Disability Benefit is also known as “Rehabilitation Benefit”. It provides

a reduced benefit to the insured if he is able to return to work at a reduced
income of 75% of his Pre-disability Earnings, or lower. This applies even
though he has not fully recovered. The reduced benefit is computed based on
the following formula:

Pre-disability Earnings − Present Earnings

X Total Disability Benefit
Pre-disability Earnings

6.7 Example 4.2 shows how the partial disability benefit is arrived at.

Example 4.2: Computation Of Partial Disability Benefit

Larry, a lecturer who earns S$8,000 a month suffered brain injury in a car
accident. This caused him to be totally disabled for two years during which
he received S$6,000 (75% of his Pre-disability Earnings) a month from his
Disability Income Insurance policy. In the third year, he managed to find a
job in a printing firm that paid him S$1,000 a month. In view of this, the
insurer reduced the monthly benefit to S$5,250, calculated as follows:
S$(8,000 – 1,000)
X S$6,000 = S$5,250
S$8,000

Note: You can see that the total monthly benefit and reduced income after
the partial disability is S$6,250 (S$5,250 + S$1,000). This is still lower than
the original income of S$8,000 a month before the disability.

6.8 The insurer will pay a pro-rata amount, based on a daily rate of one-thirtieth
(1/30) of the partial disability benefit if the period of the partial disability is less
than a month.

B3. Rehabilitation Expense Benefit

6.9 Insurers encourage participation in rehabilitation programme by reimbursing

an insured for the rehabilitation costs incurred. The benefit is limited to a per
disability basis and may include items such as:
▪ training courses;
▪ medical aids (e.g. wheelchair, walking frame, crutches); and
▪ workplace modifications.

6.10 The insured must first get the insurer’s approval in writing, before going
ahead with any rehabilitation programmes, etc. The rehabilitation benefit may
be payable in addition to the monthly disability benefit (e.g. up to three times
the monthly benefit).

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B4. Escalation Benefit

6.11 Escalation benefit is a benefit offered by insurers as a hedge against inflation.

With an additional premium, the insured can opt for a 3% or 5% escalation
benefit per annum.

6.12 This benefit is useful for long-term disabilities. Example 4.3 illustrates how the
escalation benefit works.

Example 4.3: Illustration Of The Working Of The Escalation Benefit

Eddy, an engineer, became disabled on 30 June 2023. He was insured for

S$6,000 (75% of his monthly salary of S$8,000) and had opted for a 3% per
annum escalation benefit and a 6-month deferred period.

The events following his disablement were as follows:

Date Event

1-1-2023 Insurer made the first monthly payment of S$6,000

1-2-2023 Insurer made the second monthly payment of S$6,000

Insurer continued to
Eddy continued

pay S$6,000 each

to be disabled

month

1-1-2024 Insurer paid S$6,180 [(S$6,000 + S$6,000 x 3% (escalation

benefit)]

1-2-2024 Eddy had since found a job as a clerk which paid him
S$2,000 a month. The insurer paid him a partial disability
benefit of S$4,635 derived as follows:

Pre-Disability Earnings – Present Earnings Disability

X Benefit
Pre-Disability Earnings

S$(8,000 – 2,000)
= X S$6,180
S$8,000
= S$4,635

Eddy will continue to receive the Disability Income benefit until he dies or
when the benefit period expires, depending on which is earlier.

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B5. Waiver Of Premium Benefit

6.13 The premiums due under the Disability Income Insurance policy will be
waived during the disability benefit payout period (applicable to both total and
partial disability). If the insured has paid the premium annually in advance, the
waiver of the premium will effect from the next premium due date, even
though the disability benefit payment has started. In other words, the
premiums paid will not be refunded.

B6. Death Benefit

6.14 Most insurers provide a lump sum amount to be paid to the insured’s
dependants, in the event of the insured’s death.

C. Limitation Of Disability Benefit Clause

6.15 A limitation clause in the policies ensure that the insured will not be better off
financially by claiming. The purpose is to prevent over-insuring by restricting
the monthly benefit payable, so that the total benefit (including other
Disability Income policies that the insured may have) shall not exceed the
insured’s pre-disability earnings or some proportion of it.

6.16 In the event of a claim, the disability benefit payable will be reduced by the
following sources of income:
▪ payments from other insurance policies against disability (except the Total
and Permanent Disability Benefit under Life Insurance policies), including
Work Injury Compensation Insurance; and
▪ any continuing salary, commission or other incomes derived from the
insured’s occupation or business in which he was engaged just before his
disability.

6.17 The amount of disability income benefit paid together with any of the above
sources of income will at no time be more than the amount of monthly benefit
insured under the policy. That is why it is important for the insured to select
the right deferred/elimination period, especially if his employer will continue
to pay him his salary even after he is disabled. If his employer pays him six
months’ salary in the event that he is disabled, and the deferred/elimination
period chosen by him is three months, the insurer will not pay him any
benefits after his deferred/elimination period has expired, as long as the
employer continues to pay him his full salary.

7. FEATURES OF A DISABILITY INCOME INSURANCE POLICY

7.1 The features of a typical Disability Income Insurance policy are described
below:
(a) It can be issued as a stand-alone (for which then, no rider is possible)
policy, or as a rider to a basic Life Insurance plan.
(b) It provides a regular monthly income during the insured’s total and
partial disablement.

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(c) The premiums are waived during the benefit period.

(d) The benefits may be level, or may increase at a given rate.
(e) There is a choice of deferred/elimination period.
(f) There is a choice of benefit period.
(g) There is a choice of escalation benefit (if available).
(h) The level premium can be paid on a monthly, quarterly, half-yearly or
annual basis, depending on the insurer’s practice.
(i) There is payment of partial disability benefits if a person returns to work
earning a lower income.
(j) There is provision of rehabilitation expense benefit.
(k) There is provision of death benefit.
(l) There is no restriction on the use of the cash benefits paid.
(m) Disability benefit may discontinue if the insured stays outside Singapore
for a specified period.
(n) The cover will be terminated if the insured resides outside Singapore for
more than a continuous specified number of days, within any one policy
year, unless the insurer grants the insured the continuity of cover (an
additional premium may be charged).
(o) The cover will be terminated if the insured is not engaged in any full-
time occupation or profession for a continuous period of a specified
number of days, when he is not suffering from a disability (see Section
11 of this chapter for the other causes for the termination of a policy).
(p) The policy is usually guaranteed renewable and non-cancellable by the
insurer (the insurer has the right to adjust the premium rates if the
insured changes his occupation to one which is of a higher risk)
(q) There is no surrender value, i.e. the insured cannot return the policy to
the insurer for cancellation in exchange for cash payment.
(r) Assignment of the policy is not allowed.
(s) The policy cannot be written as a third-party policy.
(t) The benefits received are non-taxable.
(u) The policy will lapse if the premium is not paid within the 30 days’ grace
period.

8. UNDERWRITING

A. Underwriting Requirements

8.1 The underwriting process for Disability Income Insurance is very similar to Life
Insurance. The different underwriting tools for individual employees and the
self-employed persons are described below:

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A1. Individual (Salaried Employee)

8.2 Proposal form (also called Application form) plus:

Proposal
▪ Notice of Assessment; or Form

▪ Central Provident Fund (CPF) Statement (six months) and “large

amount” questionnaire if the annual benefit is more than a certain amount,
e.g. S$60,000; and
▪ medical test report (e.g. medical examination report, etc.) based on the age
and amount of disability benefit proposed.

A2. Self-employed Person

8.3 Proposal form plus:

▪ Notice of Assessment for the last three years; or
▪ audited company’s accounts for the last three years; and “large amount”
questionnaire if the annual benefit is more than a certain amount (e.g.
S$60,000); and
▪ medical test report (e.g. medical examination report, etc.) based on the age
and amount of disability benefit proposed.

8.4 The underwriter will process the proposal form in the same way as explained
in later chapter of this Study Guide, except that he will be looking at the risk of
the proposer (intending insured) being disabled through an accident or illness,
rather than the risk of death.

B. Underwriting Considerations

8.5 The underwriting considerations for Disability Income Insurance are similar to
the other classes of Health Insurance. Underwriters will pay more attention to
the following factors:
▪ occupation;
▪ benefit amount;
▪ benefit period; and
▪ deferred/elimination period.

B1. Occupation

8.6 Occupation is a crucial underwriting consideration for two reasons. Firstly,

some occupations have a higher risk of disability from accidents (e.g. lorry
driver, people working on heavy machines in manufacturing unit) or illnesses
(people working on tobacco factory) than others. Secondly, it is easier to
return to work with some degree of incapacity in some occupations than in
others. For example, not only is a manual worker more likely to be disabled
than an accountant, but it is also easier for an accountant to continue working
with an injury like a broken arm, as opposed to the manual worker. Thus, most
insurers have a rating structure depending on the class of occupation. A
typical rating structure is as shown in Table 4.2.

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Table 4.2: Rating Structure Based On The Class Of Occupation

Class I Professions and occupations involving indoor work mainly

of a sedentary (deskbound) nature, e.g. accountants,
doctors, and lawyers.

Class II Office-based occupations with significant travelling to sites or

production lines, shop-based jobs involving minimal manual
work and senior supervisory positions for light manufacturing
companies, e.g. insurance representatives, tour guides, and
journalists.

Class III Occupations involving light skilled manual work, medical

related occupations, shop-based occupations involving light
manual work, e.g. bakers, deliverymen, and hawkers.

Class IV Occupations involving semi-skilled or unskilled manual work

of a medium to heavy nature, e.g. bus drivers, commercial
airline crew, and armed security guards.

Decline Occupations involving very heavy manual work, highly

(uninsurable) specialised skills, dangerous conditions or highly variable
income, e.g. construction workers, oil riggers, professional
divers, timber loggers, musicians, and authors.

8.7 Class I is standard rating while the other occupation classes pay extra
premium. Those in hazardous jobs, such as motorcycle delivery drivers, or
individuals without income, such as housewives, are usually not insurable.

8.8 It is a key requirement for the insured to inform the insurer in writing of any
change in his occupation within a specified timeframe of the change. The
insurer reserves the right to impose a loading, reduce the benefit, or exclude
any claim arising as a result of his new occupation, especially if it is more
hazardous than the previous one. Failure to inform the insurer of the change
in occupation entitles the insurer to repudiate any claim made under the
policy, or to adjust the benefit payable.

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B2. Benefit Amount

8.9 The underwriter will assess the proposed benefits to ensure they are
reasonable for the specific occupation, nature of work involved, and stated
earnings.

B3. Benefit Period

8.10 The benefit period is the duration that the insurer needs to pay out the benefit.
Underwriters may use this to determine the terms of acceptance.

B4. Deferred/Elimination Period

8.11 The deferred/elimination period chosen helps the underwriter to determine

whether there is any moral hazard involved. For example, if an employee opts
for a short deferred/elimination period, the underwriter, before making a
decision on the terms of acceptance, may wish to find out the period for which
the employer will continue to pay the employee in the event of a disability.

9. CESSATION OF BENEFITS

9.1 The benefits under a Disability Income Insurance policy will cease upon the
occurrence of any one of the following events:
▪ when the insured is fit to return to work;
▪ when death occurs; or BENEFIT
PERIOD

▪ when the benefit period has expired.

9.2 If the Disability Income Insurance cover is issued as a rider, the cover will
cease upon the expiry of the basic plan, or when one of the above-mentioned
events occurs.

10. EXCLUSIONS

10.1 Most Disability Income Insurance policies do not pay the disability benefit or
waive the premiums if the disability is directly or indirectly due to:
(a) self-inflicted injury, while sane or insane;
(b) indulgence in alcohol or drug taking, unless taken under the directions of
a registered medical practitioner;
(c) invasion, strike, riot, civil commotion, war (declared or undeclared) or act
of war or warlike operation;
(d) illness or injury sustained while the insured is in the service of the armed
forces of any country, except for reservist in-camp training during
peacetime operation in accordance with the Enlistment Act 1970;
(e) pregnancy or childbirth or any complication arising there from. However,
the exception is in the case of pregnancy, where the disability continues
for more than 90 days after pregnancy termination , the disability will be

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deemed to have commenced 90 days after the termination of the

pregnancy;
(f) participation in any aerial activity, including parachuting and skydiving
or travel in any type of aircraft, other than as a fare paying passenger on
a regularly scheduled flight of a commercial airline;
(g) sexually transmitted disease, or any disability, illness or injury or any
condition or complication arising from or caused by (whether directly or
indirectly) the human immunodeficiency virus (HIV), including Acquired
Immune Deficiency Syndrome (AIDS) and AIDS-related conditions;
(h) participation in any professional sports or hazardous sports, including
racing of any kind on horse or wheels, mountaineering, rock climbing
and scuba diving; and
(i) any pre-existing condition (i.e. condition occurring before the payment
of the initial payment).

The above list of exclusions may differ from insurer to insurer.

11. TERMINATION OF COVER

11.1 The Disability Income Insurance policy will terminate upon the occurence of
one of the following events:
(a) the policy has reached its expiry date;
(b) the premiums due are not paid within the grace period;
(c) the insured dies;
(d) the insured reaches the expiry age as stated in the policy schedule;
(e) the insured resides outside Singapore for an aggregate period of more
than a specified number of days (e.g. 180 days) within one policy year,
without seeking the insurer’s prior written approval for continuation of
cover; or
(f) the insured is not employed in a full-time occupation or profession
continuously for a specified number of days (except if he is disabled).

12. GROUP DISABILITY INCOME INSURANCE

12.1 Group Disability Income Insurance is purchased by the employer for its
employees as an employee benefit. It can be issued on a stand-alone basis or
as a rider.

12.2 Insurers will only issue a Group Disability Income policy if the employer has a
Group Term Life Insurance policy with them, or they may also issue it as a
rider to a Group Term Life Insurance policy.

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A. Coverage Provided By Group Disability Income Insurance

12.3 The cover provided by a Group Disability Income Insurance policy works in
the same way as an individual Disability Income Insurance policy. The benefits
and exclusions are also the same. Hence, we will not repeat them here.

13. GENERAL UNDERWRITING PRINCIPLES FOR GROUP DISABILITY INCOME

INSURANCE

13.1 The selection process in Group Disability Insurance policies is similar to that
for the individual disability plans. As the group must have a Group Term Life
Insurance policy before they are eligible for this disability policy, most of the
underwriting criteria will have already been met. The additional factors that
the underwriters will need to take into consideration are:
(a) nature of the company’s business;
(b) age of the individual employee;
(c) exact nature of work of each employee;
(d) salary of each employee;
(e) benefit period applied for;
(f) benefit amount applied for; and
(g) claims experience of the group under the previous Group Disability
Income Insurance policy.

13.2 The above information will enable the underwriter to determine the
occupational class that each employee falls under, and whether the benefit
amount applied for is justifiable. The past claims experience will enable the
underwriter to determine the overall terms of acceptance.

13.3 Note that some insurers may issue this policy only for white-collar
occupations.

CLAIM
14. DISABILITY INCOME CLAIMS

A. Claims Procedure For Disability Income Policy

14.1 Claims procedures for individual or group disability income are similar. In the
event of a claim, the insured must notify the insurer within a specified period
of time (e.g. 60 days) from the date of commencement of the disability. Failure
to comply with this requirement might cause the claim to be invalidated.
However, the insured could avoid this by proving that it was impossible for
him to notify the insurer within the specified period, and by demonstrating
that he had tried his best to do so.

14.2 The documents that the insurer normally asks for are as follows:
(a) claim form giving the personal particulars of the insured, as well as
details of his occupation and disability;

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(b) claimant’s statement;

(c) Clinical Abstract form (see Appendix 4A);
(d) physician’s statement/doctor’s statement to be completed by the
insured’s attending physician giving full details of his disability;
(e) NRIC or birth certificate for verification of the insured’s age;
(f) evidence of earnings in the form of income tax returns (IR8A form),
copies of payslips for the 12 months prior to the commencement of
disability, and letter from employer to certify that the claimant (insured)
is not being paid during the period of disability;
(g) letter from company certifying that the insured’s service has been
terminated (if available);
(h) copies of Medical Certificates;
(i) all available Laboratory and Tests results;
(j) a copy of the Police Report if the cause of the disability is due to an
accident; and
(k) a copy of the Incident Report (required to be submitted to the Ministry of
Manpower if the incident occurs at the workplace).

14.3 The insurer may request for any other relevant supporting documents or
information not listed above, on a case-by-case basis.

14.4 Some insurers may set a deadline for the submission of the evidence of
disability or may require the insured to bear the cost of the evidence (e.g.
medical reports) used to support his claim.

14.5 For long-term disabilities, the insurer may request, at specified times,
evidence to prove that the insured is still disabled.

B. Foreign Residency During Claims Period

14.6 If the insured resides outside Singapore while the policy benefits are payable,
the insurer may impose some or all of the conditions as specified below:
(a) The insurer must be notified of the change of residence within 30 days of
the change.
(b) The insurer has approved the new country of residence.
(c) The insurer has determined that the evidence, which can be submitted to
make or support a claim under the policy from the new country of
residence, is of similar (or better) standard, in terms of quality and
reliability, as compared to that which would be available if the insured
were to remain in Singapore.
(d) The insurer has determined that the expertise and facilities for the care,
treatment and rehabilitation of the insured in the new country of
residence are of a similar (or better) standard, as compared to those
which would be available in Singapore.
(e) The insurer reserves the right to require an independent examination of
the insured by its preferred doctor as and when reasonable.

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14.7 If any of these conditions are not satisfied, the insurer reserves the right to
suspend the benefits payable under the policy until such time that the insured
returns to Singapore, and that the insurer receives satisfactory evidence to
resume payment of benefits.

15. CONCLUSION

15.1 Disability Income Insurance policy provides benefits that are not available
under other types of policies. The regular monthly income replaces a portion
of the insured’s lost income, when he is disabled and unable to work. It helps
to ease the financial difficulties that the insured and his family may face in
such a situation. The policy also pays a reduced benefit if the insured is able
to return to work after a disability, but accepts a lower-paying job. This helps
the family maintain a standard of living similar to what they have pre-
disability in addition, since there are no specifications on how the income
received should be used, it can be utilized for any purpose, including repaying
an outstanding loan.

15.2 As this policy contains a Limitation Clause to prevent over-insuring, you must
ensure that the deferred period and percentage of salary to be insured are
correct, so that in the event of a claim, your client will not be subject to the
Limitation Clause. Furthermore, you must ensure that the cover will continue
for the whole of the insured’s working life. As such, a thorough fact-finding or
advisory process is important.

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 4. Disability Income Insurance

APPENDIX 4A

ABC Life Ltd

21 Any Street, ABC Centre, Singapore 654321
Tel: (65) 6789 8181 Fax: (65) 6789 8282
Clinical Abstract Form

Important Notes:
1. This form is required for the application of medical report from hospital/clinic and should be completed by the
patient or the patient’s parent (if patient is below 21 years of age) or the patient’s next-of-kin (if patient is
deceased)

2. For request of medical report from hospital, this form is to be submitted to the Medical Records Department of the
hospital.

Date (dd/mm/yyyy) _____________

To: Doctor-In-charge

Dear Sir/Madam

Name of Patient______________________________________ NRIC No.____________________

Re: Application for Medical Report

I hereby authorise you to furnish ABC Life Ltd, 21 Any Street Centre, Singapore 654321, with a detailed medical
report on the above-named patient. This report is required for insurance purposes. I agree that a photocopy of
this form shall be as valid as the original.

Yours sincerely

_________________________ ____________________________________________
Signature of Patient Signature of Patient’s Parent/Patient’s Spouse/Next-of-kin1
(if patient is below 21 or is deceased)

Particulars of Patient

Name (as shown in NRIC)

NRIC No.

Address

Particulars of Patient’s Parent/Patient’s Spouse/Next-of-kin (if patient is below 21 or is deceased)

Name (as shown in NRIC)

NRIC No.

Address

Relationship to patient

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CHAPTER
04
DISABILITY INCOME INSURANCE

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

What is Disability Income It is sold as an income-protection product in that it helps to replace a portion of the
Insurance? insured’s income that he loses if he becomes incapacitated and unable to work as a
result of an accident or illness, subject to certain conditions.
Differentiate between Total And Permanent Disability
Disability Income Disability Income Insurance
Benefit
Insurance and Total and
Permanent Disability Provides an income replacement if the Serves to accelerate the death benefit
Benefit insured is unable to work. payable under a Life Insurance policy,
to alleviate the financial burden
or hardship of the insured and his
dependants.
Benefits are payable on a monthly Benefit under the Total and
basis for up to a fixed number of years Permanent Disability Benefit is
(such as five or ten years), or until the payable in instalments, or one lump
insured reaches a certain age (such as sum, depending on the terms and
the age of 60 or 65 years). conditions as specified in the Life
Insurance policy.
Disability definition relates to the Disability is defined to be total and
extent the insured can fulfil the duties permanent, such as loss of limbs or
of his occupation. loss of eyesight.
It can be purchased as a stand-alone It is usually incorporated into the Life
policy or as a rider. Insurance policies in Singapore.
Maximum sum assured is up to a Sum assured is not pegged to salary.
specified percentage of the salary.
Escalation benefit is available. No escalation benefit.
Partial disability benefit is available. Partial disability benefit is not
available.
Choice of deferred/elimination period No deferred period as specified (but
is available (e.g. one month, three usually there is a 6-month waiting
months, six months, etc.). period requirement as proof of
permanent disability).
It is usually only available to working There is usually no restriction on
adults with earned income/salary. non-working people, e.g. children and
housewives, as it is bundled with the
death benefit under a Life Insurance
policy.
How Disability Income • Insurers will allow the benefit amount to cover only up to 75% of the insured’s
Insurance works? average income over the past 12 months immediately prior to his disability.
• Most insurers also impose a ceiling on the income to be covered (e.g. S$15,000).
• Some insurers grant a lower percentage for the self-employed, e.g. 60% of the
past 12 months’ income.
• The purpose of replacing only a certain percentage of the insured’s income is to
ensure that the insured will not be better off financially from the benefit which
he receives under his Disability Income Insurance policy, so that he will have the
incentive to go back to work.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Total disability Term “Total Disability” is clearly defined in the policy and may take one of the
following forms:
1. Own occupation disability;
2. Modified own occupation disability;
3. Any occupation disability and
4. Severe disability.
Partial disability When the insured recovers from a total disability to perform some major duties of
his occupation, but at a salary which is at least 25% lower than the pre-disability
salary.
Recurrent disability (linked • The insured who has been receiving the disability benefits returns to work but
claims) suffers a relapse within a specified period of time (usually 180 days) from the
same cause, most insurers will waive the deferred/elimination period, and the
benefit payments will re-commence immediately.
• In such a case, the claim will be treated as a continuation of the earlier claim for
the purpose of determining the duration of the benefit payment period.
Benefit period • It is the maximum period for which disability benefits are payable to the insured
for any one episode of disability.
• It can be short term (e.g. five years) or long term (e.g. up to age of 60 years).
• The shorter the benefit term, the lower will be the premiums.
Deferred/elimination • A Disability Income Insurance policy will start paying its benefits after the
period insured has been disabled for a specified period known as the deferred,
elimination or pre-benefit period.
• The longer the deferred period, the cheaper will be the premium, since the
duration and frequency of claims are thereby reduced.
Difference between “own Own Occupation
occupation”, “modified • “The insured’s inability to perform the material duties of his own occupation”
own occupation”, “any Modified Own Occupation
occupation” and “severe • “The insured’s inability to perform any gainful occupation or a similar
disability“ definitions occupation for which the insured is reasonably suited by reason of education,
training or experience”
Any Occupation
• This is a more restrictive definition of Total Disability. It means: “the insured’s
inability to perform any occupation”
Severe Disability
• This definition follows the Long-Term Care Insurance definition where the
insured is unable to perform at least three of the six Activities of Daily Living
(ADLs) – washing, dressing, feeding, toileting, mobility, and transferring.
Eligibility criteria for • Keep the policy in force;
payment of Disability • Be working (employed) or in-between jobs when being disabled;
Income Insurance benefit • Still be disabled after the deferred/elimination period;
• Meet the definition of total or partial disability as stated in the policy;
• Not have reached the expiry age as stated in the policy;
• Not have resided outside Singapore for more than a certain period of time
(usually not more than six months); and
• Not have other sources of income (e.g. payment from Work Injury
Compensation Insurance), which when totalled up, is more than the benefits
due to him under his Disability Income Insurance policy.

Types of benefits offered by Disability Income Insurance

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Total disability benefit The main benefit offered by Disability Income Insurance is the monthly cash benefit
payable to the insured to replace his lost income (e.g. up to 75%), when he becomes
totally disabled through an accident or illness.
Partial disability benefit Partial Disability Benefit is also known as “Rehabilitation Benefit”. It provides a
reduced benefit to the insured if he is able to return to work at a reduced income
of 75% of his Pre-disability Earnings, or lower, even though he has not been fully
recovered.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Rehabilitation expense Insurers encourage the disabled insured to participate in rehabilitation
benefit programmes. They will reimburse an insured for the rehabilitation costs incurred.
Escalation benefit It is a benefit offered by insurers as a hedge against inflation. With an additional
premium, the insured can opt for a 3% or 5% escalation benefit per annum.
Waiver of premium benefit The premiums due under the Disability Income Insurance policy will be waived
during the disability benefit payout period (applies to both total and partial
disability).
Death benefit Most insurers provide a lump sum amount to be paid to the insured’s dependants,
in the event of the insured’s death.
How to compute the Pre-disability Earnings - Present Earnings
partial disability benefit? X Total Disability Benefit
Pre-disability Earnings
How the escalation benefit Eddy, an engineer, became disabled on 30 June 2018. He was insured for S$6,000
works? (75% of his monthly salary of S$8,000) and had opted for a 3% per annum
escalation benefit and a 6-month deferred period.

The events following his disablement were as follows:

1-1-2019: Insurer made the first monthly payment of S$6,000

1-2-2019: Insurer made the second monthly payment of S$6,000

Eddy continued to be disabled. Insurer continued to pay S$6,000 each month.

1-1-2020: Insurer paid S$6,180 [(S$6,000 + S$6,000 x 3% (escalation benefit)]

1-2-2020: Eddy had since found a job as a clerk which paid him S$2,000 a month.
The insurer paid him a partial disability benefit of S$4,635

Pre-disability Earnings - Present Earnings

X Disability Benefit
Pre-disability Earnings

S$(8,000 - 2,000)
= X S$6,180
S$8,000

= S$4,635

How the limitation of Purpose is to prevent over-insuring by restricting the monthly benefit payable, so
disability benefit clause that the total benefit (including other Disability Income policies that the insured may
works? have) shall not exceed the insured’s pre-disability earnings or some proportion of it.

In the event of a claim, the disability benefit payable will be reduced by the
following sources of income:
1. Payments from other insurance policies against disability (except the Total and
Permanent Disability Benefit under Life Insurance policies), including Work
Injury Compensation Insurance; and
2. Any continuing salary, commission or other incomes derived from the insured’s
occupation or business in which he was engaged immediately prior to his
disability.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Features of Disability • Can be issued as a stand-alone (for which then, no rider is possible) policy, or as
Income Insurance a rider to a basic Life Insurance plan.
• Provides a regular monthly income during the insured’s total and partial
disablement.
• Premiums are waived during the benefit period.
• Benefits may be level, or may increase at a given rate.
• A choice of deferred/elimination period.
• A choice of benefit period.
• A choice of escalation benefit (if available).
• Level premium can be paid on a monthly, quarterly, half-yearly or annual basis,
depending on the insurer’s practice.
• Payment of partial disability benefits if a person returns to work earning a lower
income.
• Provision of rehabilitation expense benefit.
• Provision of death benefit.
• No restriction on the use of the cash benefits paid.
• Disability benefit may discontinue if the insured stays outside Singapore for a
specified period.
• Cover will be terminated if the insured resides outside Singapore for more than
a continuous specified number of days, within any one policy year, unless the
insurer grants the insured the continuity of cover (an additional premium may
be charged).
• Cover will be terminated if the insured is not engaged in any full-time
occupation or profession for a continuous period of a specified number of days,
when he is not suffering from a disability (see Section 11 of this chapter for the
other causes for the termination of a policy).
• Policy is usually guaranteed renewable and non-cancellable (the insurer has the
right to adjust the premium rates if the insured changes his occupation to one
which is of a higher risk) by the insurer.
• No surrender value, i.e. the insured cannot return the policy to the insurer for
cancellation in exchange for cash payment.
• No assignment is allowed.
• Policy cannot be written as a third-party policy.
• Benefits received are non-taxable.
• Policy will lapse if the premium is not paid within the 30 days’ grace period.
Documents required Individual (Salaried Employee)
for the underwriting Proposal form (also called Application form) plus:
of Disability Income 1. Computerised payslip; or
Insurance for an individual 2. Certified letter from company (with company letterhead) or
employee, as well as for 3. Notice of Assessment; or
the self-employed person 4. Central Provident Fund (CPF) Statement (six months) and large amount
questionnaire if the annual benefit is more than a certain amount, e.g.
S$60,000; and
5. Medical test report (e.g. medical examination report, etc.) based on the age and
amount of disability benefit proposed.

Self-employed Person
Proposal form plus:
1. Notice of Assessment for the last three years; or
2. Audited company’s accounts for the last three years; and large amount
questionnaire if the annual benefit is more than a certain amount (e.g.
S$60,000); and
3. Medical test report (e.g. medical examination report, etc.) based on the age and
amount of disability benefit proposed.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Underwriting Occupation is a crucial underwriting consideration for two reasons:
considerations for 1. Some occupations have a higher risk of disability from accidents (e.g. lorry
Disability Income driver), or illnesses, than others.
Insurance: 2. It is easier to return to work with some degree of incapacity in some
• Occupation occupations than in others.

Typical rating structure as follows:

1. Class I.
2. Class II.
3. Class III.
4. Class IV.
5. Decline (uninsurable).
Underwriting Underwriter will assess to ensure the benefits proposed are reasonable for the type
considerations for of occupation, nature of work involved, and stated earnings.
Disability Income
Insurance:
• Benefit amount
Underwriting Benefit period is the duration that the insurer needs to pay out the benefit.
considerations for Underwriters may use this to determine the terms of acceptance.
Disability Income
Insurance:
• Benefit period
Underwriting The deferred/elimination period chosen helps the underwriter to determine
considerations for whether there is any moral hazard involved.
Disability Income
Insurance:
• Deferred/ elimination
period
When would the benefits • When the insured is fit to return to work;
under a Disability Income • When death occurs; or
Insurance policy cease to • When the benefit period has expired.
be payable?
Exclusions commonly 1. Self-inflicted injury, while sane or insane;
found under Disability 2. Indulgence in alcohol or drug taking, unless taken under the directions of a
Income Insurance registered medical practitioner;
3. Invasion, strike, riot, civil commotion, war (declared or undeclared) or act of war
or warlike operation;
4. Illness or injury sustained while the insured is in the service of the armed forces
of any country, except for reservist in-camp training during peacetime operation
in accordance with the Enlistment Act 1970;
5. Pregnancy or childbirth or any complication arising there from, except in the
case of pregnancy, where the disability continues for more than 90 days after
the termination of pregnancy, the disability will be deemed to have commenced
90 days after the termination of the pregnancy;
6. Participation in any aerial activity, including parachuting and sky-diving or travel
in any type of aircraft, other than as a fare paying passenger on a regularly
scheduled flight of a commercial airline;
7. Sexually transmitted disease, or any disability, illness or injury or any condition
or complication arising from or caused by (whether directly or indirectly) the
human immunodeficiency virus (HIV), including Acquired Immune Deficiency
Syndrome (AIDS) and AIDS-related conditions;
8. Participation in any professional sports or hazardous sports, including racing of
any kind on horse or wheels, mountaineering, rock climbing and scuba diving;
9. Any pre-existing condition (i.e. condition occurring before the payment of the
initial payment).

The above list of exclusions may differ from insurer to insurer.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Events that will cause • Policy has reached its expiry date;
a Disability Income • Premiums due are not paid within the grace period;
Insurance policy to be • Insured dies;
terminated • Insured reaches the expiry age as stated in the policy schedule;
• Insured resides outside Singapore for an aggregate period of more than a
specified number of days (e.g. 300 days) within one policy year, without seeking
the insurer’s prior written approval for continuation of cover; or
• Insured is not employed in a full-time occupation or profession for a continuous
period of a specified number of days (except if he is disabled).
Coverage and features of Cover provided by a Group Disability Income Insurance policy works in the same
Group Disability Income way as an individual Disability Income Insurance policy. The benefits and exclusions
Insurance are also the same
General underwriting The selection process in Group Disability Insurance policies is similar to that for the
principles for both individual disability plans.
Individual and Group
Disability Income As the group must have a Group Term Life Insurance policy before they are eligible
Insurance for this disability policy, most of the underwriting criteria will have already been
met.

The additional factors that the underwriters will need to take into consideration are:
1. Nature of the company’s business;
2. Age of the individual employee;
3. Exact nature of work of each employee;
4. Salary of each employee;
5. Benefit period applied for;
6. Benefit amount applied for; and
7. Claims experience of the group under the previous Group Disability Income
Insurance policy.
General claims procedures Claims procedures for individual or group disability income are similar.
for both Individual and
Group Disability Income • In the event of a claim, the insured must notify the insurer within a specified
Insurance period of time (e.g. 60 days) from the date of commencement of the disability.
• Failure to comply with this requirement might cause the claim to be invalidated,
unless the insured could prove that it was not possible for him to notify the
insurer within the specified period, and that he had tried his best to do so.
• If the insured resides outside Singapore while the policy benefits are payable,
the insurer may impose conditions.
General claims documents • Claim form giving the personal particulars of the insured, as well as details of
for Disability Income Policy his occupation and disability;
• Claimant’s statement;
• Clinical Abstract form (see Appendix 4A);
• Physician’s statement/doctor’s statement to be completed by the insured’s
attending physician giving full details of his disability;
• NRIC or birth certificate for verification of the insured’s age;
• Evidence of earnings, which can be in the form of income tax returns (IR8A
form), copies of payslips for the 12 months prior to the commencement of
disability, and letter from employer to certify that the claimant (insured) is not
being paid during the period of disability;
• Letter from company certifying that the insured’s service has been terminated
(if available);
• Copies of Medical Certificates;
• All available Laboratory and Tests results;
• A copy of the Police Report if the cause of the disability is due to an accident;
and
• A copy of the Incident Report (required to be submitted to the Ministry of
Manpower if the incident occurs at the workplace).

15
Health Insurance

CHAPTER 5
LONG-TERM CARE INSURANCE

CHAPTER OUTLINE

1. Introduction
2. What Is Long-Term Care (LTC) Insurance?
3. Benefits Offered Under LTC Insurance
4. Other Benefits Provided Under LTC Insurance
5. Maximum Benefit
6. Benefit Payment Term
7. ElderShield
8. CareShield Life

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ explain Long-Term Care (LTC) Insurance
▪ know the types of LTC Insurance
▪ know the benefits offered under LTC Insurance
▪ know the eligibility criteria for payment of LTC benefits
▪ know what are considered as “Activities of Daily Living (ADLs)” and how they are
related to the benefit payment under LTC Insurance
▪ know the other benefits provided under LTC Insurance
▪ explain maximum benefit sum payable and benefit payment term under LTC
Insurance
▪ know what is ElderShield
▪ know the persons covered under ElderShield
▪ know how to check ElderShield coverage
▪ know the scope of protection under ElderShield and its premiums
▪ explain when an insured is eligible to claim under ElderShield
▪ know how to make a claim under ElderShield
▪ know what is CareShield Life and how it provides better protection
▪ know the differences between ElderShield and CareShield Life
▪ explain the features of MediSave Care

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 5. Long-Term Care Insurance

Contents
CHAPTER OUTLINE .................................................................................................................86
LEARNING OUTCOMES ..........................................................................................................86
1. INTRODUCTION .............................................................................................................88
2. WHAT IS LONG-TERM CARE (LTC) INSURANCE? .......................................................88
3. BENEFITS OFFERED UNDER LTC INSURANCE ............................................................89
A. Types Of LTC Policies .............................................................................................89
B. Eligibility Criteria For Payment Of LTC Benefits ....................................................89
B1. Inability To Perform Activities Of Daily Living (ADLs) Or Advanced
Dementia...........................................................................................................89
B2. Meets The Deferred Period Requirement........................................................91
B3. Does Not Cover Pre-existing Conditions .........................................................91
4. OTHER BENEFITS PROVIDED UNDER LTC INSURANCE ............................................. 91
5. MAXIMUM BENEFIT ......................................................................................................92
6. BENEFIT PAYMENT TERM ............................................................................................92
7. ELDERSHIELD .................................................................................................................93
A. What is ElderShield? ...............................................................................................93
A1. Overview ...........................................................................................................93
A2. Monthly pay-outs .............................................................................................93
A3. Fixed premiums ................................................................................................93
A4. Government administration of ElderShield ....................................................93
B. The Persons Covered Under ElderShield...............................................................93
B1. The Persons Enrolled .......................................................................................93
B2. Checking on ElderShield Coverage .................................................................94
B3. Protection Afforded Under ElderShield ..........................................................94
B4. Premiums of ElderShield .................................................................................94
B5. When The Insured Is Eligible to Claim ............................................................94
B6. Making A Claim ................................................................................................95
8. CARESHIELD LIFE ..........................................................................................................95
A. A Comparison Between CareShield Life And ElderShield .................................... 97
B. MEDISAVE CARE .....................................................................................................97
C. OTHER LONG-TERM CARE FINANCING SCHEMES AND SUBSIDIES ................. 98
C1. Interim Disability Assistance Programme for the Elderly (IDAPE) ................ 98
C2. ElderFund .........................................................................................................98
C3. Pioneer Disability Assistance Scheme (PioneerDAS) .................................... 98
C4. Seniors Mobility and Enabling Fund (SMF)....................................................98
C5. Home Caregiving Grant (HCG) ........................................................................99
C6. Migrant Domestic Worker Levy Concession for Persons with Disabilities
[MDW Levy Concession (PWD)] ....................................................................99
C7. Caregivers Training Grant (CTG).....................................................................99

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Health Insurance

1. INTRODUCTION

1.1 Growing old gracefully and leading a healthy, independent lifestyle is the
desire of most people. However, age-related illnesses and injuries may
prevent them from fulfilling this desire. Chronic medical conditions like
diabetes, stroke, hypertension, dementia, Alzheimer’s disease, and the
complications that arise from these medical conditions may render the elderly
people unable to care for themselves independently. They will need help with
Activities of Daily Living (ADLs), such as feeding, bathing, dressing, using the
toilet, and moving around. Some may even require special care in a facility,
such as a nursing home. The costs of such care can strain one’s financial
resources and, therefore, become a financial burden to one’s family.

1.2 Singapore’s population is rapidly ageing and by 2025, the nation is expected
to attain “super-aged” status. One in four citizens will be aged 65 and above
by 2030. An ageing population, coupled with increased longevity, will lead to
higher national healthcare and long-term care expenditure, particularly for the
elderly. With fewer children to support parents and grandparents, and the
increasing numbers of elderly people living alone, more paid help, such as
domestic workers, home-based caregivers and nurses, will also be needed.
This will be a growing concern for the Government, as it will have to ensure
that seniors have adequate protection against the cost of long-term care when
such needs arise.

1.3 In this chapter, we will look at how Long-Term Care Insurance can help
provide funds to supplement the cost of financing an individual’s long-term
care needs.

LTCI

2. WHAT IS LONG-TERM CARE (LTC) INSURANCE?

2.1 LTC Insurance is designed to meet the costs of care for a person who, because
of an accident, illness, frailty or a combination of these, is unable to function
independently. Instead, he must depend on others to help him with the most
basic ADLs.

2.2 There are two key advantages of buying LTC, while clients are still young and
healthy, with no existing medical disabilities.
 Firstly, the product will cost less as the premiums will rise considerably
with age.
 Secondly, buying at a younger age also means that there is less risk of
being rejected for cover owing to existing disabilities or medical history.

2.3 LTC Insurance covers care generally excluded by other

Medical Insurance. It will pay in addition to the
insured’s other insurance policies e.g. MediShield Life,
Hospital Income and Critical Illness Insurance policy.

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 5. Long-Term Care Insurance

3. BENEFITS OFFERED UNDER LTC INSURANCE

A. Types Of LTC Policies

3.1 Two types of LTC policies are available and they are:
(a) “Service-based” policy pays a benefit when an insured needs to use the
service which is covered under the policy (e.g. home care or nursing care).
Benefits can be paid in two ways:
 Reimbursement of the cost incurred in using one of the services
covered under the policy, up to the covered amount; or
 a pre-agreed insured amount regardless of the actual cost incurred for
the services.

(b) “Disability-based” policy pays a benefit when an insured:

 Is diagnosed to be suffering from advanced dementia (including
Alzheimer’s disease;
 is assessed to be suffering significant limitations in ADLs; or
 is evaluated to have a deterioration or loss of intellectual capacity
resulting in a significant reduction in mental and social functioning,
thus the need for continuous supervision.

3.2 Benefits are paid monthly

(a) to the insured upon being certified by an approved and registered medical
practitioner to be unable to perform the specified minimum number of
defined ADLs after a prescribed period. Some insurers pay 100% of the LTC
monthly benefit if the insured is unable to perform at least the minimum
number of ADLs, whereas others pay on a graduated scale. For example, if
the insured cannot perform two of the six ADLs, only 50% of the LTC
monthly benefit is payable, but if the insured cannot perform four out of
the six ADLs, 100% of the LTC monthly benefit will then be payable.

B. Eligibility Criteria For Payment Of LTC Benefits

3.3 The insured does not need not be hospitalised to be eligible for the LTC
benefits. He can use the benefits received under his LTC to cover the costs of
engaging a domestic helper (maid), staying in a nursing home, or to
participating in an assisted-living facility or home-care programme.

3.4 However, he must meet certain other criteria, before he can be eligible to
claim for the LTC benefits.

B1. Inability To Perform Activities Of Daily Living (ADLs) Or Advanced Dementia

3.5 Inability To Perform ADLs

(a) One of the key criteria for paying the benefits in LTC policies is the insured’s
inability to perform specific essential actions required for an individual to

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Health Insurance

live independently without support. These essential actions are known as

“Activities of Daily Living” (ADLs).

Washing Dressing Feeding

Activities of Daily
Living (ADLs)

Toileting
Mobility Transferring

(b) The definitions of these ADLs are important. Some policies pay the benefits
for not being able to perform one out of six ADLs while others require three
out of six ADLs to be affected for benefits . Premium for the former is more
expensive than the latter.

(c) The ADLs are defined as follows:

 Washing: the ability to wash in the bath or shower (including getting
into and out of the bath or shower) or wash by other means.
 Dressing: the ability to put on, or take off, secure and unfasten all
garments and, as appropriate, any braces, artificial limbs, or other
surgical or medical appliances.
 Feeding: the ability to feed oneself after the food has been prepared
and made available.
 Toileting: the ability to use the lavatory or manage bowel and bladder
function through the use of protective undergarments (e.g. diapers) or
surgical appliances (e.g. urinary catheters) if appropriate.
 Mobility: the ability to move indoors from room to room on level
surfaces.
 Transferring: the ability to move from a bed to an upright chair or
wheelchair, and vice versa.

Washing Dressing Feeding Toileting Mobility Transferring

(d) Failure to perform any of the above ADLs means that the insured will be
unable to perform the task, even with the aid of assistive devices (e.g.
wheelchair, clutches) on his own and always require the assistance of
another person throughout the entire activity.

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3.6 Advanced Dementia

(a) Advanced dementia means a condition where the insured experiences a
deterioration or loss of intellectual capacity or abnormal behaviour, arising
from Alzheimer’s disease or irreversible organic disorders excluding
neurosis and psychiatric illness. This condition results in significant
reduction in mental and social functioning requiring the continual
supervision of the insured to prevent the insured from harming others or
himself. Advanced dementia is confirmed by clinical assessments accepted
standardised questionnaires or tests.
(b) The dementia must arise from an organic reason, and that the insured
requires continual supervision.

B2. Meets The Deferred Period Requirement

3.7 Besides the requirement of failure to perform the ADLs, the insured may also
need to fulfil a deferred period requirement before being eligible to receive the
LTC benefits. Most insurers have a deferred period of 90 days commencing from
the first day of any continuous period of inability to perform the ADLs. Many
seniors may suffer short periods of dependence after a stay in hospital for an
illness or injury, and a deferred period will ensure that short-term claims are
avoided and, therefore, reduce the premium.
Deferred Period usually
B3. Does Not Cover Pre-existing Conditions 90 Days

3.8 LTC policy would not pay if the claim arose from a pre-existing condition that
was not disclosed in the proposal form. If disclosed, the insurer may accept the
application at standard premium rates, or at sub-standard premium rates, i.e.
may charge a higher premium, accept the application with exclusions, or reject
the application. The decisions taken regarding applications and the rates of
premiums application are largely dependent on the severity of the conditions of
the proposer (also called the applicant or the intending insured).

3.9 The purpose of the provision is to guard against people buying the coverage
knowing that they have a condition that is likely to lead to a claim. This is also
known as anti-selection against the insurer.

3.10 The insurer may also impose other policy conditions for the insured to comply
with, before they are eligible to claim the benefits.

4. OTHER BENEFITS PROVIDED UNDER LTC INSURANCE

4.1 Insurers also usually include a death benefit which is payable to the insured’s
beneficiaries upon the death of the insured. However, the quantum is small,
ranging from an indicative amount of S$5,000 to six times the LTC monthly
benefit for example. Upon payment of the death benefit, the cover ceases.

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4.2 In addition to LTC and death benefits, some insurers may also package it with
other benefits, such as:
(a) Extended Care Benefit – an extra specified sum, such as an extra monthly
benefit, is payable every three or five years; and
(b) Rehabilitation Benefit – a reduced benefit (e.g. 50% of the insured amount)
when the insured makes partial recovery (such as if he is unable to do two
instead of three ADLs).
(c) Dependant care benefit – pays a % of the severe disability benefit for a
specific period when the insured has a dependent child at the point of
claim.
(d) Waiver of premium benefit – premium will be waived after the deferment
period when the insured qualifies for the severe disability benefit (inability
to do ADLs) claim under the policy.

4.3 These benefits are subject to limits on the maximum sum that can be claimed,
as well as limits on the benefit payment period. Otherwise, the product will
become prohibitively expensive. The main purpose of LTC Insurance is not to
fulfil the need of income protection, or for reimbursement of medical
expenses, e.g. hospital and surgical bills. Such needs are better met by other
policies, such as Disability Income Insurance and/or Hospital and Surgical
Insurance.

5. MAXIMUM BENEFIT

5.1 For LTC benefits, the amount an insured can claim depends on the chosen
plan. For example, it may be between S$300 and S$5,000 per month, provided
he is unable to perform the specified number of ADLs, and meets the other
policy conditions. Some insurers may limit the maximum benefit sum
payable.

6. BENEFIT PAYMENT TERM

6.1 While most insured individuals prefer the policy benefits to be payable as long
as they live, the premiums for such plans may be too expensive for them.
Some insurers allow customers to choose the benefit payment term. This
means that the benefits will be payable for the chosen period (e.g. 12 years of
benefits). The premiums payable for a shorter benefit payment term will be
cheaper and more affordable. During the benefit payment period, premiums
payable are waived.

6.2 Notwithstanding the above, there are LTC insurance schemes (with affordable
premiums) that offer lifetime cash pay-outs for as long as the insured is
severely disabled. Such schemes include CareShield Life which we shall
examine in a later part of this chapter.

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7. ELDERSHIELD1

A. What is ElderShield?

7.1 ElderShield is a long-term care insurance scheme targeted at severe disability,

especially during old age.

A1. Overview

7.2 When it was introduced in 2002, ElderShield provided pay-outs of S$300 per
month for up to five years upon severe disability. It was subsequently
reviewed in 2007 to provide better benefits of S$400 per month for up to six
years. The benefits received depends on the scheme the insured joined. Please
note that the ElderShield scheme is no longer open for new applications.

A2. Monthly pay-outs

7.3 ElderShield provides monthly cash pay-outs for up to 72 months to help pay
out-of-pocket expenses for the care of those with severe disabilities.

A3. Fixed premiums

7.4 Premiums are determined when the insured enters the scheme, and the
premiums remain fixed. The insured must pay the premium each year until
the policy anniversary after his 65th birthday or when the insured makes a
successful claim.

A4. Government administration of ElderShield

7.5 From 1 November 2021, the Government has taken over the administration of
ElderShield from private insurers (Singlife, Great Eastern Life Assurance Co
Ltd, and Income Insurance Limited).

B. The Persons Covered Under ElderShield

B1. The Persons Enrolled

7.6 Until 2019, all Singapore Citizens and Singapore Permanent Residents with
MediSave Accounts were enrolled in ElderShield at the age of 40, unless they
opted out.

7.7 Since 2020, auto-enrolments into ElderShield were discontinued. Singapore

Citizens and Singapore Permanent Residents born in 1980 and after and aged
30 and above after 2020 were instead enrolled into CareShield Life.

7.8 Those born on 30 September 1932 or before, or had a pre-existing disability as

of 30 September 2002, were ineligible to enrol in ElderShield in 2002. Instead,
they may be eligible for assistance under the Interim Disability Assistance
Programme for the Elderly (IDAPE) if they develop severe disabilities.

1
https://www.cpf.gov.sg/member/healthcare-financing/eldershield

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7.9 To learn more about IDAPE, please visit this website:

https://www.aic.sg/financial-assistance/interim-disability-assistance-
programme-elderly

B2. Checking on ElderShield Coverage

7.10 The following steps should be performed in checking on one’s coverage:

(a) Log in to one’s CPF Digital Services using one’s Singpass.
(b) Hover over "My CPF" and click on "Healthcare" under "My dashboards".
(c) Click on “Long-term care insurance” on the anchor links or scroll down
to the “Long-term care insurance” section.

7.11 If the person is not covered, no information on ElderShield will be reflected.

To check one’s coverage, he or she should visit the CPF website at Central
Provident Fund Board (CPFB).

B3. Protection Afforded Under ElderShield

7.12 ElderShield provides the following protection and benefits:

(a) Lifetime coverage – The insured continues to be covered for life once he
has completed paying all his premiums at age 65.
(b) Up to 72 months of cash pay-outs – The insured stands to receive a
monthly cash pay-out for up to five or six years, depending on the plan
chosen. With ESH400, he will get S$400 per month for up to 72 months,
and with ESH300, he will get S$300 per month for up to 60 months.
(c) Fully payable with MediSave – The insured can use his MediSave to pay
his ElderShield premiums. Family members can help the insured by
paying from their own MediSave or topping up the insured’s account
with cash.
(d) Worldwide coverage – The insured will remain covered, have the ability
to make claims, and receive pay-outs no matter where he lives in the
world.

B4. Premiums of ElderShield

7.13 The premium payment for ElderShield is up to age 65, with a coverage for life.
ElderShield premiums are based on the age at which the insured joins the
scheme and are payable until the policy anniversary after his 65th birthday.

7.14 To learn more about ElderShield premiums, please visit this website:
https://www.cpf.gov.sg/member/healthcare-financing/eldershield/eldershield-
premiums.

B5. When The Insured Is Eligible to Claim

7.15 One can apply to receive ElderShield pay-outs if he is determined by an MOH-

accredited assessor to be unable to carry out three of the six activities of daily
living (ADL) listed below:
(a) Washing – The ability to wash in the bath or shower (including getting

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into and out of the bath or shower) or wash by other means.

(b) Dressing – The ability to put on, take off, secure, and unfasten all
garments and, as appropriate, any braces, artificial limbs, or other
surgical or medical appliances.
(c) Feeding – The ability to feed oneself food after it has been prepared and
made available.
(d) Toileting – The ability to use the toilet or manage bowel and bladder
function using protective undergarments, such as diapers or surgical
appliances, if appropriate.
(e) Mobility – The ability to move indoors from room to room on level
surfaces.
(f) Transferring – The ability to move from a bed to an upright chair or
wheelchair, and vice versa.

B6. Making A Claim

7.16 To make a claim, one should complete the claim assessment. First, the insured
needs to arrange for a disability assessment which can be conducted by any
MOH-accredited severe disability assessor. For a list of assessors, please visit
this link:
https://www.aic.sg/financial-assistance/Documents/ApplicationForms/IDAPE
Assessor List.pdf

7.17 The assessment costs S$100 for a clinic assessment and S$250 for a house
call, both of which are payable to the assessor at the time of assessment. The
full fee will be reimbursed if the insured is assessed to be severely disabled
and will be reimbursed with the first pay out.

7.18 Next, the insured needs to log in to AIC’s e-Service portal (eFASS) with his
Singpass to submit a claim. The insured can access the link: AIC eFinance to
learn more about submitting a claim. In the event that the insured is not able
to complete it on his own e.g. if he lacks mental capacity, his
donee/deputy/immediate family member or caregiver may do so on his behalf.

8. CARESHIELD LIFE2

8.1 CareShield Life was launched on 1 October 2020 to provide enhanced benefits
compared to ElderShield. CareShield Life is a long-term care insurance
scheme that supports the basic long-term care needs of Singaporeans with
severe disability.

8.2 CareShield Life is compulsory for all Singaporeans born in 1980 or later. Those
born 1980 to 1989 were automatically enrolled in 2020 at one go, while those
born 1990 onwards will be automatically enrolled under the scheme upon
turning 30. Those with pre-existing disability and illnesses will still be covered
under CareShield Life.

2
https://www.careshieldlife.gov.sg

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8.3 For a person born in 1979 or earlier:

(a) His current ElderShield plans will continue to protect him.
(b) He could choose to join CareShield Life if he does not have severe
disabilities (defined as the inability to perform at least three out of six
ADLs).
(c) He can enjoy participation incentives of up to S$2,500, if he joins by 31
December 2023. The Merdeka and Pioneer Generation seniors will receive
an additional S$1,500.

8.4 For a person born in 1980 or later:

(a) Universal coverage – he will be covered even if he has pre-existing
medical conditions and/or disabilities.
(b) If he was born between 1980 and 1990, he would have automatically
joined CareShield Life in 2020.
(c) If he was born after 1990, he will join CareShield Life when he turns 30.
(d) Transitional subsidies were available from 2020 onwards and these
subsidies end in 2024.

8.5 The figure below shows an example of Adam, a Singaporean who is enrolled
into CareShield Life at 30 years old.

Source:
https://www.careshieldlife.gov.sg/content/dam/cshl/pdf/CareShield%20Life%20
Welcome%20Booklet.pdf

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 5. Long-Term Care Insurance

8.6 CareShield Life provides better protection and assurance in four ways:
(a) Lifetime cash pay-outs for as long as the insured has severe disabilities;
(b) Pay-out starting at S$600 per month in 2020 and increases annually until
age 67 or when a successful claim is made;
(c) Government subsidies are given to make premiums affordable i.e. no one
will lose coverage because of an inability to pay premiums; and
(d) Premiums can be fully paid by MediSave.

8.7 In addition to CareShield Life, Singaporeans will benefit from two new
schemes starting in 2020:
(a) MediSave Care which was launched on 1 October 2020. Singaporeans
with severely disability and aged 30 years old and above can make a cash
withdrawal of up to S$200 per month from MediSave.
(b) ElderFund which was launched on 31 January 2020. It serves as an
assistance for lower-income Singaporeans who have severe disability,
where they can claim up to S$250 per month to help with long-term care
needs. CareShield Life/ElderShield/Supplement policyholders are not
eligible for ElderFund pay-outs.

A. A Comparison Between CareShield Life And ElderShield

8.9 The table below shows how CareShield Life compares against ElderShield.

ElderShield300 ElderShield400 CareShield Life

Pay-out Amount S$300 S$400 Pay-outs start at
S$600 per month in
2020 and increase
over time
Pay-out Duration 60 months 72 months For entire duration
of disability
Government None Yes, depending on
Subsidies and circumstances
Incentives
Payable by Yes Yes Yes
MediSave
Pay-out Criteria Unable to perform 3 or more of the 6 activities for daily
living (ADLs).

B. MEDISAVE CARE

8.10 MediSave Care is a long-term care scheme which was launched on 1 October
2020. Under MediSave Care, Singapore Citizens and Singapore Permanent
Residents, aged 30 years old and above, and with severe disabilities, will be
able to make cash withdrawals of up to S$200/month from their own and/or
their spouse’s MediSave. This can be used for their long-term care needs, after
setting aside a minimum amount for other medical expenses.

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8.11 The table below shows the MediSave balances and corresponding monthly
withdrawal quantum.
MediSave Balance 3 Monthly Withdrawal Quantum
S$20,000 and above S$200
S$15,000 and above S$150
S$10,000 and above S$100
S$5,000 and above S$50
Below S$5,000 N.A.
8.12 A Singaporean Citizen or a Singapore Permanent Resident is eligible for
MediSave Care if he or she is assessed by an MOH-accredited assessor to be
unable to perform three or more of the six Activities of Daily Living.

C. OTHER LONG-TERM CARE FINANCING SCHEMES AND SUBSIDIES

8.13 The government has enhanced support for long term care through various
schemes such as ElderFund and home caregiving grant. For more details,
please visit CareShield Life website. 4

C1. Interim Disability Assistance Programme for the Elderly (IDAPE)

8.14 Cash assistance of S$150/month or S$250/month for up to 6 years, for low-

income Singapore Citizens who have developed severe disability and were
unable to join ElderShield in 2002 due to their age or pre-existing disabilities
then.

C2. ElderFund

8.15 A discretionary assistance scheme that offers financial support to lower-income

Singapore Citizens aged 30 and above with severe disability, who are not
eligible for CareShield Life, ElderShield, and/or Interim Disability Assistance
Programme for the Elderly (IDAPE). It provides cash assistance of S$150/month
or S$250/month, for long term care needs.

C3. Pioneer Disability Assistance Scheme (PioneerDAS)

8.16 Cash assistance of S$100/month for life, for moderately disabled Pioneers who
always require some assistance with at least 3 out of the 6 Activities of Daily
Living.

C4. Seniors Mobility and Enabling Fund (SMF)

8.17 Means-tested subsidies for assistive devices and home healthcare items for
seniors who are living at home and have qualified through a needs assessment.

3
MediSave balance at point of monthly withdrawal.
4
https://www.careshieldlife.gov.sg/long-term-care/other-long-term-care-financing-support.html

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C5. Home Caregiving Grant (HCG)

8.18 Monthly payout of S$250 or S$400 to defray caregiving costs for eligible care
recipients living in the community. The care recipient should always require
some assistance with at least three of the six Activities of Daily Living.

C6. Migrant Domestic Worker Levy Concession for Persons with Disabilities [MDW
Levy Concession (PWD)]

8.19 Lower levy of S$60/month, for a household who hires a foreign domestic
worker to care for a patient. The patient should always require some assistance
with at least 1 Activity of Daily Living.

C7. Caregivers Training Grant (CTG)

8.20 Annual subsidy of S$200 for caregivers to attend approved courses to better
care for their loved ones.

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CHAPTER
05
LONG-TERM CARE INSURANCE

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

What is Long-Term Care LTC Insurance is designed to meet the costs of care for a person who, because of
Insurance (LTC)? an accident, illness, frailty or a combination of these, is physically unable to function
independently. Instead, he must depend on others to help him to perform most
basic Activities of Daily Living (ADLs).
Benefits offered under • “Service-based” policy pays a benefit when an insured incurs costs for a service
Long-Term Care Insurance covered under the policy (e.g. home care or nursing care) and satisfies the
benefit trigger. This type of policy can pay benefits in two ways:
» Expense incurred method where the insurer will reimburse the insured for
the cost incurred in using one of the services covered under the policy, up
to the covered amount.
» Indemnity method pays the covered amount, regardless of the actual cost
of the services received.

• “Disability-based” policy pays a benefit when an insured meets the benefit

trigger, regardless of the service use. The benefit trigger may be based on
limitations in ADLs and/or degree of cognitive impairment. This means that the
benefits may be paid if the insured is diagnosed to be suffering from advanced
dementia (including Alzheimer’s disease), or when the insured is assessed to be
suffering significant limitations in ADLs, or where there is a deterioration or loss
of intellectual capacity resulting in a significant reduction in mental and social
functioning, and the need for continuous supervision.
Eligibility criteria for • Meets The Definition Of Inability To Perform Activities Of Daily Living (ADLs) Or
payment of Long-Term Advanced Dementia.
Care Insurance benefit • Meets The Deferred Period Requirement.
• Does Not Cover Pre-existing Conditions.
“Activities of Daily Living One of the key criteria for paying the benefits in LTC policies is the insured’s inability
(ADLs)” and how they are to perform certain specific actions, which are essential, if an individual is to be able
related to the benefit to live independently without support from others. These are known as “Activities of
payment under Long-Term Daily Living” (ADLs).
Care Insurance.
Washing Dressing Feeding

Activities of Daily Living (ADLs)

Toileting Mobility Transferring

Other benefits are • Usually include a death benefit which is payable to the insured’s beneficiaries
available under Long-Term upon the death of the insured. However, the quantum is small.
Care Insurance • Hospital Room And Board Benefit.
• Surgical Procedure Benefit.
• Financial Assistance With Adaptation Benefit.
• Extended Care Benefit.
• Rehabilitation Benefit.

16
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Maximum benefit sum • For LTC benefits, depending on the plan that the insured chooses, he may claim,
payable for example, between S$300 and S$5,000 per month, as long as he is unable to
perform the specified number of ADLs, and meets the other policy conditions.
Some insurers may limit the maximum benefit sum payable.
• For policies packaged with hospital benefits, there is usually a maximum
amount that can be claimed per day, subject to a maximum number of days per
year of hospitalisation.
• For those with Surgical Benefits, the insured, again depending on the plan that
he has purchased, can claim only a maximum amount per surgery.
Benefit payment term While most insureds prefer the policy benefits to be payable as long as they live,
the premiums for such plans may be too expensive for them to buy. Some insurers
allow customers to choose the benefit payment term. This means that the benefits
will be payable for the chosen period (e.g. 12 years of benefits). The premiums
payable for a shorter benefit payment term will be cheaper and more affordable.
During the benefit payment period, premiums payable are waived.
ElderShield and CareShield ElderShield300 ElderShield400 CareShield Life
Life
Pay-out amount $300 $400 Pay-outs start at
$600 per month in
2020 and increase
over time
Pay-out duration 60 months 72 months For entire
duration of
disability
Government No Yes, depending on
subsidies and circumstances
incentives
Payable by Yes
MediSave?
Pay-out criteria Unable to perform 3 or more of the 6 activities for daily
living
Persons covered under Until 2019, all Singapore Citizens and Singapore Permanent Residents with
ElderShield MediSave Accounts were enrolled in ElderShield at the age of 40, unless they opted
out.

Since 2020, auto-enrolments into ElderShield were discontinued. Singapore Citizens

and Singapore Permanent Residents born in 1980 and after and aged 30 and above
after 2020 were instead enrolled into CareShield Life.

Those born on 30 September 1932 or before, or had a pre-existing disability as of

30 September 2002, were ineligible to enrol in ElderShield in 2002. Instead, they
may be eligible for assistance under the Interim Disability Assistance Programme
for the Elderly (IDAPE) if they develop severe disabilities.
How to check ElderShield The following steps should be performed in checking on one’s coverage:
coverage • Log in to one’s CPF Digital Services using one’s Singpass.
• Hover over "My CPF" and click on "Healthcare" under "My dashboards".
• Click on “Long-term care insurance” on the anchor links or scroll down to the
“Long-term care insurance” section.

If the person is not covered, no information on ElderShield will be reflected. To

check one’s coverage, he or she should visit the CPF website at https://www.cpf.gov.
sg/member

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Scope of protection ElderShield provides the following protection and benefits:
under ElderShield and its • Lifetime coverage - The insured continues to be covered for life once he has
premiums completed paying all his premiums at age 65.
• Up to 72 months of cash pay-outs – The insured stands to receive a monthly
cash pay-out for up to five or six years, depending on the plan chosen. With
ESH400, he will get S$400 per month for up to 72 months, and with ESH300, he
will get S$300 per month for up to 60 months.
• Fully payable with MediSave – The insured can use his MediSave to pay his
ElderShield premiums. Family members can help the insured by paying from
their own MediSave or topping up the insured’s account with cash.
• Worldwide coverage – The insured will remain covered, have the ability to make
claims, and receive pay-outs no matter where he lives in the world.
• The premium payment for ElderShield is up to age 65, with a coverage for life.
ElderShield premiums are based on the age at which the insured joins the
scheme and are payable until the policy anniversary after his 65th birthday.
When an insured is eligible One can apply to receive ElderShield pay-outs if he is determined by an MOH-
to claim under ElderShield accredited assessor to be unable to carry out three of the six activities of daily living
(ADL) listed below:
1. Washing – The ability to wash in the bath or shower (including getting into and
out of the bath or shower) or wash by other means.
2. Dressing – The ability to put on, take off, secure, and unfasten all garments
and, as appropriate, any braces, artificial limbs, or other surgical or medical
appliances.
3. Feeding – The ability to feed oneself food after it has been prepared and made
available.
4. Toileting – The ability to use the toilet or manage bowel and bladder function
using protective undergarments, such as diapers or surgical appliances, if
appropriate.
5. Mobility – The ability to move indoors from room to room on level surfaces.
6. Transferring – The ability to move from a bed to an upright chair or wheelchair,
and vice versa.
Making a claim under To make a claim, one should complete the claim assessment. First, the insured
ElderShield needs to arrange for a disability assessment which can be conducted by any MOH-
accredited severe disability assessor.

The assessment costs S$100 for a clinic assessment and S$250 for a house call,
both of which are payable to the assessor at the time of assessment. The full fee
will be reimbursed if the insured is assessed to be severely disabled and will be
reimbursed with the first pay out.

Next, the insured needs to log in to AIC’s e-Service portal (eFASS) with his Singpass
to submit a claim.

In the event that the insured is not able to complete it on his own e.g. if he lacks
mental capacity, his donee/deputy/immediate family member or caregiver may do
so on his behalf.

18
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
CareShield Life CareShield Life was launched on 1 October 2020 to provide enhanced benefits
compared to ElderShield. CareShield Life is a long-term care insurance scheme that
supports the basic long-term care needs of Singaporeans with severe disability.

CareShield Life is compulsory for all Singaporeans born in 1980 or later. Those born
1980 to 1989 were automatically enrolled in 2020 at one go, while those born 1990
onwards will be automatically enrolled under the scheme upon turning 30. Those
with pre-existing disability and illnesses will still be covered under CareShield Life.

CareShield Life provides better protection and assurance in four ways:

• Lifetime cash pay-outs for as long as the insured has severe disabilities;
• Pay-out starting at S$600 per month in 2020 and increases annually until age 67
or when a successful claim is made;
• Government subsidies are given to make premiums affordable i.e. no one will
lose coverage because of an inability to pay premiums; and
• Premiums can be fully paid by MediSave.
MediSave Care MediSave Care is a long-term care scheme which was launched on 1 October 2020.
Under MediSave Care, Singapore Citizens and Singapore Permanent Residents,
aged 30 years old and above, and with severe disabilities, will be able to make cash
withdrawals of up to $200/month from their own and/or their spouse’s MediSave.
This can be used for their long-term care needs, after setting aside a minimum
amount for other medical expenses.

A Singaporean Citizen or a Singapore Permanent Resident is eligible for MediSave

Care if he or she is assessed by an MOH-accredited assessor to be unable to
perform three or more of the six Activities of Daily Living.
Other long-term care • Interim Disability Assistance Programme for the Elderly (IDAPE)
financing schemes and • ElderFund
subsidies • Pioneer Disability Assistance Scheme (PioneerDAS)
• Seniors Mobility and Enabling Fund (SMF)
• Home Caregiving Grant (HCG)
• Migrant Domestic Worker Levy Concession for Persons with Disabilities [MDW
Levy Concession (PWD)]
• Caregivers Training Grant (CTG)

19
Health Insurance

CHAPTER 6
CRITICAL ILLNESS INSURANCE

CHAPTER OUTLINE

1. Introduction
2. Critical Illness (CI) Insurance
3. LIA Critical Illness Framework 2019 (“The CI Framework”)
4. Benefits Offered under Critical Illness Insurance
5. Variations of Illness Insurance
6. Underwriting
7. Factors To Consider In Determining Adequacy of Critical Illness Coverage
8. Exclusions
9. Termination of Cover
10. Claims
11. Group Critical Illness (CI) Insurance Policy
Appendix 6A – Standard Definitions for Severe Stage of 37 Critical Illnesses: Version
2019

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ describe how a Critical Illness Insurance policy works
▪ understand the Critical Illness Framework proposed by the Life
Insurance Association
▪ know the eligibility criteria for payment of the Critical Illness Insurance benefit
▪ state the features of Critical Illness Insurance
▪ outline and differentiate the two types of Critical Illness covers
▪ know the advantages of severity-based Critical Illness covers
▪ know the latest market developments in Critical Illness Plans and understand the
various coverages
▪ understand the factors to consider in determining the adequacy of Critical Illness
Insurance coverage
▪ list the common exclusions under a Critical Illness Insurance policy and know the
circumstances under which it will be terminated
▪ list the documents that the insured has to submit when making a claim and know
the claim procedures
▪ know how a Group Critical Illness Insurance policy works

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Contents
CHAPTER OUTLINE.......................................................................................................... 100
LEARNING OUTCOMES .................................................................................................. 100
1. INTRODUCTION ...................................................................................................... 102
2. CRITICAL ILLNESS (CI) INSURANCE ..................................................................... 102
3. LIA CRITICAL ILLNESS FRAMEWORK 2019 (“THE CI FRAMEWORK”) ................ 102
4. BENEFITS OFFERED UNDER CRITICAL ILLNESS INSURANCE ............................ 105
A. Eligibility Criteria For Payment Of Critical Illness Benefit .............................. 105
B. Features Of CI Insurance.................................................................................. 108
C. Types Of CI Insurance Covers ......................................................................... 109
C1. Acceleration Benefit Critical Illness (CI) Insurance Cover ....................... 109
C2. Additional Benefit Critical Illness (CI) Insurance Cover ........................... 111
5. VARIATIONS OF CRITICAL ILLNESS INSURANCE................................................ 114
A. Severity-Based Critical Illness (CI) Insurance Plan (Early Pay CI) .................. 114
A1. The Advantages of Severity-Based Cover ............................................... 115
A2. Premium and Other Considerations......................................................... 115
B. Multiple Pay Critical Illness (CI) Insurance Plan ............................................. 116
C. Critical Illness Plans Covering Mental Illnesses ............................................. 116
D. Insurance Covering Diabetes........................................................................... 116
E. Combination of CI Cover ................................................................................. 117
6. UNDERWRITING ..................................................................................................... 117
A. Underwriting Requirements ............................................................................ 117
B. Underwriting Considerations .......................................................................... 117
7. FACTORS TO CONSIDER IN DETERMINING ADEQUACY OF CRITICAL ILLNESS
COVERAGE ............................................................................................................. 117
A. Minimum Four Years Of Income, After Taking Into Account Debt................ 118
B. Recovery Expenses .......................................................................................... 118
C. Providing For Dependents ............................................................................... 118
8. EXCLUSIONS .......................................................................................................... 119
9. TERMINATION OF COVER ...................................................................................... 119
10. CLAIMS.................................................................................................................... 120
11. GROUP CRITICAL ILLNESS (CI) INSURANCE POLICY .......................................... 120
APPENDIX 6A ................................................................................................................... 121

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1. INTRODUCTION

1.1 When Critical Illness Insurance was first developed, the initial product was
known as Dread Disease Insurance, covering four primary health conditions:
Cancer, Stroke, Heart Attack and Coronary Artery Bypass. Since then, the
coverage has been widely accepted worldwide as people become more aware
of the financial implications of serious medical conditions and the need for
protection in the event of an unforeseen diagnosis of the illness. Critical Illness
Insurance has evolved over the last four decades. In this chapter, we will take a
closer look at Critical Illness Insurance, including the recent developments of
the product in the market.
Dread
Disease

2. CRITICAL ILLNESS (CI) INSURANCE

2.1 Critical Illness (also known as Dread Disease) insurance provides a lump sum
benefit to the policyholder in the event that the insured is diagnosed to be
suffering from one of the critical illnesses or has undergone a surgical
procedure covered under the policy. Each critical illness and surgery covered
by the policy is defined in the policy, and the benefits will be paid only if he
suffers a condition that meets the definition as specified in the policy.

2.2 Benefits received from a Critical Illness policy can be used to finance the cost
of care and treatment, recuperation, medical aids, replacing any income loss
or even funding a change in lifestyle.

2.3 Critical Illness (CI) Insurance policy can be sold as a stand-alone policy
(individual or group basis), or as an optional rider to a Whole Life,
Endowment, Term Insurance or Investment-Linked Policy (ILP), to provide
either an additional sum assured or the advanced payment of a portion, or the
entire sum assured payable on death.

3. LIA CRITICAL ILLNESS FRAMEWORK 2019 (“THE CI FRAMEWORK”)

3.1 The CI Framework seeks to balance the interests of both the consumers and
the insurance companies. Offering clear and consistent coverage on the core
critical illness benefits will allow for easier product comparison by consumers
as well as consistent outcomes on CI claims. It seeks to reduce ambiguity of
the same CI claim being paid by one insurer but rejected by another.

3.2 Set up in consultation with the Monetary Authority of Singapore, member

companies of Life Insurance Association (LIA) and General Insurance
Association (GIA) undertake to comply with the framework which governs the
provision of CI coverage by insurers. Under the CI framework, severe Critical
Illness definitions is standardised for 37 medical conditions by way of common
definitions.

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3.3 Since 2003, the industry has standardised definitions for a list of 37 severe
critical illnesses for insurers to adopt to provide consistency for policyholders.
Subsequent reviews were done in 2014 and 2019 to update the standardised
definitions, having considered advancements in medical technology, health
trends, diagnosis as well as the experiences gathered by the industry to
address any issues that arose due to lack of clarity on the definitions.

3.4 Since 2014, insurers could offer any number of medical conditions under a CI
plan including single-illness CI plans. There were no restrictions on how many
stages of illness progression that insurers could cover.

3.5 In the 2019 review, the standardised definitions were updated with some name
changes. LIA defines and maintains a list of 37 medical conditions and these
common definitions describe the respective medical conditions at the “severe”
stage. 1

3.6 An insurer which chooses to cover a medical condition found in the LIA’s list
must adopt the LIA’s common definition for the medical condition at severe
stage. However, for these conditions, insurers are to use their own definitions
in respect of the mildly-moderately severe stage or the extremely severe stage
of illness progression.

3.7 For medical conditions not found in the LIA’s list, insurers are to use their own
definitions for all stages of illness progression.

3.8 The industry will review the LIA’s common definitions for continued relevance
once every three years.

3.9 The purpose is to enhance clarity of the coverage intent so customers do not
misunderstand what is being covered and what is not.

3.10 On and after 26 August 2020, CI products using Version 2014 definitions may
not be sold in Singapore. Any CI policy purchased from 26 August 2020 will be
subjected to the 2019 CI definitions.

3.11 Critical Illness policies issued before were not impacted by the new definitions.

3.12 Financial advisors need to highlight to their clients that CI are covered under
the policy only if they meet the definitions.

3.13 Appendix 6A shows the Standard Definitions for Severe Stage of 37 Critical
Illnesses: Version 2019 extracted from the LIA Website at: www.lia.org.sg.

3.14 The list of changes to the standard list of 37 critical illness under the Critical
Illness Framework 2019 are shown in Annex 1.

1
https://www.lia.org.sg/industry-guidelines/health-insurance/critical-illness-plan/2019/lia-critical-illness-ci-
framework-2019/

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3.15 From 16 November 2022, more updates were made on CI framework as

follows:

(a) Insurers can independently determine suitable waiting periods in all of

the insurance policies. Waiting period refers to the period of time stated
in the policy which must pass, before some or all of the insured’s Health
Insurance coverage can begin.

(b) The S$25,000 cap on sum payable in respect of “Angioplasty & Other
Invasive Treatment for Coronary Artery” was removed.

3.16 Although each insurer is free to adopt its own wordings on the waiting period
clause, the waiting period is to begin from the date that cover commences, or
date of reinstatement and the “date of diagnosis” shall be used to apply to the
waiting period.

3.17 The following are within the scope of the CI Framework:

(a) New individual policies or benefits.
(b) New group policies or renewals, including any new CI cover during the
policy year.
(c) CI benefits issued as a standalone policy or a rider.
(d) CI benefits issued on an individual basis or a group basis.
(e) CI benefits issued as a rider to an H&S policy or a PA policy.
(f) For cases of top-up to existing CI policies, insurers are given the
discretion to decide to either apply the policy’s existing definitions to the
top-up amount or apply the prevailing current definitions to the top-up
amount. Where it is the latter, it is for the insurer to decide on the date of
implementation of such a practice. Furthermore, the insurer should
disclose this practice to the policyholder in order to avoid any
misunderstanding or difficulties in the future.
(g) Where an existing individual CI term policy (yearly renewable type) is
auto-renewed or has to be cancelled and re-issued due to administrative
reasons, for example: change of payment mode or credit cards, the same
approach applies as described in Section (f) above.
(h) Where an existing CI benefit attached to a health policy (including
Integrated Shield Plan) is auto-renewed, the same approach applies as
described in Section (f) above).

3.18 The following are out of scope of the CI Framework:

(a) CI products for Male or Female or Children which do not cover any of
the CI conditions in its entire scope. Example, a Female CI product which
covers only Female Organs Cancer does not need to apply the Major
Cancer definition.
(b) Terminal Illness issued under the general benefits of a basic plan.

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3.19 However, the above does not preclude insurers from customising their
products by extending coverage for more medical conditions and stages of
illness progression, beyond the standard list of 37 critical illnesses.

3.20 An insurer may choose to cover any number of medical conditions under a CI
plan, including a single illness type of plan. For each medical condition,
subject to “Adoption of LIA’s Common Definitions”, there are no restrictions
on how many stages and what the stages of illness progression are, which
may be covered.

4. BENEFITS OFFERED UNDER CRITICAL ILLNESS INSURANCE

A. Eligibility Criteria For Payment Of Critical Illness Benefit

4.1 The common eligibility criteria are highlighted below:

(a) The policy must be in force.

(b) The life insured has not reached the expiry age of the CI Insurance cover
(if applicable).

(c) Critical Illness Must Be One That Is Covered.

The critical illness suffered must be one of the illnesses as specified in the
policy contract, and it must be the first incidence of the illness for the life
insured. This means that if the critical illness is a pre-existing illness or is
excluded from the policy, it will not be covered.

(d) Meets The Definition Of Critical Illness.

(i) The condition must meet the definition of critical illness as defined by
the policy for the insurer to consider the claim.
(ii) Let us look at the definitions for one of the severe CI:

“Major Cancer”
A malignant tumour positively diagnosed with histological
confirmation and characterised by the uncontrolled growth of
malignant cells with invasion and destruction of normal tissue.

The term Major Cancer includes, but is not limited to, leukemia,
lymphoma and sarcoma.

Major Cancer diagnosed on the basis of finding tumour cells and/or

tumour-associated molecules in blood, saliva, faeces, urine or any
other bodily fluid in the absence of further definitive and clinically
verifiable evidence does not meet the above definition.

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For the above definition, the following are excluded:

 All tumours which are histologically classified as any of the
following:
- Pre-malignant;
- Non-invasive;
- Carcinoma-in-situ (Tis) or Ta;
- Having borderline malignancy;
- Having any degree of malignant potential;
- Having suspicious malignancy;
- Neoplasm of uncertain or unknown behaviour; or
- All grades of dysplasia, squamous intraepithelial lesions (HSIL
and LSIL) and intra epithelial neoplasia.
 Any non-melanoma skin carcinoma, skin confined primary
cutaneous lymphoma and dermatofibrosarcoma protuberans
unless there is evidence of metastases to lymph nodes or beyond;
 Malignant melanoma that has not caused invasion beyond the
epidermis;
 All Prostate cancers histologically described as T1N0M0 (TNM
Classification) or below; or Prostate cancers of another equivalent
or lesser classification;
 All Thyroid cancers histologically classified as T1N0M0 (TNM
Classification) or below;
 All Neuroendocrine tumours histologically classified as T1N0M0
(TNM Classification) or below;
 All tumours of the Urinary Bladder histologically classified as
T1N0M0 (TNM Classification) or below;
 All Gastro-Intestinal Stromal tumours histologically classified as
Stage I or IA according to the latest edition of the AJCC Cancer
Staging Manual, or below;
 Chronic Lymphocytic Leukaemia less than RAI Stage 3;
 All bone marrow malignancies which do not require recurrent
blood transfusions, chemotherapy, targeted cancer therapies,
bone marrow transplant, haematopoietic stem cell transplant or
other major interventionist treatment; and
 All tumours in the presence of HIV infection.
(iii) As illustrated, suffering from cancer does not make it a valid claim
unless the definition is met.

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(e) Diagnosis Meets The Conditions Set By The Insurer.

(i) The diagnosis of the critical illness must be made by registered
medical practitioners. It excludes physicians who are themselves the
life insureds, their spouses and other lineal relatives 2 of theirs.
(ii) The diagnosis must be supported by medical evidence, such as
radiological, clinical, histological or laboratory evidence acceptable to
the insurer. In addition, insurers may require that the diagnosis be
supported by their own medical director who may base his opinion on
the medical evidence submitted by the claimant and/or any additional
evidence requested by him.
(iii) If there is any dispute on the appropriateness or correctness of the
diagnosis, the insurer has the right to call for a medical examination of
the life insured, or the evidence used in arriving at such a diagnosis by
an acknowledged independent expert in the field of medicine
concerned, as selected by the insurer. The expert’s opinion will be
binding on both the insurer and the life insured.

(f) Meets The Waiting Period Requirement.

(i) The critical illness must be diagnosed after the waiting period. Waiting
period for CI plans starts from the date of issue, or the date of any
reinstatement of the policy. Insurers can independently determine the
suitable waiting period of their policies.
(ii) The waiting period aims to prevent consumers from buying the policy
only when they suspect that there is something wrong with their
health; a practice known as anti-selection. If a person is found to be
suffering from any of the critical illnesses before or during the waiting
period, the insurer will void the policy and refund the premiums paid.

(g) Meets The Survival Period Requirement.

(i) The life insured must survive a period before the critical illness benefit
becomes payable. This survival period is the period of time starting
from the date of occurrence of a critical illness. Note that survival
period is applicable only to the Additional Benefit type of Critical
Illness cover.

2
Lineal relatives refer to people who are descendants from the same ancestor.

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(ii) In a nutshell,

The benefits under a CI Insurance policy are payable ONLY if the:

▪ policy is in force;
▪ life insured has not reached the expiry age of the CI Insurance cover;
▪ critical illness which the life insured is suffering from is one that is
covered under the policy and meets the conditions as specified in the
policy;
▪ critical illness is not a pre-existing illness;
▪ critical illness contracted meets the definition of the particular critical
illness as specified in the policy;
▪ critical illness is diagnosed to have commenced after the waiting period;
and
▪ life insured survives the survival period if there is one imposed on the
policy.

B. Features Of CI Insurance

4.2 Although there are two types of CI Insurance covers, each of them shares
common features as described below:
(a) It pays a lump sum amount upon diagnosis of an insured critical illness.
(b) Only one critical illness claim is allowed unless it is a Multiple Pay CI
Insurance plan.
(c) It has a waiting period.
(d) There may be a cap on the total amount of coverage that a policy owner
can buy. This is to minimise the risk of moral hazard.
(e) The premium can be level or age-banded and is non-guaranteed.
(f) There is no restriction on how the CI Insurance benefit payable is to be
used.
(g) It can be a standalone policy or attached as a rider to an ILP, Term,
Endowment or Whole Life Insurance policy.
(h) The packaged CI Insurance policy may accumulate cash value (e.g. Whole
Life type of CI Insurance policy) and has non-forfeiture options. However,
the CI Insurance cover may be terminated once the policy owner exercises
any of the non-forfeiture options (excluding the paid-up option).
(i) A stand-alone Term CI Insurance policy does not acquire cash value.
Hence, it does not have any non-forfeiture option.
(j) CI rider does not acquire any cash value.
(k) It provides 24-hour, worldwide coverage, unless otherwise endorsed or
amended in the policy.
(l) Assignment of the policy may or may not be allowed.

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(m) There is minimum entry age for applying and maximum coverage age. For
young lives, it may be subject to lien3.
(n) There is a minimum (e.g. S$10,000) and maximum (e.g. S$2,000,000) sum
assured restriction.
(o) The cover may expire at a maximum age (e.g. 75 years) or a whole life
cover may be provided.

C. Types Of CI Insurance Covers

4.3 There are two main types of CI Insurance covers offered in the insurance
market. They either provide an:
(a) Acceleration Benefit; or
(b) Additional Benefit.

4.4 Some insurers have also introduced Severity-Based and Multiple Pay CI
Insurance plans. Let us look at how each of them works.

C1. Acceleration Benefit Critical Illness (CI) Insurance Cover

4.5 This can be issued as a packaged policy or rider to provide for pre-payment of
a portion (e.g. 50%) or the full sum assured (i.e. 100%) of the basic policy
which it is attached to. For example, an individual buys a S$200,000 Whole Life
type of CI Insurance policy with 50% acceleration. In the event that he is
diagnosed to be suffering from one of the critical illnesses covered under his
policy, the insurer will pay him S$100,000 (i.e. 50% x S$200,000) plus bonuses
(if any). The balance of the sum assured plus bonuses (if any) will be paid,
when he dies or suffers a Total and Permanent Disability (TPD). On the other
hand, if he dies or suffers a TPD without contracting any critical illness, the full
S$200,000 plus bonuses (if any) will be paid to him. Figure 6.1 illustrates how
this policy works.

3
A lien is a feature which restricts the sum assured payable on the happening of the insured event. Most
insurers impose the lien on policies taken on children’s lives for a specified number of years, e.g. three
years. In such a case, if the insured child dies within the 1st year after the inception of the policy, the
insurer will pay only 25% of the sum assured. This percentage increases on the 2nd and 3rd year to 50%
and 75%, respectively. From the 4th year onwards, the full sum assured will be paid, whenever the
insured event happens.

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Figure 6.1: Illustration Of The Working Of A S$200,000 Whole Life Type Of

Critical Illness (CI) Insurance Policy With 50% Acceleration

S$200,000 Whole
Life type of
Critical Illness
Insurance policy
with 50%
Acceleration Critical Illness

Death/TPD
Payment of
S$100,000

Death/TPD

Payment of
S$200,000 Payment of
S$100,000

4.6 Figure 6.1 shows an example of a policy that pays only one CI claim. If he
contracts another critical illness, the policy will not pay him the remaining sum
assured. The amount of benefit that he will get from this policy is always equal
to the sum assured plus bonuses (if any). As the sum assured reduces, the
future premiums may be reduced in the same proportion.

4.7 If the person has chosen a 100% (instead of 50%) Acceleration Benefit in the
above example, the full basic sum assured plus bonuses (if any) will be paid,
regardless of whether he contracts a critical illness, dies or suffers a TPD.

4.8 Policy owners who opt for less than 100% acceleration can consider attaching
a CI Waiver of Premium rider to it, so that the future premiums on the balance
sum assured will be waived.

4.9 The cover for this type of CI Insurance policy may be up to the age of 100
years, or for life, depending on the type of Life Insurance policy to which it is
attached or packaged. If it is packaged or attached to an ILP or Endowment
Insurance policy, then it will follow the same terms of these basic policies. On
the other hand, if it is a Whole Life Insurance policy to which it is attached or
packaged to, then the cover is usually up to the age of 100 years, so long as
the policy owner keeps the policy in force.

4.10 Another factor that affects the tenor of the CI Insurance cover is whether the
attached policy will acquire a cash value. When attached to a Term Insurance
policy which does not acquire a cash value, the cover will terminate if the

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Term Insurance ends. On the other hand, if the CI Insurance cover is attached
to an Endowment Insurance or a Whole Life Insurance policy, it will acquire a
cash value. Once such a policy has acquired a cash value, the insurer can make
use of the automatic premium loan feature to keep the policy in force should
the policy owner default in his premium payment after the grace period is
over. Alternatively, the policy owner can exercise the paid-up option, in which
case, the life insured will still enjoy the CI Insurance cover, but only for a
reduced amount.

4.11 In a nutshell, an Acceleration Benefit CI Insurance policy or rider provides a life

insured with the following coverage, depending on whichever event happens
first:

Acceleration Benefit Critical Illness

(CI) Coverage

Lump sum payment Lump sum Payment of the basic

of basic sum assured payment of sum assured plus
plus bonuses (if any) basic sum bonuses (if any) upon
upon diagnosis of OR assured plus OR TPD.
any covered insured bonuses (if any)
illnesses &/or waiver upon death.
of future premium.

C2. Additional Benefit Critical Illness (CI) Insurance Cover

4.12 This type of cover is available on a stand-alone basis or as a rider.

 On a stand-alone basis, the sum assured will be paid upon the diagnosis of a
covered critical illness, and the policy will be terminated.
 As a rider, it pays an amount in addition to the sum assured of the basic
policy to which it is attached. For example, a person purchases a S$100,000
Whole Life Insurance policy with a S$200,000 Additional Benefit CI Insurance
rider. If he contracts one of the critical illnesses covered by his policy, the
insurer will pay him S$200,000. The Whole Life Insurance sum assured of
S$100,000 will be paid only upon his death or TPD. Figure 6.2 illustrates the
working of this type of CI Insurance rider.

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Figure 6.2: Illustration Of The Working Of A S$100,000 Whole Life Policy With
A S$200,000 Additional Benefit Critical Illness (CI) Insurance Rider

Whole Life
Insurance policy =
S$100,000
CI Insurance rider
= S$200,000

Critical Illness

Death/TPD
Payment of
S$200,000

Death/TPD

Payment of
S$100,000 Payment of
S$100,000

4.13 Note from Figure 6.2, payment of the CI Insurance benefit does not affect the
basic sum assured. If he contracts a critical illness followed by death, the total
amount that the insurer will pay under this policy will be S$300,000. However, if
he does not contract any critical illness, then the amount that the insurer needs
to pay is only S$100,000 upon death or TPD.

4.14 The term for this type of CI Insurance rider can be shorter, but not longer than
that of the basic policy. Usually, this rider expires when the life insured reaches a
specified age (usually the age of 65 years). The sum assured, on the other hand,
can be higher than the sum assured of the basic policy, e.g. up to five times that
of the basic sum assured.

4.15 Client can consider attaching a CI Waiver of Premium rider so that he need not
worry about the premium payment for the basic policy.

4.16 Table 6.1 below gives a summary of the differences between the Acceleration
and Additional Benefit types of CI Insurance covers.

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Table 6.1: Summary Of Comparison Of Acceleration & Additional Benefit Types Of

Critical Illness (CI) Insurance Covers

Acceleration Benefit Additional Benefit

(Packaged Policy Or Rider) Stand-alone Policy Rider
It must be packaged or It need not be attached to It must be attached to a
attached to a basic policy, any basic policy. basic policy.
i.e. ILP, Term, Endowment or
Whole Life Insurance policy.
On diagnosis of a critical On diagnosis of a critical On diagnosis of a critical
illness, a percentage of the illness, the full sum assured illness, the full sum
basic sum assured as of the policy will be paid. assured of the rider will
specified in the policy will be be paid.
paid.
Payment of a CI Insurance Payment of a CI Insurance Payment of a CI
claim will cause the policy to claim will cause the policy Insurance claim will not
be terminated if it is a 100% to be terminated. affect the basic policy
Acceleration type of policy or which will continue to
rider. be in force.

Total amount paid under the Total amount paid under Total amount paid under
policy is equal to the basic the policy is equal to the the policy is equal to the
sum assured plus bonuses (if basic sum assured. sum assured of the CI
any). Insurance rider, in
addition to the sum
assured of the basic
policy and any bonuses
payable under the basic
policy, in the event of
the insured contracting a
critical illness dies, or
becomes totally disabled
subsequently.
CI Insurance rider sum Not applicable. Sum assured can be up
assured must not exceed to a certain number of
that of the basic policy. times of the basic sum
assured, subject to the
insurer’s specified
guidelines.
CI Insurance rider term Not applicable. The term must not
usually follows that of the exceed that of the basic
basic policy. policy and usually
expires, when the life
insured reaches a
specified age.

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5. VARIATIONS OF CRITICAL ILLNESS INSURANCE

5.1 The coverage offered by critical illness insurance products can vary from the
number of critical illnesses to the types of critical illnesses and/or stages of
critical illnesses covered. The stages can be classified as early, intermediate or
severe.

5.2 Traditional CI policies would cover only severe (end) stage critical illnesses.
For instance, the insured would receive the pay-out if he is diagnosed with
stage 4 colon cancer, but not for stage 1.

5.3 Severity-Based Critical Illness plans offer a pay-out when the insured gets
diagnosed during the early or intermediate stages of a critical illness. Medical
and technological advancements have now made it possible to detect critical
illnesses during the early stages. Receiving the pay-out in the early stage of a
CI is advantageous to the insured as the monies received can be used towards
earlier medical intervention and better treatment outcomes. The insured also
stands to have a financial peace of mind while undergoing treatments. 4

5.4 Financial advisers advising on Critical Illness (CI) coverage should highlight the
following to their clients:
(a) Type of Plan Purchased.
(b) Scope of Cover and Exclusions.
(c) Coverage of the CI - whether early, intermediate, end stage.
(d) Claim conditions, including if the client is holding on to several CI policies
covering the same CI condition and whether all the policies pay out if the
claims conditions are met.
(e) Premium payments of the plan if it is a standalone or attached as a rider.
(f) Waiver of Premium Rider.

A. Severity-Based Critical Illness (CI) Insurance Plan (Early Pay CI)

5.5 CI Insurance that pays in an earlier stage of the illness is commonly known as
Early Pay CI. Benefits are claimable at various stages of the illness, from early
to intermediate to severe.

5.6 Depending on the stages and severity of the critical illness, the plan gives a
percentage of the sum assured as a lump sum payment to the policy owner.
The progressive lump sum payments, subject to a monetary cap of each
severity level, amounts to the total sum assured which can be multiples of the
original coverage.

5.7 There may also be Waiting Period and Survival Period for Severity-based CI
plans.

4
https://www.axa.com.sg/blog/insurance-guide/ultimate-guide-to-critical-illness-insurance-in-singapore

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5.8 Severity-based CI plans may appeal to those who are concerned about financial
support for early treatment of the critical illness. It can be purchased as a term
plan or attached as a rider to an existing Life Insurance policy, to enhance and
complement the life insured’s CI Insurance coverage. The premium is higher
than that of the normal CI Insurance plan.

A1. The Advantages of Severity-Based Cover

5.9 We can regard severity-based coverage as a hybrid of the traditional critical

illness cover.

5.10 Unlike the traditional covers where the insured gets all or nothing (when insured
is diagnosed with the covered CI, he gets 100% of the sum assured), severity-
based critical illness insurance will pay a certain percentage based on how
severe the illness is. The insured receives lower pay-outs when he is diagnosed
with a less severe CI.

5.11 The advantages of severity based critical illness insurance are:

(a) Greater number of illnesses covered

The insured is covered for a greater number of critical illnesses. Less severe
forms of cancer are covered. This would not be possible in a standard
critical illness policy. For example, partial blindness can be claimed under a
severity-based cover but not under a traditional CI cover.

(b) Pay-outs received at an early stage of the illness

This enables the insured to have the funds to prevent the illness
from deteriorating. The insured stands to receive a sum earlier
that can be used for treatment. For example, if a polyp is detected
in one’s colon and is identified as an early-stage cancer, one can claim and
have his colon operated on.

(c) The ability to claim more than once

The insured can only make one claim under a traditional CI policy. For
severity-based CI policy, the insured can claim for more than one illness
and even for unrelated conditions.

(d) Continuity of coverage after a claim

The CI cover will still continue after the insured has claimed for a less
severe critical illness.

A2. Premium and Other Considerations

5.12 An early pay CI plan is more expensive than severe CI plan.

5.13 While such a policy allows the insured to claim for more than one illness, there is
a maximum amount he can claim under the policy and any claims made will be
deducted from the sum assured.

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B. Multiple Pay Critical Illness (CI) Insurance Plan

5.14 A multi-pay critical illness plan pays the insured multiple times over each
diagnosis of critical illness and also for relapse or recurrence of critical
illnesses, subject to applicable waiting period.

5.15 This type of CI Insurance plan allows for more than one critical illness claim on
the policy. A second claim and subsequent ones are allowed if the medical
condition deteriorates or if a different medical condition occurs.

5.16 Such multiple claims are not restricted to only severe stage CI. When such CI
plan includes benefits for severity-based CI, insurers may allow for multi-
claims on early stages of the CI subject to benefit limits.

5.17 Waiting Period and Survival Period may be applicable for such plans.

5.18 Future premiums may be waived upon diagnosis of first claim on advanced
stage CI.

C. Critical Illness Plans Covering Mental Illnesses

5.19 The prevalence of mental illnesses has created yet another opportunity for
product innovation in providing coverage for mental conditions, which has been
traditionally excluded by insurers. Insurance plans that cover mental illness
typically pay a lump sum (which is usually a reduced coverage of the original CI)
upon diagnosis of one of the covered mental illnesses. The illnesses covered are
typically the following five conditions:
(a) Major Depressive Disorders (MDD);
(b) Schizophrenia;
(c) Bipolar Disorder;
(d) Obsessive Compulsive Disorder (OCD); and
(e) Tourette Syndrome

5.20 Pay-out for Mental Illness covers is limited to a maximum benefit per life.
Waiting Period and Survival Period may be applicable for such covers.

D. Insurance Covering Diabetes

5.21 Being diagnosed with diabetes and having to adjust to the new lifestyle can be a
daunting experience. Insurers have designed coverage to help diabetic patients
with the financial burden of treatment.

5.22 Insurance covering diabetes provides a lump sum on diagnosis of the chronic
illness, diabetes complications or a diabetes-related critical illness. Coverage may
extend to limb amputation(s) resulting from diabetes-related complications.

5.23 Waiting Period and Survival Period may be applicable for such covers.

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E. Combination of CI Cover

5.24 It is common to find insurers offering a combination of advance stage, severity-

stage, multi-pay CI covers with diabetes and mental illness covered in one CI
Plan. Note that there may be caps imposed on the coverage for each of the
respective categories.

6. UNDERWRITING

A. Underwriting Requirements

6.1 The underwriting requirements are basically the same as those for Life Insurance
policies, namely the completion of a proposal form (usually the same as that for
Life Insurance) and the insured undergoing various medical tests. The only
difference is that the non-medical limit for CI covers is lower. Non-medical limit
is the maximum coverage amount an insurer will provide coverage without
requiring the life insured to undergo a medical examination or provide detailed
medical information.

B. Underwriting Considerations

6.2 The underwriting considerations are similar to those for Life Insurance policies,
and these will be discussed in greater detail in a later chapter of this Study Text.

6.3 Usually, only standard and sub-standard risks with up to a medium rating can be
considered for CI Insurance. Risks with high extra mortality and those declined
for Life Insurance are not regarded as acceptable for CI Insurance.

6.4 Generally, the terms of acceptance are the same as those discussed in a later
chapter of this Study Text, except that the insurer may specifically exclude the
covered critical illnesses which the life insured is likely to develop in the future
due to his occupation, lifestyle, as well as medical and family history.

7. FACTORS TO CONSIDER IN DETERMINING ADEQUACY OF CRITICAL ILLNESS

COVERAGE 5

7.1 Critical Illness (CI) insurance provides a pay out when the insured is diagnosed
with a critical illness. Note that not all CI policies cover the same range of
illnesses.

7.2 Traditional CI policies provide a lump sum payment when the insured is
diagnosed with a critical illness. They usually pay only if the illness is at a severe
stage (e.g. stage IV cancer). However, other CI policies do pay out at earlier
stages of the disease. In addition, policies that provide multiple pay outs are
more common nowadays. These multiple pay out policies pay at different stages
of the disease.

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7.3 Therefore, selecting the CI plan that provides the right degree of financial support
is key. In determining the adequacy of CI coverage, there are some factors to
consider:

 Minimum four years of income, after taking into account debt;

 Recovery expenses; and
 Providing for dependents.

A. Minimum Four Years Of Income, After Taking Into Account Debt

7.4 A rule of thumb is to have CI coverage of at least four years of the insured’s
income. However, the age of the insured’s dependents must be considered. If the
insured’s children are at a young age, he would need more coverage.

7.5 After considering all debts and other liabilities, the nett coverage amount should
be sufficient to support the insured’s standard of living for four years.

7.6 One cannot just rely on life insurance as it is a death benefit cover. A living
benefit cover such as CI insurance is required as the insured would still need
living expenses when he is suffering from a critical illness. Life insurance
(without any additional riders) would pay out upon the insured’s death.

B. Recovery Expenses

7.7 Following the diagnosis of a critical illness, the insured may need to incur costs
such as engaging a nurse, hiring domestic help etc. These added costs must be
taken into consideration.

7.8 With access to good medical care, the insured could recover in the early stages .
Hence, having an early-stage CI plan would be most useful in this regard. With
certain early-stage CI plans, the insured can get pay-outs for different stages of
critical illness. Moreover, obtaining coverage for recurring critical illness is also
possible. These types of plans can pay out up to 600 per cent of the Sum
Assured.

7.9 CI insurance complements the insured’s existing hospital and surgical insurance
coverage with pay outs used to cover treatments and care that are excluded
under hospital and surgical insurance.

C. Providing For Dependents

7.10 As discussed, life insurance policies provide death benefits only. Living benefits
are equally vital. When the insured is critically ill, he cannot work but still needs
to pay the bills. This is where CI insurance plays a vital role.

7.11 It is also important to consider the needs of the insured’s dependents. If his child
is young, coverage should last until the child is expected to be independent.

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7.12 If the insured’s dependents are already financially independent, the insured may
get by with lesser coverage. It is best for the insured to seek the advice of his
Financial Consultant on such matters.

8. EXCLUSIONS

8.1 The common exclusions seen in a CI Insurance policy are:

(a) pre-existing illnesses;
(b) self-inflicted injury or illness, while sane or insane;
(c) wilful misuse of drugs and/or alcohol;
(d) congenital anomalies or inherited disorders;
(e) Acquired Immune Deficiency Syndrome (AIDS) or infection by any human
immunodeficiency virus (HIV);
(f) bodily injury sustained as a result of travel in or on any type of aircraft,
except as a fare-paying passenger or as a crew member of an international
airline operating on a regularly scheduled passenger flight of a licensed
commercial aircraft; and
(g) war or warlike operation, nuclear, strike, riot and civil commotion risks.

8.2 If the life insured suffers from one of the critical illnesses covered under the CI
Insurance policy as a result of any of the above causes, the insurer is not
required to pay the claim. Note that the exclusions vary from insurer to
insurer. Hence, you should find out the precise exclusions imposed by your
insurer and highlight them to your clients accordingly.

9. TERMINATION OF COVER

9.1 The CI Insurance cover will terminate on the occurrence of any one of the
following events:
(a) a valid critical illness claim has been made (usually the case, unless the
policy contract states otherwise);
(b) the maximum coverage allowed under the policy is paid out;
(c) the basic Life Insurance policy which it is attached or packaged to matures
or expires;
(d) the policy lapses owing to non-payment of premiums after the grace
period;
(e) the policy is surrendered for its cash value or converted into an Extended
Term Insurance policy;
(f) the life insured dies; or
(g) the life insured reaches the expiry age of the CI Insurance rider.

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10. CLAIMS

10.1 In the event of a claim, the claimant must submit the following supporting
documents:
(a) claimant’s statement to be completed by the policy owner and the life
insured if they are not the same person;
(b) Attending Physician’s Report; and
(c) proof of the critical illness, such as biopsy report, histology report,
imaging/scan report, laboratory report, and others as mentioned earlier, or
as requested by the insurer, furnished at the expense of the claimant.

10.2 These are the basic requirements. However, the insurer reserves the right to
call for any other relevant supporting information and documents as it deems
fit.

10.3 Usually, the insurer will require:

(a) written notice of the claim to be submitted within a specified period of the
diagnosis of a critical illness or the performance of a surgery as covered
under the policy;
(b) all proofs of the critical illness and claim form must be submitted within a
specified period from the date of diagnosis of the critical illness or surgery.

11. GROUP CRITICAL ILLNESS (CI) INSURANCE POLICY

11.1 Group CI Insurance cover can be issued as a packaged policy or as a rider. The
coverage of a Group CI Insurance cover is similar to that of the Individual CI
Insurance cover, and it can be in the form of either the Acceleration or the
Additional Benefit CI type of cover. However, there will always be an expiry
age (e.g. 75 years) specified in the CI Insurance cover, regardless of whether it
is an Acceleration or Additional Benefit type of CI Insurance cover.

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APPENDIX 6A

LIA CRITICAL ILLNESS (CI) FRAMEWORK 2019

STANDARD DEFINITIONS FOR SEVERE STAGE OF 37 CRITICAL ILLNESSES:
VERSION 2019

Industry list of all 37 critical illnesses:

1 Major Cancer
2 Heart Attack of Specified Severity
3 Stroke with Permanent Neurological Deficit
4 Coronary Artery By-pass Surgery
5 End Stage Kidney Failure
6 Irreversible Aplastic Anaemia
7 End Stage Lung Disease
8 End Stage Liver Failure
9 Coma
10 Deafness (Irreversible Loss of Hearing)
11 Open Chest Heart Valve Surgery
12 Irreversible Loss of Speech
13 Major Burns
14 Major Organ / Bone Marrow Transplantation
15 Multiple Sclerosis
16 Muscular Dystrophy
17 Idiopathic Parkinson’s Disease
18 Open Chest Surgery to Aorta
19 Alzheimer’s Disease / Severe Dementia
20 Fulminant Hepatitis
21 Motor Neurone Disease
22 Primary Pulmonary Hypertension
23 HIV Due to Blood Transfusion and Occupationally Acquired HIV
24 Benign Brain Tumour
25 Severe Encephalitis
26 Severe Bacterial Meningitis
27 Angioplasty & Other Invasive Treatment for Coronary Artery
28 Blindness (Irreversible Loss of Sight)
29 Major Head Trauma
30 Paralysis (Irreversible Loss of Use of Limbs)
31 Terminal Illness
32 Progressive Scleroderma
33 Persistent Vegetative State (Apallic Syndrome)
34 Systemic Lupus Erythematosus with Lupus Nephritis
35 Other Serious Coronary Artery Disease
36 Poliomyelitis
37 Loss of Independent Existence

Source : LIA Website: LIA Critical Illness (CI) Framework 2019

Standard Definitions For Severe Stage Of 37 Critical Illnesses: Version 2019

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1 Major Cancer

A malignant tumour positively diagnosed with histological confirmation and

characterised by the uncontrolled growth of malignant cells with invasion and
destruction of normal tissue.

The term Major Cancer includes, but is not limited to, leukaemia, lymphoma and
sarcoma.

Major Cancer diagnosed on the basis of finding tumour cells and/or tumour-
associated molecules in blood, saliva, faeces, urine or any other bodily fluid in the
absence of further definitive and clinically verifiable evidence does not meet the
above definition.

For the above definition, the following are excluded:

• All tumours which are histologically classified as any of the following:
Pre-malignant;
Non-invasive;
Carcinoma-in-situ (Tis) or Ta; Having borderline malignancy;
Having any degree of malignant potential; Having suspicious malignancy;
Neoplasm of uncertain or unknown behaviour; or
All grades of dysplasia, squamous intraepithelial lesions (HSIL and LSIL) and
intra epithelial neoplasia;
• Any non-melanoma skin carcinoma, skin confined primary cutaneous lymphoma
and dermatofibrosarcoma protuberans unless there is evidence of metastases to
lymph nodes or beyond;
• Malignant melanoma that has not caused invasion beyond the epidermis;
• All Prostate cancers histologically described as T1N0M0 (TNM Classification) or
below; or Prostate cancers of another equivalent or lesser classification;
• All Thyroid cancers histologically classified as T1N0M0 (TNM Classification) or
below;
• All Neuroendocrine tumours histologically classified as T1N0M0 (TNM
Classification) or below;
• All tumours of the Urinary Bladder histologically classified as T1N0M0 (TNM
Classification) or below;
• All Gastro-Intestinal Stromal tumours histologically classified as Stage I or IA
according to the latest edition of the AJCC Cancer Staging Manual, or below;
• Chronic Lymphocytic Leukaemia less than RAI Stage 3;
• All bone marrow malignancies which do not require recurrent blood
transfusions, chemotherapy, targeted cancer therapies, bone marrow transplant,
haematopoietic stem cell transplant or other major interventionist treatment;
and
• All tumours in the presence of HIV infection.

2 Heart Attack of Specified Severity

Death of heart muscle due to ischaemia, that is evident by at least three of the
following criteria proving the occurrence of a new heart attack:

• History of typical chest pain;

• New characteristic electrocardiographic changes; with the development of any
of the following: ST elevation or depression, T wave inversion, pathological Q
waves or left bundle branch block;
• Elevation of the cardiac biomarkers, inclusive of CKMB above the generally
accepted normal laboratory levels or Cardiac Troponin T or I at 0.5ng/ml and

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above;
• Imaging evidence of new loss of viable myocardium or new regional wall
motion abnormality. The imaging must be done by Cardiologist specified by the
Company.

For the above definition, the following are excluded:

• Angina;
• Heart attack of indeterminate age; and
• A rise in cardiac biomarkers or Troponin T or I following an intra-arterial cardiac
procedure including, but not limited to, coronary angiography and coronary
angioplasty.

Explanatory note: 0.5ng/ml = 0.5ug/L = 500pg/ml

3 Stroke with Permanent Neurological Deficit

A cerebrovascular incident including infarction of brain tissue, cerebral and

subarachnoid haemorrhage, intracerebral embolism and cerebral thrombosis
resulting in permanent neurological deficit. This diagnosis must be supported by all
of the following conditions:

• Evidence of permanent clinical neurological deficit confirmed by a neurologist at

least 6 weeks after the event; and
• Findings on Magnetic Resonance Imaging, Computerised Tomography, or
other reliable imaging techniques consistent with the diagnosis of a new stroke.

The following are excluded:

• Transient Ischaemic Attacks;
• Brain damage due to an accident or injury, infection, vasculitis, and
inflammatory disease;
• Vascular disease affecting the eye or optic nerve;
• Ischaemic disorders of the vestibular system; and
• Secondary haemorrhage within a pre-existing cerebral lesion.

4 Coronary Artery By-pass Surgery

The actual undergoing of open-chest surgery or Minimally Invasive Direct Coronary

Artery Bypass surgery to correct the narrowing or blockage of one or more coronary
arteries with bypass grafts. This diagnosis must be supported by angiographic
evidence of significant coronary artery obstruction and the procedure must be
considered medically necessary by a consultant cardiologist.

Angioplasty and all other intra-arterial, catheter-based techniques, ‘keyhole’ or laser

procedures are excluded.

5 End Stage Kidney Failure

Chronic irreversible failure of both kidneys requiring either permanent renal

dialysis or kidney transplantation.

6 Irreversible Aplastic Anaemia

Chronic persistent and irreversible bone marrow failure, confirmed by biopsy, which
results in anaemia, neutropenia and thrombocytopenia requiring treatment with at
least one of the following:

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• Blood product transfusion;

• Bone marrow stimulating agents;
• Immunosuppressive agents; or
• Bone marrow or haematopoietic stem cell transplantation.

The diagnosis must be confirmed by a haematologist.

7 End Stage Lung Disease

End stage lung disease, causing chronic respiratory failure. This diagnosis must be
supported by evidence of all of the following:

• FEV1 test results which are consistently less than 1 litre;

• Permanent supplementary oxygen therapy for hypoxemia;
• Arterial blood gas analyses with partial oxygen pressures of 55mmHg or less
(PaO2 ≤ 55mmHg); and
• Dyspnoea at rest.

The diagnosis must be confirmed by a respiratory physician.

8 End Stage Liver Failure

End stage liver failure as evidenced by all of the following:

• Permanent jaundice;
• Ascites; and
• Hepatic encephalopathy.

Liver disease secondary to alcohol or drug abuse is excluded.

9 Coma

A coma that persists for at least 96 hours. This diagnosis must be supported by
evidence of all of the following:

• No response to external stimuli for at least 96 hours;

• Life support measures are necessary to sustain life; and
• Brain damage resulting in permanent neurological deficit which must be
assessed at least 30 days after the onset of the coma.

For the above definition, medically induced coma and coma resulting directly from
alcohol or drug abuse are excluded.

10 Deafness (Irreversible Loss of Hearing)

Total and irreversible loss of hearing in both ears as a result of illness or accident.
This diagnosis must be supported by audiometric and sound-threshold tests
provided and certified by an Ear, Nose, Throat (ENT) specialist.

Total means “the loss of at least 80 decibels in all frequencies of hearing”.

Irreversible means “cannot be reasonably restored to at least 40 decibels by medical

treatment, hearing aid and/or surgical procedures consistent with the current
standard of the medical services available in Singapore after a period of 6 months

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from the date of intervention.”

11 Open Chest Heart Valve Surgery

The actual undergoing of open-heart surgery to replace or repair heart valve

abnormalities. The diagnosis of heart valve abnormality must be supported by
cardiac catheterization or echocardiogram and the procedure must be considered
medically necessary by a consultant cardiologist.

12 Irreversible Loss of Speech

Total and irreversible loss of the ability to speak as a result of injury or disease to the
vocal cords. The inability to speak must be established for a continuous period of 12
months. This diagnosis must be supported by medical evidence furnished by an Ear,
Nose, Throat (ENT) specialist.

All psychiatric related causes are excluded.

13 Major Burns

Third degree (full thickness of the skin) burns covering at least 20% of the surface of
the Life Assured’s body.

14 Major Organ / Bone Marrow Transplantation

The receipt of a transplant of:

• Human bone marrow using haematopoietic stem cells preceded by total bone
marrow ablation; or
• One of the following human organs: heart, lung, liver, kidney, pancreas, that
resulted from irreversible end stage failure of the relevant organ.

Other stem cell transplants are excluded.

15 Multiple Sclerosis

The definite diagnosis of Multiple Sclerosis, and must be supported by all of the
following:

• Investigations which unequivocally confirm the diagnosis to be Multiple

Sclerosis; and
• Multiple neurological deficits which occurred over a continuous period of at
least 6 months. Other causes of neurological damage such as SLE and HIV are
excluded.

16 Muscular Dystrophy

The unequivocal diagnosis of muscular dystrophy must be made by a consultant

neurologist. The condition must result in the inability of the Life Assured to perform
(whether aided or unaided) at least 3 of the 6 “Activities of Daily Living” for a
continuous period of at least 6 months.

For the purpose of this definition, “aided” shall mean with the aid of special
equipment, device and/or apparatus and not pertaining to human aid.

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17 Idiopathic Parkinson’s Disease

The unequivocal diagnosis of idiopathic Parkinson’s Disease by a consultant

neurologist. This diagnosis must be supported by all of the following conditions:

• The disease cannot be controlled with medication; and

• Inability of the Life Assured to perform (whether aided or unaided) at least 3 of
the 6 “Activities of Daily Living” for a continuous period of at least 6 months.

For the purpose of this definition, “aided” shall mean with the aid of special
equipment, device and/or apparatus and not pertaining to human aid.

18 Open Chest Surgery to Aorta

The actual undergoing of major surgery to repair or correct an aneurysm, narrowing,

obstruction or dissection of the aorta through surgical opening of the chest or
abdomen. For the purpose of this definition, aorta shall mean the thoracic and
abdominal aorta but not its branches.

Surgery performed using only minimally invasive or intra-arterial techniques are

excluded.

19 Alzheimer's Disease / Severe Dementia

Deterioration or loss of cognitive function as confirmed by clinical evaluation and

imaging tests, arising from Alzheimer's disease or irreversible organic disorders,
resulting in significant reduction in mental and social functioning requiring the
continuous supervision of the life assured. This diagnosis must be supported by the
clinical confirmation of an appropriate consultant and supported by the Company's
appointed doctor.

The following are excluded:

• Non-organic diseases such as neurosis and psychiatric illnesses; and
• Alcohol related brain damage.

20 Fulminant Hepatitis

A submassive to massive necrosis of the liver by the Hepatitis virus, leading

precipitously to liver failure. This diagnosis must be supported by all of the
following:

• Rapid decreasing of liver size as confirmed by abdominal ultrasound;

• Necrosis involving entire lobules, leaving only a collapsed reticular framework;
• Rapid deterioration of liver function tests;
• Deepening jaundice; and
• Hepatic encephalopathy.

21 Motor Neurone Disease

Motor neurone disease characterised by progressive degeneration of corticospinal

tracts and anterior horn cells or bulbar efferent neurones which include spinal
muscular atrophy, progressive bulbar palsy, amyotrophic lateral sclerosis and
primary lateral sclerosis. This diagnosis must be confirmed by a neurologist as
progressive and resulting in permanent neurological deficit.

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22 Primary Pulmonary Hypertension

Primary Pulmonary Hypertension with substantial right ventricular enlargement

confirmed by investigations including cardiac catheterisation, resulting in permanent
physical impairment of at least Class IV of the New York Heart Association (NYHA)
Classification of Cardiac Impairment.

The NYHA Classification of Cardiac Impairment:

Class I: No limitation of physical activity. Ordinary physical activity does not

cause undue fatigue, dyspnoea, or anginal pain.
Class II: Slight limitation of physical activity. Ordinary physical activity results in
symptoms.
Class III: Marked limitation of physical activity. Comfortable at rest, but less than
ordinary activity causes symptoms.
Class IV: Unable to engage in any physical activity without discomfort. Symptoms
may be present even at rest.

23 HIV Due to Blood Transfusion and Occupationally Acquired HIV

A. Infection with the Human Immunodeficiency Virus (HIV) through a blood

transfusion, provided that all of the following conditions are met:

• The blood transfusion was medically necessary or given as part of a medical

treatment;
• The blood transfusion was received in Singapore after the Issue Date, Date of
endorsement or Date of reinstatement of this Supplementary Contract,
whichever is the later; and
• The source of the infection is established to be from the Institution that
provided the blood transfusion and the Institution is able to trace the origin of
the HIV tainted blood.

B. Infection with the Human Immunodeficiency Virus (HIV) which resulted from an
accident occurring after the Issue Date, date of endorsement or date of
reinstatement of this Supplementary Contract, whichever is the later whilst the
Insured was carrying out the normal professional duties of his or her occupation
in Singapore, provided that all of the following are proven to the Company’s
satisfaction:

• Proof that the accident involved a definite source of the HIV infected fluids;
• Proof of zero-conversion from HIV negative to HIV positive occurring during
the 180 days after the documented accident. This proof must include a
negative HIV antibody test conducted within 5 days of the accident; and
• HIV infection resulting from any other means including sexual activity and the
use of intravenous drugs is excluded.

This benefit is only payable when the occupation of the insured is a medical
practitioner, housemen, medical student, state registered nurse, medical laboratory
technician, dentist (surgeon and nurse) or paramedical worker, working in medical
centre or clinic (in Singapore).

This benefit will not apply under either section A or B where a cure has become
available prior to the infection. “Cure” means any treatment that renders the HIV

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inactive or non-infectious.

24 Benign Brain Tumour

Benign brain tumour means a non-malignant tumour located in the cranial vault and
limited to the brain, meninges or cranial nerves where all of the following conditions
are met:

• It has undergone surgical removal or, if inoperable, has caused a permanent

neurological deficit; and
• Its presence must be confirmed by a neurologist or neurosurgeon and
supported by findings on Magnetic Resonance Imaging, Computerised
Tomography, or other reliable imaging techniques.

The following are excluded:

• Cysts;
• Abscess;
• Angioma;
• Granulomas;
• Vascular Malformations;
• Haematomas; and
• Tumours of the pituitary gland, spinal cord and skull base.

25 Severe Encephalitis

Severe inflammation of brain substance (cerebral hemisphere, brainstem or

cerebellum) and resulting in permanent neurological deficit which must be
documented for at least 6 weeks. This diagnosis must be certified by a consultant
neurologist, and supported by any confirmatory diagnostic tests.

Encephalitis caused by HIV infection is excluded.

26 Severe Bacterial Meningitis

Bacterial infection resulting in severe inflammation of the membranes of the brain or

spinal cord resulting in significant, irreversible and permanent neurological deficit.
The neurological deficit must persist for at least 6 weeks. This diagnosis must be
confirmed by:

• The presence of bacterial infection in cerebrospinal fluid by lumbar puncture;

and
• A consultant neurologist.

Bacterial Meningitis in the presence of HIV infection is excluded.

27 Angioplasty & Other Invasive Treatment for Coronary Artery

The actual undergoing of balloon angioplasty or similar intra-arterial catheter

procedure to correct a narrowing of minimum 60% stenosis of one or more major
coronary arteries as shown by angiographic evidence. The revascularisation must be
considered medically necessary by a consultant cardiologist.

Coronary arteries herein refer to left main stem, left anterior descending, circumflex
and right coronary artery.

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Payment under this condition is limited to 10% of the Sum Assured under this policy
subject to a S$25,000 maximum sum payable. This benefit is payable once only and
shall be deducted from the amount of this Contract, thereby reducing the amount of
the Sum Assured which may be payable herein.

Diagnostic angiography is excluded.

28 Blindness (Irreversible Loss of Sight)

Permanent and irreversible loss of sight in both eyes as a result of illness or accident
to the extent that even when tested with the use of visual aids, vision is measured at
6/60 or worse in both eyes using a Snellen eye chart or equivalent test, or visual field
of 20 degrees or less in both eyes. The blindness must be confirmed by an
ophthalmologist.

The blindness must not be correctable by surgical procedures, implants or any other
means.

29 Major Head Trauma

Accidental head injury resulting in permanent neurological deficit to be assessed no

sooner than 6 weeks from the date of the accident. This diagnosis must be
confirmed by a consultant neurologist and supported by relevant findings on
Magnetic Resonance Imaging, Computerised Tomography, or other reliable imaging
techniques. "Accident” means an event of violent, unexpected, external, involuntary
and visible nature which is independent of any other cause and is the sole cause of
the head Injury.

The following are excluded:

• Spinal cord injury; and
• Head injury due to any other causes.

30 Paralysis (Irreversible Loss of Use of Limbs)

Total and irreversible loss of use of at least 2 entire limbs due to injury or disease
persisting for a period of at least 6 weeks and with no foreseeable possibility of
recovery. This condition must be confirmed by a consultant neurologist.

Self-inflicted injuries are excluded.

31 Terminal Illness

The conclusive diagnosis of an illness that is expected to result in the death of the
Life Assured within 12 months. This diagnosis must be supported by a specialist and
confirmed by the Company’s appointed doctor.

Terminal illness in the presence of HIV infection is excluded.

32 Progressive Scleroderma

A systemic collagen-vascular disease causing progressive diffuse fibrosis in the skin,

blood vessels and visceral organs. This diagnosis must be unequivocally confirmed
by a consultant rheumatologist and supported by biopsy or equivalent confirmatory
test, and serological evidence, and the disorder must have reached systemic
proportions to involve the heart, lungs or kidneys.

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The following are excluded:

• Localised scleroderma (linear scleroderma or morphea);
• Eosinophilic fascitis; and
• CREST syndrome.

33 Persistent Vegetative State (Apallic Syndrome)

Universal necrosis of the brain cortex with the brainstem intact. This diagnosis must
be definitely confirmed by a consultant neurologist holding such an appointment at
an approved hospital. This condition has to be medically documented for at least
one month.

34 Systemic Lupus Erythematosus with Lupus Nephritis

The unequivocal diagnosis of Systemic Lupus Erythematosus (SLE) based on

recognised diagnostic criteria and supported with clinical and laboratory evidence.
In respect of this contract, systemic lupus erythematosus will be restricted to those
forms of systemic lupus erythematosus which involve the kidneys (Class III to Class
VI Lupus Nephritis, established by renal biopsy, and in accordance with the RPS/ISN
classification system). The final diagnosis must be confirmed by a certified doctor
specialising in Rheumatology and Immunology.

The RPS/ISN classification of lupus nephritis:

Class I Minimal mesangial lupus nephritis

Class II Mesangial proliferative lupus nephritis
Class III Focal lupus nephritis (active and chronic; proliferative and sclerosing)
Class IV Diffuse lupus nephritis (active and chronic; proliferative and sclerosing;
segmental and global)
Class V Membranous lupus nephritis
Class VI Advanced sclerosis lupus nephritis

35 Other Serious Coronary Artery Disease

The narrowing of the lumen of at least one coronary artery by a minimum of 75%
and of two others by a minimum of 60%, as proven by invasive coronary
angiography, regardless of whether or not any form of coronary artery surgery has
been performed.

Diagnosis by Imaging or non-invasive diagnostic procedures such as CT scan or MRI

does not meet the confirmatory status required by the definition.

Coronary arteries herein refer to left main stem, left anterior descending, circumflex
and right coronary artery. The branches of the above coronary arteries are excluded.

36 Poliomyelitis

The occurrence of Poliomyelitis where the following conditions are met:

• Poliovirus is identified as the cause,

• Paralysis of the limb muscles or respiratory muscles must be present and persist
for at least 3 months.

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 6. Critical Illness Insurance

The diagnosis must be confirmed by a consultant neurologist or specialist in the

relevant medical field.

37 Loss of Independent Existence

A condition as a result of a disease, illness or injury whereby the Life Assured is

unable to perform (whether aided or unaided) at least 3 of the 6 "Activities of Daily
Living", for a continuous period of 6 months. This condition must be confirmed by
the company's approved doctor.

Non-organic diseases such as neurosis and psychiatric illnesses are excluded.

For the purpose of this definition, “aided” shall mean with the aid of special
equipment, device and/or apparatus and not pertaining to human aid.

Others

The following two terms can be found in some of the above definitions, and their
meanings are as follows:

1. Permanent Neurological Deficit

Permanent means expected to last throughout the lifetime of the Life Assured.

Permanent neurological deficit means symptoms of dysfunction in the nervous

system that are present on clinical examination and expected to last throughout the
lifetime of the Life Assured. Symptoms that are covered include numbness,
paralysis, localized weakness, dysarthria (difficulty with speech), aphasia (inability to
speak), dysphagia (difficulty swallowing), visual impairment, difficulty in walking,
lack of coordination, tremor, seizures, dementia, delirium and coma.

2. Activities of Daily Living (ADLs)

(i) Washing - the ability to wash in the bath or shower (including getting into and
out of the bath or shower) or wash satisfactorily by other means;
(ii) Dressing - the ability to put on, take off, secure and unfasten all garments and,
as appropriate, any braces, artificial limbs or other surgical appliances;
(iii) Transferring - the ability to move from a bed to an upright chair or wheelchair
and vice versa;
(iv) Mobility - the ability to move indoors from room to room on level surfaces;
(v) Toileting - the ability to use the lavatory or otherwise manage bowel and
bladder functions so as to maintain a satisfactory level of personal hygiene;
(vi) Feeding - the ability to feed oneself once food has been prepared and made
available.

*End*

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Health Insurance

ANNEX 1
List of changes to the standard list of 37 critical illness under the Critical Illness
Framework 2019

Name Definitions
No. Critical Illnesses
changed? changed?

1 Major Cancer Yes Yes

2 Heart Attacks of Specified Severity No change Yes
Stroke with Permanent Neurological
3 Yes Yes
Deficit
4 Coronary Artery By-pass Surgery No change No change
5 End Stage Kidney Failure Yes No change
6 Irreversible Aplastic Anaemia Yes Yes
7 End Stage Lung Disease No change No change
8 End Stage Liver Disease No change No change
9 Coma No change Yes
10 Deafness (Irreversible Loss of Hearing) Yes Yes
11 Open Chest Heart Valve Surgery Yes No change
12 Irreversible Loss of Speech Yes Yes
13 Major Burns No change No change
Major Organ/Bone Marrow
14 No change No change
Transplantation
15 Multiple Sclerosis No change Yes
16 Muscular Dystrophy No change Yes
17 Idiopathic Parkinson's Disease Yes Yes
18 Open Chest Surgery to Aorta Yes No change
19 Alzheimer's Disease / Severe Dementia No change Yes
20 Fulminant Hepatitis No change No change
21 Motor Neurone Disease No change Yes
22 Primary Pulmonary Hypertension No change No change
HIV Due to Blood Transfusion and
23 No change Yes
Occupationally Acquired HIV
24 Benign Brain Tumour No change Yes
25 Severe Encephalitis Yes Yes

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 6. Critical Illness Insurance

Name Definitions
No. Critical Illnesses
changed? changed?

26 Severe Bacterial Meningitis Yes No change

Angioplasty & Other Invasive Treatment
27 No change No change
for Coronary Artery
28 Blindness (Irreversible Loss of Sight) Yes Yes
29 Major Head Trauma No change Yes
Paralysis (Irreversible Loss of Use of
30 Yes No change
Limbs)
31 Terminal Illness No change No change
32 Progressive Scleroderma No change Yes
Persistent Vegetative State (Apallic
33 Yes No change
Syndrome)
Systemic Lupus Erythematosus with
34 No change Yes
Lupus Nephritis
35 Other Serious Coronary Artery Disease No change Yes
36 Poliomyelitis No change Yes
37 Loss of Independent Existence Yes No change

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CHAPTER
06
CRITICAL ILLNESS INSURANCE

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

How a Critical Illness A Critical Illness (also known as Dread Disease) policy is an insurance product
Insurance policy works? designed to provide a lump sum benefit to a policyholder in the event that the
insured is diagnosed to be suffering from one of the critical illnesses or has
undergone a surgical procedure covered under the policy. Each critical illness or
surgery covered by the policy is precisely defined in the policy, and the benefits will
be paid only if he suffers a condition that meets the standard definition as specified
in the policy.
Critical Illness Framework The CI Framework seeks to balance the interests of both the consumers and the
proposed by the Life insurance companies i.e. offering clear and consistent coverage on the core critical
Insurance Association illness benefits will allow for easier product comparison by consumers as well as
consistent outcomes in CI claims. It seeks to reduce ambiguity of the same CI claim
being paid by one insurer but rejected by another.

Please refer to LIA Website at: www.lia.org.sg for the latest definitions.
Eligibility criteria for • Policy must be in force.
payment of the Critical • Life insured has not reached the expiry age of the CI Insurance cover (if
Illness Insurance benefit applicable).
• Critical Illness Must Be One That Is Covered.
• Meets The Definition Of Critical Illness.
• Diagnosis Meets The Conditions Set Down By The Insurer.
• Meets The Waiting Period Requirement.
• Meets The Survival Period Requirement.

20
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Features of Critical Illness Critical Illness (also known as Dread Disease) insurance provides a lump sum
Insurance benefit to the policyholder in the event that the insured is diagnosed to be suffering
from one of the critical illnesses or has undergone a surgical procedure covered
under the policy. Each critical illness and surgery covered by the policy is defined in
the policy, and the benefits will be paid only if he suffers a condition that meets the
definition as specified in the policy.

Benefits received from a Critical Illness policy can be used to finance the cost of
care and treatment, recuperation, medical aids, replacing any income loss or even
funding a change in lifestyle.

Critical Illness (CI) Insurance policy can be sold as a stand-alone policy (individual or
group basis), or as an optional rider to a Whole Life, Endowment, Term Insurance or
Investment-Linked Policy (ILP), to provide either an additional sum assured or the
advanced payment of a portion, or the entire sum assured payable on death.
LIA Critical Illness The CI Framework seeks to balance the interests of both the consumers and the
Framework 2019 insurance companies. Offering clear and consistent coverage on the core critical
("The CI Framework") illness benefits will allow for easier product comparison by consumers as well as
consistent outcomes on CI claims. It seeks to reduce ambiguity of the same CI claim
being paid by one insurer but rejected by another.

Set up in consultation with the Monetary Authority of Singapore, member

companies of Life Insurance Association (LIA) and General Insurance Association
(GIA) undertake to comply with the framework which governs the provision of CI
coverage by insurers. Under the CI framework, severe Critical Illness definitions is
standardised for 37 medical conditions by way of common definitions.
Two main types of Critical • Acceleration Benefit.
Illness covers • Additional Benefit.

Some insurers have also introduced Severity-Based and Multiple Pay CI Insurance
plans.
Eligibility Criteria for The benefits under a CI Insurance policy are payable ONLY if the:
Payment of Critical Illness • policy is in force;
Benefit • life insured has not reached the expiry age of the CI Insurance cover;
• critical illness which the life insured is suffering from is one that is covered
under the policy and meets the conditions as specified in the policy;
• critical illness is not a pre-existing illness;
• critical illness contracted meets the definition of the particular critical illness as
specified in the policy;
• critical illness is diagnosed to have commenced after the waiting period; and
• life insured survives the survival period if there is one imposed on the policy.
Example on Acceleration If an individual buys a S$200,000 Whole Life type of CI Insurance policy with 50%
Benefit Critical Illness (CI) acceleration, in the event that he is diagnosed to be suffering from one of the
Insurance Cover critical illnesses covered under his policy, the insurer will pay him S$100,000 (i.e.
50% x S$200,000) plus bonuses (if any). The balance of the sum assured plus
bonuses (if any) will be paid, when he dies or suffers a Total and Permanent
Disability (TPD).
Example on Additional If a person purchases a S$100,000 Whole Life Insurance policy with a S$200,000
Benefit Critical Illness (CI) Additional Benefit CI Insurance rider, the insurer will pay him S$200,000 if he
Insurance Cover contracts one of the critical illnesses covered by his policy. The Whole Life Insurance
sum assured of S$100,000 will be paid only upon his death or TPD.

21
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Comparison Of Acceleration Benefit Additional Benefit
Acceleration & Additional
Benefit Types Of Critical (Packaged Policy Or Stand-alone Policy Rider
Illness (CI) Insurance Rider)
Covers It must be packaged It need not be attached It must be attached to a
or attached to a basic to any basic policy. basic policy.
policy, i.e. ILP, Term,
Endowment or Whole
Life Insurance policy.
On diagnosis of a critical On diagnosis of a critical On diagnosis of a critical
illness, a percentage of illness, the full sum illness, the full sum
the basic sum assured as assured of the policy will assured of the rider will
specified in the policy will be paid. be paid.
be paid.
Payment of a CI Payment of a CI Payment of a CI
Insurance claim will Insurance claim will Insurance claim will not
cause the policy to be cause the policy to be affect the basic policy
terminated if it is a 100% terminated. which will continue to be
Acceleration type of in force.
policy or rider.
Total amount paid under Total amount paid under Total amount paid under
the policy is equal to the the policy is equal to the the policy is equal to the
basic sum assured plus basic sum assured. sum assured of the CI
bonuses (if any). Insurance rider, plus the
sum assured of the basic
policy, plus any bonuses
payable under the basic
policy, in the event of a
person who contracts
a critical illness dies, or
becomes totally disabled
subsequently.
CI Insurance rider sum Not applicable. Sum assured can be
assured must not exceed up to a certain number
that of the basic policy. of times of the basic
sum assured, subject to
the insurer’s specified
guidelines.
CI Insurance rider term Not applicable. The term must not
usually follows that of exceed that of the
the basic policy. basic policy and usually
expires, when the life
insured reaches a
specified age.
Variations of Critical Illness • Severity-Based Critical Illness (CI) Insurance Plan (Early Pay CI).
Insurance • Multiple Pay Critical Illness (CI) Insurance Plan.
• Critical Illness Plans Covering Mental Illnesses.
• Insurance Covering Diabetes.
• Combination of CI Cover.
• Insurance Covering Pregnancy Complications.
Advantages of Severity- • Greater number of illnesses covered
Based Cover • Pay-outs received at an early stage of the illness
• The ability to claim more than once
• Continuity of coverage after a claim

22
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Variations of Critical Illness The coverage offered by critical illness insurance products can vary from the
Plans and latest market number of critical illnesses to the types of critical illnesses and/or stages of critical
developments illnesses covered. The stages can be classified as early, intermediate or severe.

Traditional CI policies would cover only severe (end) stage critical illnesses. For
instance, the insured would receive the pay-out if he is diagnosed with stage 4 colon
cancer, but not for stage 1.

Severity-Based Critical Illness plans offer a pay-out when the insured gets
diagnosed during the early or intermediate stages of a critical illness. Medical
and technological advancements have now made it possible to detect critical
illnesses during the early stages. Receiving the pay-out in the early stage of a CI is
advantageous to the insured as the monies received can be used towards earlier
medical intervention and better treatment outcomes. The insured also stands to
have a financial peace of mind while undergoing treatments.
Underwriting • Basically, the same as those for Life Insurance policies, namely the completion
requirements of a proposal form (usually the same as that for Life Insurance) and the insured
undergoing various medical tests.
• Difference is that the non-medical limit for CI covers is lower. In other words,
the life insured could be required to undergo medical tests for a sum assured
whereas he would not be required to do so if he were to apply for a Life
Insurance policy with the same sum assured.
Factors to consider in Having a CI policy should not be the main objective but selecting the one that
determining adequacy of provides the right degree of financial support is the key. In determining the
Critical illness Coverage adequacy of CI coverage, there are five factors to consider:
• Life Insurance Association’s (LIA) recommended amount
• Minimum four years of income, after taking into account debt
• Recovery expenses
• Providing for dependents
Common exclusions under • Pre-existing illnesses;
a Critical Illness Insurance • Self-inflicted injury or illness, while sane or insane;
policy • Wilful misuse of drugs and/or alcohol;
• Congenital anomalies or inherited disorders;
• Acquired Immune Deficiency Syndrome (AIDS) or infection by any human
immunodeficiency virus (HIV);
• Bodily injury sustained as a result of travel in or on any type of aircraft, except
as a fare-paying passenger or as a crew member of an international airline
operating on a regularly scheduled passenger flight of a licensed commercial
aircraft; and
• War or warlike operation, nuclear, strike, riot and civil commotion risks.

Note that the exclusions vary from insurer to insurer.

Circumstances under • A valid critical illness claim has been made (usually the case, unless the policy
which Critical Illness contract states otherwise);
Insurance policy will be • Maximum coverage allowed under the policy is paid out;
terminated • Basic Life Insurance policy to which it is attached or packaged matures or
expires;
• Policy lapses owing to non-payment of premiums after the grace period;
• Policy is surrendered for its cash value or converted into an Extended Term
Insurance policy;
• Life insured dies; or
• Life insured reaches the expiry age of the CI Insurance rider.

23
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Circumstances under • A valid critical illness claim has been made (usually the case, unless the policy
which Critical Illness contract states otherwise);
Insurance policy will be • Maximum coverage allowed under the policy is paid out;
terminated • Basic Life Insurance policy to which it is attached or packaged matures or
expires;
• Policy lapses owing to non-payment of premiums after the grace period;
• Policy is surrendered for its cash value or converted into an Extended Term
Insurance policy;
• Life insured dies; or
• Life insured reaches the expiry age of the CI Insurance rider.
Documents that the • Claimant’s statement to be completed by the policy owner and the life insured if
insured has to submit they are not the same person;
when making a claim • Attending Physician’s Report; and
• Proof of the critical illness, such as biopsy report, histology report, imaging/scan
report, laboratory report, and others as mentioned earlier, or as requested by
the insurer, furnished at the expense of the claimant.
Claim procedures • Written notice of the claim to be submitted within a specified period (usually 60
days) of the diagnosis of the critical illness or the performance of a surgery as
covered under the policy;
• Submission of the claim form within a specified period (e.g. 15 days) from the
date that the insurer sent it out; and
• All proofs of the critical illness must be submitted within a specified period
(usually 60 days) from the date of diagnosis of the critical illness or surgery.

Note that it may vary from insurer to insurer.

How a Group Critical • Coverage of a Group CI Insurance cover is similar to that of the Individual CI
Illness Insurance policy Insurance cover
works? • Can be in the form of either the Acceleration or the Additional Benefit CI type of
cover.
• However, there will always be an expiry age (e.g. 75 years) specified in the CI
Insurance cover, regardless of whether it is an Acceleration or Additional Benefit
type of CI Insurance cover.

24
Health Insurance

CHAPTER 7
OTHER TYPES OF HEALTH INSURANCE

CHAPTER OUTLINE

1. Introduction
2. Hospital Cash (Income) Insurance
3. Maternity Insurance
4. Medical Expense Benefits Under Travel Insurance
5. Group Dental Care Insurance
Appendix 7A – Sample Maternity Insurance Benefit Table
Appendix 7B – Sample Schedule of Allowances Under Group Dental Insurance

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ understand how a Hospital Cash (Income) Insurance policy works
(whether as a stand-alone policy or as a rider)
▪ briefly explain the conditions to be met before a claim can be admitted under a
Hospital Cash Insurance policy
▪ state the features and types of a Hospital Cash Insurance policy
▪ list the common exclusions under a Hospital Cash Insurance policy/rider and know
the circumstances under which it will be terminated
▪ list the documents that need to be submitted in the event of a claim under a
Hospital Cash Insurance policy
▪ know how a maternity insurance works including the features, benefits and
exclusions
▪ know the common medical benefits provided by a Travel Insurance policy
▪ state the common exclusions for the medical benefits under a typical Travel
Insurance policy
▪ know how the benefits are paid under Group Dental Insurance and whether there
are any limits to the benefits that one is entitled to claim
▪ state the common exclusions under a Group Dental Insurance policy and
understand how the limitation clause of a Group Dental Insurance policy works
▪ know the circumstances under which a Group Dental Insurance policy will be
terminated
▪ know the claim procedures, including the types of documents that need to be
submitted for a Group Dental Care Insurance claim

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 7. Other Types of Health Insurance

Contents
CHAPTER OUTLINE ......................................................................................................... 134
LEARNING OUTCOMES .................................................................................................. 134
1. INTRODUCTION ..................................................................................................... 135
2. HOSPITAL CASH (INCOME) INSURANCE............................................................. 136
A. Conditions To Be Met Before A Claim Can Be Admitted .............................. 137
A1. Waiting Period .......................................................................................... 137
A2. Hospital Confinement .............................................................................. 137
B. Features Of Hospital Cash Insurance ............................................................. 138
C. Types Of Hospital Cash Insurance.................................................................. 138
C1. Stand-alone Hospital Cash Insurance ..................................................... 138
C2. Hospital Cash Insurance Riders ............................................................... 139
D. Underwriting ................................................................................................... 139
E. Exclusions ........................................................................................................ 139
F. Termination Of Cover...................................................................................... 140
G. Claims .............................................................................................................. 140
3. MATERNITY INSURANCE ...................................................................................... 140
A. Benefits Of Maternity Insurance ..................................................................... 141
B. Features Of Maternity Insurance..................................................................... 141
4. MEDICAL BENEFITS UNDER TRAVEL INSURANCE ............................................. 142
A. Medical Expenses & Other Related Benefits ................................................. 142
B. Hospital Confinement Allowance ................................................................... 143
C. Emergency Medical Evacuation ..................................................................... 143
D. Repatriation ..................................................................................................... 144
E. Exclusions ........................................................................................................ 144
5. GROUP DENTAL CARE INSURANCE .................................................................... 145
A. Benefits Offered............................................................................................... 145
B. Flexibility ......................................................................................................... 145
C. Exclusions ........................................................................................................ 146
D. Limitation Clause............................................................................................. 146
E. Termination Of Cover...................................................................................... 146
F. Claims .............................................................................................................. 147
APPENDIX 7A .................................................................................................................. 148
APPENDIX 7B .................................................................................................................. 149

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Health Insurance

1. INTRODUCTION

1.1 Other types of Health Insurance products are covered in this chapter: Hospital
Cash Insurance, Maternity Insurance, Medical Expenses Benefits covered in
Travel Insurance and Group Dental Care Insurance.
Dread
Disease

2. HOSPITAL CASH (INCOME) INSURANCE

2.1 Hospital Cash (also known as Hospital Income) Insurance pays a daily cash
benefit if the insured is hospitalised due to an injury or illness. The daily
benefit is a fixed dollar amount (e.g. S$200). This benefit is independent of the
actual hospitalisation costs. Payment of the benefit is limited to a specified
number of days (e.g. 180 days) per hospitalisation in any given year. Some
insurers may impose a lifetime limit on the number of days (e.g. 1,000 days)
that a person may claim.

2.2 Let us look at Example 7.1 to illustrate the working of this benefit.

Example 7.1: Illustration Of The Working Of A

Hospital Cash Insurance Policy

Illustration of the claims history of Harry who purchased a Hospital Cash

Insurance that paid a daily benefit of S$100 up to a period of 180 days per
hospitalisation and 1,000 days per lifetime:

2011 – hospitalised for 150 days for car accident injury

2014 – hospitalised for 210 days for complicated heart by-pass surgery
2016 – hospitalised for 170 days for severe osteoporosis
2017 – hospitalised for 190 days for hip replacement
2019 – hospitalised for 200 days for broken thigh bone treatment
2023 – hospitalised for 160 days for varicose vein treatment

The total amount that the insurer paid to him to-date worked out to be as
follows:
2011 - 150 days
2014 - 180 days
2016 - 170 days
2017 - 180 days
2019 - 180 days
2023 - 140 days (i.e. 1,000 – 860)

Total - 1,000 days X S$100 per day = S$100,000

2.3 Although Harry had stayed in the hospital for more than 180 days in 2014,
2017 and 2019, the insurer paid him only up to 180 days being the maximum
period per hospitalisation. In 2023, though his stay was 160 days, the insurer
paid him for the hospital stay of only 140 days because the balance of his
lifetime limit was 140 days.

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 7. Other Types of Health Insurance

2.4 Since he had claimed for the maximum number of hospitalisation days per
lifetime, his policy was terminated after he had received the final payment
from the insurer.

2.5 Hospital Cash Insurance can be issued as a stand-alone policy, as a rider or

bundled into other types of insurance, such as Personal Accident Insurance,
Travel Insurance, Critical Illness Insurance or Medical Expense Insurance
policies. The amount payable under Hospital Cash Insurance is in addition to
all other Health Insurance policies, plans or schemes (including MediShield
Life, Integrated Shield Plan and any Group Hospital & Surgical Insurance
Scheme) for which the individual is covered.

2.6 This benefit can be issued to cover hospitalisation resulting from:

 injury only; or
 both injury and illness.

A. Conditions To Be Met Before A Claim Can Be Admitted

2.7 To claim for a Hospital Cash benefit, the insured must meet the criteria below:

A1. Waiting Period

(a) For Injury

If the hospitalisation is caused by an accident 1 directly and
independently of any other cause, there is no waiting period.

(b) For Illness

If the hospitalisation is due to an illness or disease, it must be contracted
or commenced after the policy issuance or when reinstatement has
taken effect for a specified period of time. In addition, it must not be an
illness that is specifically excluded from the coverage of the policy.

A2. Hospital Confinement

2.8 The insured must be confined to a hospital for a specified minimum

number of hours.

(a) Per Lifetime Limit

This is the maximum total number of hospitalisation days the insured
can claim per lifetime. (as illustrated in Example 7.1 of this chapter).

(b) Expiry Age

The insured has not reached the expiry age as stated in the policy.

(c) Cause
Cause of the injury or illness must not be one of the exclusions as
discussed in a later section of this chapter.

1
Accident normally means any event caused by violent, accidental, external and visible means.

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B. Features Of Hospital Cash Insurance

2.9 Although Hospital Cash Insurance can be issued as a stand-alone policy or as

a rider, it shares the common features as described below:
(a) There is a per day hospitalisation benefit.
(b) There is a cap on the lifetime coverage.
(c) The benefit is a fixed amount throughout the policy term.
(d) There is no waiting period for hospitalisation due to an injury. A waiting
period is imposed from the date of issue or reinstatement of the policy if
the cause of hospitalisation is due to an illness.
(e) The benefit payment is not affected by the payments from other Health
Insurance policies, plans or schemes (including Medishield Life,
Integrated Shield Plan and any Group Hospital & Surgical Insurance
Scheme), i.e. it is paid on top of the benefits received from all other
medical insurance covers.
(f) The cover expires at a specified age (e.g. 65, 70 or 75 years).
(g) The premiums may remain at a consistent level or increase once the
insured reaches a higher age-band.
(h) It renews on a yearly basis.
(i) It usually provides 24-hour, worldwide coverage, although some insurers
limit the cover to certain geographical areas.
(j) It usually has no cash value.
(k) No assignment of the policy is allowed.
(l) For a policy free of any claim, a no claim discount may be given at
renewal.

C. Types Of Hospital Cash Insurance

2.10 Hospital Cash Insurance can be issued as a stand-alone policy or as a rider.

C1. Stand-alone Hospital Cash Insurance

2.11 When Hospital Cash Insurance is issued as a stand-alone policy, the daily
benefits offered are more attractive and can include:
(a) >100% of the daily benefit if the insured stays in a High Dependency Unit
(HDU) or Coronary Care Unit (CCU) of a hospital;
(b) double or triple payment if the insured stays in the Intensive Care Unit
(ICU) of a hospital;
(c) triple payment if hospitalisation is due to an accident, or if the insured is
hospitalised overseas;
(d) get-well benefit;
(e) rehabilitation income;
(f) free accidental death benefit; and
(g) involuntary loss of employment benefit (in excess of 30 days) - waiver of

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 7. Other Types of Health Insurance

premium (up to six months).

2.12 Premium for a stand-alone policy increases when the insured crosses into the
next age-band upon renewal of the policy. For example, from the ages of 21 to
40 years, the insured may need to pay S$21.50 per month for S$100 per day
benefit. From the ages of 41 to 50 years, he may need to pay S$33.50 per
month, and so on. In other words, the premium increases with age.

2.13 The insured can have a choice of different plans providing varying amounts of
benefits, and may include his spouse and children under the cover. The policy
is usually automatically renewable on an annual basis up to a specified age
(e.g. 65, 70 or 75 years). The coverage is 24-hour, worldwide basis.

C2. Hospital Cash Insurance Riders

2.14 Hospital Cash Insurance can also be issued as a rider attached to a basic
policy, such as a Life Insurance policy (e.g. Whole Life Insurance, Endowment
Insurance or Critical Illness Insurance policy). The rider expires when the
insured reaches a specified age (e.g. 65, 70 or 75 years) or on the maturity of
the policy, whichever is the earlier. Thus, the term of this rider cannot be
longer than that of the basic policy, since the rider cannot stand on its own.

D. Underwriting

2.15 Owing to its small premiums, Hospital Cash Insurance policy is not
underwritten. Waiting period applies and pre-existing medical conditions are
permanently excluded under the policy.

E. Exclusions

2.16 Some common exclusions of a Hospital Cash Insurance policy include:

(a) pre-existing medical condition that the insured knew existed or has
received treatment and/or medical advice;
(b) pre-existing physical defect or infirmity, unless declared to and accepted
by the insurer;
(c) self-inflicted injuries or suicide, while sane or insane;
(d) Human immunodeficiency virus (HIV) or any HIV related illness, including
Acquired Immune Deficiency Syndrome (AIDS) or any illness arising from
it;
(e) sexually transmitted disease;
(f) mental/nervous disorder, drug addiction, intoxication, alcoholism, obesity,
weight reduction/improvement, bulimia, anorexia nervosa, preventive
treatment, such as vaccination or acupuncture;
(g) illegal or unlawful act of the insured;
(h) pregnancy, miscarriage, childbirth, abortion, birth control or infertility;
(i) routine physical assessment or any other medical examination not
relating to any health impairment;

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Health Insurance

(j) cosmetic or plastic surgery, circumcision, congenital condition, dental

work or myopic treatment;
(k) war and related operations;
(l) nuclear weapons material, ionising or radiation;
(m) strike, riot and civil commotion; and
(n) participation in hazardous sports like skiing or sky-diving, aerial activities
other than air travel as a fare-paying passenger of a licensed aircraft,
driving or riding in any kind of race, motor-cycling or pillion riding.

F. Termination Of Cover

2.17 A Hospital Cash Insurance cover will terminate when one of the following
events occurs:
(a) the premium is not paid at the end of the grace period;
(b) the insured reaches the expiry age as stated in the policy;
(c) the per lifetime limit is reached;
(d) the basic policy lapses or matures; or
(e) the insured dies.

G. Claims

2.18 In the event of a claim, the insurer will require submission of the following
supporting documents:
(a) claim form; and CLAIM
(b) hospital discharge summary and bills.

2.19 These are the usual documents that the insured is required to submit. Note
that the insurer reserves the right to call for additional documentary evidence,
such as the Attending Physician’s Report and any other relevant supporting
documents.

3. MATERNITY INSURANCE

3.1 This insurance provides coverage for the mother and baby for the period of
pregnancy and may cover up to the end of 3rd policy year, protecting them
against complcations related to pregnancy and birth. This plan does not cover
the usual cost of giving birth where the mother and/or the child do not suffer
any complications arising from the pregnancy or birth.

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A. Benefits Of Maternity Insurance

3.2 The benefits offered by a maternity insurance may include:

For the mother:

 Medical expenses due to the covered list of complications that arise
from the pregnancy;
 Death or total & permanent disability benefit; or
 Hospitalisation income benefit for each day of hospitalisation due to
pregnancy complications.

For the newborn:

 Medical expenses due to congenital illnesses;
 Death benefit;
 Hospitalisation income benefit for each day the baby is hospitalised due
to congenital illnesses;
 Outpatient cash benefit for each day of phototherapy machine rented; or
 It may cover up to four babies in a single pregnancy.

Please refer to Appendix 7A for a sample benefit table.

3.3 Costs of delivery including pre and post hospitalisation bill are excluded.

B. Features Of Maternity Insurance

3.4 Maternity Insurance has common features as described below:

(a) It is a single premium term policy.
(b) It protects both mother and child (up to four babies in a single pregnancy)
from as early as 13th week of pregnancy.
(c) It is valid for three (3) years from the policy start date.
(d) It covers for specific types of pregnancy complications and congenital
illnesses according to the insurer’s list.
(e) It provides a death benefit for both mother and child.
(f) It gives a hospital income benefit for each day of hospital stay resulting
from the list of covered events.
(g) The sum insured is paid in a lump sum upon death, diagnosis of
pregnancy complications or congenital illnesses.
(h) Other benefits are subject to limits and caps as defined by the insurers.
(i) The benefit payment is not affected by the payments from other Health
Insurance policies, plans or schemes (including MediShield Life,
Integrated Shield Plan and any Group Hospital & Surgical Insurance
Scheme), i.e. it is paid on top of the benefits received from all other
medical insurance covers.
(j) The cover expires at the end of the policy term.
(k) It usually has no cash value.
(l) No assignment of the policy is allowed.

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(m) Coverage will end when all benefits for the insured mother and the
insured child end; or at the end of policy term, whichever is earlier.
(n) The insurer may offer an option for the insured mother or insured child to
buy a regular premium whole life plan, endowment plan or investment-
linked plan within 90 days of the child’s birth, without the need for
medical underwriting.

3.5 Exclusions

Some common exclusions of a Maternity Insurance policy include:

(a) Self-inflicted injuries, illnesses, suicide or attempted suicide;
(b) misuse of drugs or alcohol;
(c) acquired immunodeficiency syndrome (AIDS), AIDS-related complex or
infection by human immunodeficiency virus (HIV), resulting from any
means;
(d) the insured mother carrying three or more babies in a single pregnancy;
(e) overseas treatment;
(f) abortions which the insured has decided to have, unless medically
necessary due to pregnancy complications covered under the pregnancy
complications benefit and certified by a doctor; or
(g) any unlawful or criminal act or omission.

4. MEDICAL BENEFITS UNDER TRAVEL INSURANCE

4.1 Travel Insurance can be issued on an individual or group basis to cover any
losses, liabilities, medical expenses and other travel inconveniences suffered
by an individual while travelling outside Singapore. In this section, we will
focus our discussion solely on the medical benefits offered only under a
Travel Insurance policy.

4.2 The medical benefits offered by a Travel Insurance policy usually include:
(a) medical expenses and other related benefits;
(b) hospital confinement allowance;
(c) emergency medical evacuation; and
(d) repatriation.

A. Medical Expenses & Other Related Benefits

4.3 Travel Insurance will reimburse most of the non-elective overseas medical and
treatment expenses necessarily and reasonably incurred by the insured
person for sustaining injury or sickness (as defined in the policy) as follows:
 medical expenses, such as clinical, hospital, surgical, nursing, ambulance
and medical supply charges, and emergency accidental dental and
miscarriage expenses, including any follow-up medical expenses in
Singapore incurred within a certain specified period after the insured
person returns from his trip; and

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 expenses incurred for treatment by Traditional Chinese Medicine

physician, including acupuncturist, bonesetter, chiropractor, herbalist or
physiotherapist, up to a limit as specified by some insurers.

4.4 Because there is no age limit to apply for travel insurance policy, insurers set
lower benefit limits for children (below age 18) and higher limits for seniors
(usually above the age of 70 years) if insured under such a policy.

4.5 Some insurers allow for coverage of pre-existing medical conditions to travel
policies with either an extra premium and/or simple health questions.
Otherwise, pre-existing conditions are excluded from travel policies.

4.6 Reimbursement is also made for the following:

 reasonable additional accommodation and travelling expenses necessarily
incurred by the insured person (and a travel companion if required) to
remain in the overseas country of visit for medical treatment on the
written advice of a medical practitioner, up to a limit; and
 hospital visit – reasonable travel and accommodation expenses
necessarily incurred by one relative or friend of the insured person who
has been hospitalised overseas for more than five days for example, to
visit and stay with him until he is medically fit to return home, up to a
limit.

B. Hospital Confinement Allowance

4.7 The insured person is entitled to a daily hospital cash benefit when he is
hospitalised abroad up to a certain period or up to a certain amount. This is
on top of any medical expenses which he has claimed.

4.8 For hospitalisation in Singapore where treatment is sought within a certain

period upon return, the limits are generally lower.

4.9 Some insurers provide double benefit for overseas hospitalisation in an

Intensive Care Unit due to an accident, for up to a certain period.

C. Emergency Medical Evacuation

4.10 This covers the cost of any emergency medical evacuation. Emergency
medical evacuation means that, in the event of a critical situation in which the
insured person suffers a serious illness or injury abroad, and has to be
evacuated to another place to seek emergency medical treatment. This
evacuation is because the local medical services are inadequate or
unavailable.

4.11 The insurer contracts a specialist company to provide emergency medical

evacuation. It is a requirement in the policy that the insured person must
contact such specialist company which shall then decide whether or not the
insured person will require emergency medical evacuation. For this purpose, a
24-hour multilingual helpline or hotline phone number of such a specialist
company is specified in the policy.

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4.12 There is a maximum benefit limit payable for the lower coverage plan.
However, for the higher coverage plan, the coverage amount is usually
unlimited.

4.13 An important aspect of having emergency assistance cover is

that it gives further peace of mind to the insured person if he
suffers a serious illness or injury in an unfamiliar environment,
knowing that help will be on the way with just a phone call
away.

D. Repatriation

4.14 Travel Insurance covers the expenses incurred in emergency medical

repatriation and repatriation of body remains.

4.15 Emergency medical repatriation occurs when, as a result of an unfortunate

illness or accident abroad, the insured has to be repatriated to his country of
origin (e.g. return to Singapore). The decision as to whether or not he should
be repatriated would strictly rest with the attending medical doctor or the
insurer’s contracted specialist company.

4.16 Repatriation of remains means the transportation of and return of the

deceased insured’s mortal remains to his country of origin.

4.17 There is a maximum benefit limit payable for the lower coverage plan.
However, for the higher coverage plan, the coverage amount is usually
unlimited.

E. Exclusions

4.18 Travel Insurance usually does not cover any claims directly or indirectly
arising from or in connection with:
(a) war, invasion, act of foreign enemy, hostilities or warlike operations
(whether war be declared or not), civil war, mutiny, rebellion, revolution,
insurrection or military or usurped power;
(b) ionising radiation or contamination by radioactivity resulting from any
nuclear fuel or the combustion of nuclear fuel waste;
(c) participation in civil defence, police, military, naval or air force service or
operation, or national service in accordance with the Enlistment Act 1970;
(d) self-inflicted injury, suicide or attempted suicide, while sane or insane,
mental or physical defect or infirmity, insanity or nervous disorder,
intoxication or use of non-prescription drugs;
(e) routine health check-up, or cosmetic (aesthetic) or plastic surgery;
(f) sexually transmitted disease, AIDS and HIV conditions or AIDS related
infections;
(g) pregnancy or childbirth or any sickness associated with pregnancy or
childbirth;
(h) any pre-existing condition (except when the insured has opted to cover)

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for which the insured person received medical treatment, diagnosis,

consultation or prescribed drugs within the 12 (or six) months’ period
before the commencement date of the policy period of insurance;
(i) driving or riding in any kind of race, engaging in any professional sport,
ice or winter sport, mountaineering requiring the use of guides and ropes,
or underwater activity involving the use of underwater breathing
apparatus;
(j) aerial activity other than air travel as a fare-paying passenger in a licensed
passenger-carrying aircraft;
(k) direct participation in criminal, unlawful or terrorist act, or strike, riot or
civil commotion;
(l) any event including strike, riot, civil commotion, health threatening
situation, natural disaster published by the mass media or through
advisory of the authority, unless the policy already issued or the trip
already commenced before the date of publication or advisory; or
(m) travel booked or undertaken against medical advice, or for the purpose of
obtaining or seeking any medical care or treatment abroad.

5. GROUP DENTAL CARE INSURANCE

5.1 Group Dental Care Insurance is offered without underwriting and is issued as
a rider to a Group Hospital and Surgical Insurance policy. Like all group
policies, only employees who are actively at work can be covered under this
policy, and it is usually on a non-contributory basis. Coverage is 24-hour,
worldwide basis. The policy is usually issued for a period of two years and
thereafter, renewable every one or two years, depending on the insurer.

A. Benefits Offered

5.2 The benefits provided are very comprehensive and include dental procedures
ranging from simple scaling and polishing to root canal treatment and
wisdom tooth extraction. Appendix 7B is a sample of the Schedule of
Allowances specifying the benefits/procedures covered and the claimable
limits under non-panel and panel dentists.

5.3 Instead of setting benefit limits for each treatment/procedure, some insurers
set an overall limit that each insured employee may claim during each policy
year. Once this limit is reached, the insured employee will have to pay from
his own pocket for any treatment/procedure received.

B. Flexibility

5.4 Most insurers that issue Group Dental Care Insurance policies do not have
their own panel of dentists. As such, the insured employees can visit their own
dentists for treatments. Insurers who have their own panel of dentists also
allow the insured employees to go to their own dentists, but will usually
reimburse them up to the maximum limit as stated in the Schedule of
Allowances. The employee will have to pay the difference from his own
pocket.

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5.5 Most insurers also allow the coverage to be extended to cover the insured
employee’s family members, namely spouse and children.

C. Exclusions

5.6 Like all other insurance covers, Group Dental Care Insurance policies also
impose certain exclusions on the cover provided. Some common exclusions
include:
(a) dental procedures that are not specified in the Schedule of Allowances;
(b) hospital charges;
(c) injuries arising directly or indirectly from war (declared or undeclared),
revolution, or any warlike operation;
(d) medicine given;
(e) treatment which is purely cosmetic in nature;
(f) treatment resulting from self-inflicted injury, while sane or insane; and
(g) replacement of broken, lost or stolen dentures.

5.7 These are the general exclusions. You need to find out the specific exclusions
under your insurer’s policies, as the exclusions vary among the insurers.

D. Limitation Clause

5.8 All Group Dental Care Insurance policies include this Limitation Clause, to
bring to the attention of the insured persons (employees) that the
reimbursements under their policies will be reduced by benefits claimable
under:
(a) the Work Injury Compensation Insurance policy;
(b) any government or public programme of dental or medical benefits; or
(c) any other group or individual Health or Dental Care Insurance policy.

E. Termination Of Cover

5.9 Cover for each individual insured employee under a Group Dental Care
Insurance policy will automatically terminate on the earliest of the following
dates:
(a) the date of termination of the insured employee’s active full-time
employment with the policy owner (employer);
(b) the date of termination of the policy;
(c) the date of expiration of the period for which the last premium payment is
made in respect of the insured employee’s cover;
(d) the date on which the insured employee enters full-time military, naval, air
or police service, except during peacetime National Service reservist duty
or training in accordance with the Enlistment Act 1970; or
(e) the date of expiration of the period within which the insured employee
reaches a specified age (e.g. 65 years).

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F. Claims

5.10 If the employee seeks treatment at the insurer’s panel of dentists, he only
needs to login the app, produce an e-card or his identity card to verify his
membership and enjoy cashless facility.

5.11 If the employee decides to use his own dentist, he will have to make the
payment to the clinic first, and then file a claim with the following documents
to insurer to seek reimbursement.
(a) completed claim form; and
(b) original receipts and itemised bills.
CLAIM

5.12 Claims need to be submitted within a specific timeframe.

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APPENDIX 7A
ABC Life Ltd 21 Any Street, ABC Centre, Singapore 654321
SAMPLE MATERNITY INSURANCE BENEFIT TABLE

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APPENDIX 7B

ABC Life Ltd

21 Any Street, ABC Centre, Singapore 654321
Tel: (65) 6789 8181 Fax: (65) 6789 8282

SAMPLE SCHEDULE OF ALLOWANCES UNDER GROUP DENTAL INSURANCE

SCHEDULE OF ALLOWANCES

Benefits/Procedures Non-Panel Panel

Dentist Claim Dentist Claim
Limit Limit
S$ S$

Examination
Initial 15.00 As charged

X-Ray
Intraoral 12.00 As charged
Bitewing 12.00 As charged
Panorex 32.00 As charged

Test & Laboratory

Biopsy & examination of tissue 48.00 As charged

Prophylaxis (cleaning, polishing, scaling and fluoride

treatment)
Routine 40.00 As charged
Complex 60.00 As charged

Fluoride Treatment
Fluoride Application 22.50 As charged

Fillings (Silver) – For Posterior Teeth Only

Amalgam – one surface 16.00 As charged
Amalgam – two surfaces 24.00 As charged
Amalgam – three or more surfaces 32.00 As charged
Reinforced Pin 9.00 As charged

Fillings (Tooth-Coloured Material) – For Anterior Teeth Only

One surface 30.00 As charged
Two surfaces 40.00 As charged
Three or more surfaces 50.00 As charged

Gold Inlay Restorations

Inlay, gold – one surface 120.00 As charged
Inlay, gold – two surfaces 160.00 As charged
Inlay, gold – three or more surfaces 200.00 As charged

Pulpotomy
Pulpotomy 40.00 As charged
Pulp cap 20.00 As charged

Root Canal Treatment

Single root canal filling 150.00 As charged
Double root canal filling 220.00 As charged
Three or more canals 350.00 As charged

Extractions
Routine (simple) – each tooth 30.00 As charged

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SCHEDULE OF ALLOWANCES

Benefits/Procedures Non-Panel Panel

Dentist Claim Dentist Claim
Limit Limit
S$ S$
Surgical Extractions
Erupted tooth or root 120.00 As charged
Soft tissue impaction 160.00 As charged
Part bony impaction 250.00 As charged
Completely bony impaction 320.00 As charged
Oral antral root recovery 144.00 As charged
Closure of oral antral fistula 64.00 As charged
Removal of labial frenum 40.00 As charged

Alveoplasty
Per quadrant, in connection with extractions 30.00 As charged
Per quadrant, not in connection with extractions 42.00 As charged
Complete alveoplasty involving more than one quadrant 160.00 As charged

Excision Of Tumour
Excision of tumour 76.00 As charged

Fracture Of Jaw
Simple 500.00 As charged
Compound 600.00 As charged

Repair Of Prosthetic Appliance

Repair of broken complete or partial denture 20.00 As charged
Repair denture & replace broken tooth 40.00 As charged
Adding tooth to partial denture to replace extracted tooth 27.00 As charged
Adding tooth to partial denture plus clasp 54.00 As charged

Space Maintainers
Fixed band type (uni or bilateral) 135.00 As charged
Removal in acrylic (uni or bilateral) 67.00 As charged

Periodontal Treatment
Root planning per tooth 24.00 As charged
Root planning per quadrant 72.00 As charged

Miscellaneous
Tooth replantation (of patient’s own natural tooth) 144.00 As charged
Tooth replantation (of patient’s own natural tooth, metal implant not 144.00 As charged
covered)

Note: Benefit paid will be “as-charged” if the insured employee visits a dentist within
the panel of approved dentists. For any insured employee who visits a dentist outside
of the panel of approved dentists, the claim limits are as specified in this Schedule of
Allowance.

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07
OTHER TYPES OF HEALTH INSURANCE

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

How a Hospital Cash • Also known as Hospital Income.
(Income) Insurance policy • Insurance pays a daily cash benefit to the insured if he is hospitalised as a result
works? of an injury or illness.
• Fixed dollar amount (e.g. S$100) chosen by the insured at the inception of the
policy.
• Amount has no direct correlation to the actual amount of medical fees incurred.
• Total amount paid under this policy may be more or less than the actual
medical expenses incurred.
• Payment of the benefit is limited to a specified number of days (e.g. 180 days)
per hospitalisation. Some insurers may impose a lifetime limit on the number of
days (e.g. 1,000 days) that a person may claim.
• Can be issued as a stand-alone policy or as a rider.
Conditions to be met • Waiting period
before a claim can be » For injury.
admitted under a Hospital » For illness.
Cash Insurance policy • Hospital confinement
» Per lifetime limit.
» Expiry age.
» Cause.
Features of a Hospital • Per day hospitalisation benefit.
Cash Insurance policy • A cap to the maximum amount payable on a single life usually expressed as a
maximum number of days.
• Benefit is a fixed amount throughout the policy term as specified at the
inception of the policy.
• No waiting period if the cause of hospitalisation is due to an injury. A waiting
period is usually imposed from the date of issue or reinstatement of the policy
if the cause of hospitalisation is due to an illness.
• Benefit payment is not affected by the payments from other Health Insurance
policies, plans or schemes (including Medishield Life, Integrated Shield Plan and
any Group Hospital & Surgical Insurance Scheme), i.e. it is paid on top of the
benefits received from all other medical insurance covers.
• Cover expires at a specified age (e.g. 65, 70 or 75 years).
• Premiums may be level or increased once the insured reaches a higher age-
band.
• Yearly renewable.
• Usually provides 24-hour, worldwide coverage, although some insurers limit the
cover to certain geographical areas.
• Usually has no cash value.
• No assignment of the policy is allowed.
• For a policy that is in force for a consecutive period of insurance and free of any
claim, a premium discount is usually given at renewal. This is usually called a
”No Claim Discount”. A certain percentage (e.g. 25%) will be deducted from the
next renewal premium, subject to conditions as imposed by the insurer.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Types of a Hospital Cash • Stand-alone Hospital Cash Insurance
Insurance policy • Hospital Cash Insurance Riders
Common exclusions under • Pre-existing medical condition that the insured knew existed or has received
a Hospital Cash Insurance treatment and/or medical advice;
policy/rider • Pre-existing physical defect or infirmity, unless declared to and accepted by the
insurer;
• Self-inflicted injuries or suicide, while sane or insane;
• Human immunodeficiency virus (HIV) or any HIV related illness, including
Acquired Immune Deficiency Syndrome (AIDS) or any illness arising from it;
• Sexually transmitted disease;
• Mental/nervous disorder, drug addiction, intoxication, alcoholism, obesity,
weight reduction/improvement, bulimia, anorexia nervosa, preventive
treatment, such as vaccination or acupuncture;
• Illegal or unlawful act of the insured;
• Pregnancy, miscarriage, childbirth, abortion, birth control or infertility;
• Routine physical or any other medical examination not relating to any health
impairment;
• Cosmetic or plastic surgery, circumcision, congenital condition, dental work or
myopic treatment;
• War and related operations;
• Nuclear weapons material, ionising or radiation;
• Strike, riot and civil commotion; and
• Participation in hazardous sports like skiing or sky-diving, aerial activities other
than air travel as a fare-paying passenger of a licensed aircraft, driving or riding
in any kind of race, motor-cycling or pillion riding.
Circumstances under • Premium is not paid at the end of the grace period;
which a Hospital Cash • Insured reaches the expiry age as stated in the policy;
Insurance policy/rider will • Per lifetime limit is reached;
be terminated. • Basic policy lapses or matures; or
• Insured dies
Documents that need to • Claim form.
be submitted in the event • Hospital discharge summary and bills.
of a claim under a Hospital
Cash Insurance policy Note that the insurer reserves the right to call for additional documentary evidence.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Benefits of Maternity For the mother:
Insurance • Medical expenses due to the covered list of complications that arise from the
pregnancy;
• Death or total & permanent disability benefit; or
• Hospitalisation income benefit for each day of hospitalisation due to pregnancy
complications

For the newborn:

• Medical expenses due to congenital illnesses;
• Death benefit;
• Hospitalisation income benefit for each day the baby is hospitalised due to
congenital illnesses;
• Outpatient cash benefit for each day of phototherapy machine rented; or
• It may cover up to four babies in a single pregnancy.
Features of Maternity • It is a single premium term policy.
Insurance: • It protects both mother and child (up to four babies in a single pregnancy) from
as early as 13th week of pregnancy.
• It is valid for three (3) years from the policy start date.
• It covers for specific types of pregnancy complications and congenital illnesses
according to the insurer’s list.
• It provides a death benefit for both mother and child.
• It gives a hospital income benefit for each day of hospital stay resulting from the
list of covered events.
• The sum insured is paid in a lump sum upon death, diagnosis of pregnancy
complications or congenital illnesses.
• Other benefits are subject to limits and caps as defined by the insurers.
• The benefit payment is not affected by the payments from other Health
Insurance policies, plans or schemes (including MediShield Life, Integrated
Shield Plan and any Group Hospital & Surgical Insurance Scheme), i.e. it is paid
on top of the benefits received from all other medical insurance covers.
• The cover expires at the end of the policy term.
• It usually has no cash value.
• No assignment of the policy is allowed.
• Coverage will end when all benefits for the insured mother and the insured
child end; or at the end of policy term, whichever is earlier.
• The insurer may offer an option for the insured mother or insured child to buy
a regular premium whole life plan, endowment plan or investment-linked plan
within 90 days of the child’s birth, without the need for medical underwriting.
When is a Maternity • Self-inflicted injuries, illnesses, suicide or attempted suicide;
Insurance excluded?: • misuse of drugs or alcohol;
• acquired immunodeficiency syndrome (AIDS), AIDS-related complex or infection
by human immunodeficiency virus (HIV), resulting from any means;
• the insured mother carrying three or more babies in a single pregnancy;
• overseas treatment;
• abortions which the insured has decided to have, unless medically necessary
due to pregnancy complications covered under the pregnancy complications
benefit and certified by a doctor; or
• any unlawful or criminal act or omission.
Common medical benefits • Medical expenses and other related benefits;
provided by a Travel • Hospital confinement allowance;
Insurance policy • Emergency medical evacuation; and
• Repatriation.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Common exclusions for • War, invasion, act of foreign enemy, hostilities or warlike operations (whether
the medical expense war be declared or not), civil war, mutiny, rebellion, revolution, insurrection or
benefits under a typical military or usurped power;
Travel Insurance policy • Ionising radiation or contamination by radioactivity from any nuclear fuel or
from any nuclear waste from the combustion of nuclear fuel;
• Participation in civil defence, police, military, naval or air force service or
operation, or national service in accordance with the Enlistment Act 1970;
• Self-inflicted injury, suicide or attempted suicide, while sane or insane, mental
or physical defect or infirmity, insanity or nervous disorder, intoxication or use
of non-prescription drugs;
• Routine health check-up, or cosmetic (aesthetic) or plastic surgery;
• Sexually transmitted disease, AIDS and HIV conditions or AIDS related
infections;
• Pregnancy or childbirth or any sickness associated with pregnancy or childbirth;
• Any pre-existing condition (except for some policies, subject to Section 4.5
above) for which the insured person received medical treatment, diagnosis,
consultation or prescribed drugs within the 12 (or six) months’ period before
the commencement date of the policy period of insurance;
• Driving or riding in any kind of race, engaging in any professional sport, ice
or winter sport, mountaineering requiring the use of guides and ropes, or
underwater activity involving the use of underwater breathing apparatus;
• Aerial activity other than air travel as a fare-paying passenger in a licensed
passenger-carrying aircraft;
• Direct participation in criminal, unlawful or terrorist act, or strike, riot or civil
commotion;
• Any event including strike, riot, civil commotion, health threatening situation,
natural disaster published by the mass media or through advisory of the
authority, unless the policy already issued or the trip already commenced
before the date of publication or advisory; or
• Travel booked or undertaken against medical advice, or for the purpose of
obtaining or seeking any medical care or treatment abroad.

Note that the exclusions, restrictions and limitations vary from insurer to insurer.
How the benefits are • Based on a Schedule of Allowances
paid under Group Dental » One of the ways in which the insurer reimburses the insured for dental
Insurance? expenses incurred.
• Basis of reimbursement is based on the limits as specified in the Schedule of
Allowances.
Limits to the benefits • Some insurers set an overall limit (e.g. S$200) that each insured employee may
that one is entitled to claim during each policy year.
claim under Group Dental
Insurance.
Common exclusions under • Dental procedures that are not specified in the Schedule of Allowances;
a Group Dental Insurance • Hospital charges;
policy • Injuries arising directly or indirectly from war (declared or undeclared),
revolution, or any warlike operation;
• Medicine given;
• Treatment which is purely cosmetic in nature;
• Treatment resulting from self-inflicted injury, while sane or insane; and
• Replacement of broken, lost or stolen dentures.

Note that it may vary from insurer to insurer.

How the limitation Reimbursements under their policies will be reduced by benefits claimable under:
clause of a Group Dental • Work Injury Compensation Insurance policy;
Insurance policy works? • Any government or public programme of dental or medical benefits; or
• Any other group or individual Health or Dental Care Insurance policy.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Circumstances under • Date of termination of the insured employee’s active full-time employment with
which a Group Dental the policy owner (employer);
Insurance policy will be • Date of termination of the policy;
terminated • Date of expiration of the period for which the last premium payment is made in
respect of the insured employee’s cover;
• Date on which the insured employee enters full-time military, naval, air or police
service, except during peacetime National Service reservist duty or training in
accordance with the Enlistment Act 1970; or
• Date of expiration of the period within which the insured employee reaches a
specified age (e.g. 65 years).

Earliest of the above dates.

Claim procedures for For any insurer that has a panel of dentists:
a Group Dental Care • Insurer will issue a membership card or certificate to every individual insured
Insurance claim employee who will need to produce it, whenever he visits the dental clinic for
treatment.
• Dental clinic will bill the insurer directly, and the employee need not pay a single
cent nor file any claim with the insurer.

If the insurer does not have a panel of doctors or the employee decides to use his
own dentist:
• Make the payment to the clinic first, and then file a claim with the insurer to
seek reimbursement in accordance with the policy.

Insurer requires the employer to submit these documents within a specific period
(e.g. 21 days from the date of treatment)
Types of documents that • Completed claim form; and
need to be submitted • Original receipts and itemised bills.
for a Group Dental Care
Insurance claim

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Health Insurance

CHAPTER 8
MANAGED HEALTHCARE

CHAPTER OUTLINE

1. Introduction
2. What Is Managed Healthcare (MHC)?
3. How Does MHC Work?
4. What Are The Common Types Of MHC Plans?
5. Choice Of Providers Versus Cost Control
6. Managed Healthcare (MHC) Insurance
7. MHC Model In Singapore

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ know what MHC is
▪ describe how MHC works
▪ list the four common payment methods used by Managed
Healthcare Organisations (MHCOs) and understand how they work:
- capitation
- discounted-fee-for-service
- salary
- fee schedule
▪ list the three common types of MHC plans and describe how each of them works
▪ rank in ascending or descending order the degree of control the Insurers/MHOs have
over cost and the choice of providers
▪ list some of the benefits provided under a MHC Insurance policy
▪ know the elements of copayments for MHC Insurance
▪ list the common exclusions under a typical MHC Insurance policy
▪ know the underwriting requirements for MHC Insurance
▪ state the procedures for claims under a MHC Insurance policy
▪ have a view of the MHC scheme available locally

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Contents
CHAPTER OUTLINE ......................................................................................................... 152
LEARNING OUTCOMES .................................................................................................. 152
1. INTRODUCTION ....................................................................................................... 154
2. WHAT IS MANAGED HEALTHCARE (MHC)? .......................................................... 154
3. HOW DOES MHC WORK? ........................................................................................ 154
A. Accessibility....................................................................................................... 154
B. Cost .................................................................................................................... 155
C. Quality Of Care .................................................................................................. 156
4. WHAT ARE THE COMMON TYPES OF MHC PLANS? ............................................ 156
A. Health Maintenance Organisation (HMO)........................................................ 156
B. Preferred Provider Organisations (PPOs) ........................................................ 157
C. Point-of-Service (POS) Plan .............................................................................. 157
5. CHOICE OF PROVIDERS VERSUS COST CONTROL ............................................... 158
6. MANAGED HEALTHCARE (MHC) INSURANCE ...................................................... 158
A. Benefits Offered ................................................................................................ 158
B. Copayments ...................................................................................................... 159
C. Exclusions.......................................................................................................... 159
D. Underwriting ..................................................................................................... 160
E. Claims ................................................................................................................ 160
7. MHC MODEL IN SINGAPORE .................................................................................. 160

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1. INTRODUCTION

1.1 Managed Healthcare (MHC) schemes have evolved in the market as a

response to increasing medical costs. MHC plans are usually managed or run
by insurers as insurance-backed plans. Locally, only group MHC insurance is
available. Such policies are often purchased by employers as part of their
Employee Benefit package, and as an alternative to Group H&S plans. In this
chapter, we will first look at the concept and various models of MHC, before
we briefly discuss how MHC insurance works.

2. WHAT IS MANAGED HEALTHCARE (MHC)?

2.1 MHC refers to an overall strategy for containing medical care costs, while
assuring that people receive appropriate medical care. It will pay for most of
the medical bills, when an individual sees a General Practitioner (GP),
specialist or receives treatment in a hospital. Such strategies make use of a
number of MHC techniques related to how medical care is accessed, provided
and paid for.

3. HOW DOES MHC WORK?

3.1 MHC providers set up a healthcare network to manage the accessibility, cost
and quality of care of its members. They negotiate and contract with doctors,
hospitals, clinics, and other health care providers, such as pharmacies,
laboratories, X-ray centres, and medical equipment vendors, in exchange for
more patients directed to them.

3.2 MHC contains and controls healthcare expenditure by carefully managing the
following three components:
Accessibility Cost
(a) accessibility;
Quality
(b) cost; and of Care

(c) quality of care.

A. Accessibility

3.3 In a MHC plan, members are referred to a carefully selected network of

healthcare providers. In some MHC plans, a member may be required to
receive all his healthcare services from a particular provider within the
network. This doctor will be his Primary Care Physician (PCP). In other
managed care plans, he may be able to receive care from providers who are
not part of the network, but will have to pay a larger share of the cost to
receive those services.

3.4 As MHC emphasises primary and preventive care to prevent serious health
problems, PCPs are the backbone of many MHC plans. PCPs are valued
because of their ability to diagnose and treat a broad range of medical
conditions. Additionally, as they are familiar with the health conditions and

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circumstances of their patients, PCPs are often better able to ascertain the type
of specialty care that members may need.

3.5 PCP is usually a general practitioner who serves as the member’s “personal
physician” and acts as the first contact with the MHC. If additional care is
needed, the PCP will refer the member to a specialist within the network.
Under most MHC plans, a member must obtain a referral from the PCP before
seeing a specialist. As such, PCPs are often called “gatekeepers”. As
gatekeepers, PCPs co-ordinate and manage all aspects of the members’ care.
Members are allowed to change their PCPs.

B. Cost

3.6 A Managed Healthcare Organisation (MHCO) uses various methods to control

the increasing medical care costs. One of which is negotiated provider fees.

3.7 By limiting the number of physicians or hospitals in a provider network, the

MHCO can negotiate the physicians’ or hospitals’ fees and reduce the cost for
providing medical services to its members. The MHCO is able to achieve this,
because physicians, hospitals and other medical service providers are
generally willing to reduce their fees, in exchange for the increase in patient
volume that a MHC network can provide them.

3.8 The four common payment methods used by MHCO are as follows:
(a) capitation;
(b) discounted-fee-for-service;
(c) salary; and
(d) fee schedule.

(a) Capitation
Under this method, the MHCO pre-pays its providers a fixed amount for
each member’s medical care usually on a monthly basis. The provider is
paid the same amount each month, regardless of how often the member
receives medical attention or the cost of that medical attention. The fixed
fee may not be the same for all the MHCO members.

(b) Discounted-Fee-For-Service
MHCO pays its physicians a certain percentage of their normal fees (e.g.
90% of the normal fee), thereby achieving a discount of 10% on the
physicians’ fees.

(c) Salary
This method is used in the Staff Model HMO (Health Maintenance
Organisation). Under this method, the HMO compensates the physicians
with a fixed salary. These salaries are based on the average earnings of
local physicians in the same field or specialty. The HMO also pays the
physicians performance-based bonuses or gives incentive payments.

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(d) Fee Schedule

Under this method, the MHCO places caps or limits on the dollar
amounts that will be reimbursed for covered medical procedures and
services. When using this fee schedule payment structure, the MHCO
will pay no more than the specified maximum fee allowed for each
procedure. As this fee structure will result in a smaller reimbursement of
fees for physicians who charge higher-than-average fees, it may
encourage the provision of unnecessary medical services (e.g.
physicians asking patients to go for more tests than necessary or return
for follow-up checks).

3.9 Other methods used by the MHCO to control medical care costs include
Utilisation Management and risk sharing agreements.

C. Quality Of Care

3.10 To ensure that the quality of care is not compromised with the cost-
containment effort, members can be assured that the MHCO contracts with
only healthcare providers that possess the requisite skills, training and
licences. These providers must provide the necessary medical services under
prevailing professional standards of care. The MHCO also develops quality
assurance programmes usually in co-operation with the providers to
guarantee availability, accessibility and continuity of care to its members. In
fact, the MHCO places equal importance on the quality of care and cost control
because a good reputation is what attracts new members and keeps existing
members.

4. WHAT ARE THE COMMON TYPES OF MHC PLANS?

4.1 The three common types are:

(a) Health Maintenance Organisation (HMO);
(b) Preferred Provider Organisation (PPO); and
(c) Point-of-Service (POS) plan.

4.2 Let us look at each of them in turn.

A. Health Maintenance Organisation (HMO)

4.3 HMO features a network of health care providers that treat a patient
population for a prepaid fee.

4.4 A member enrolled in a HMO will need to receive most or all of his health care
from a network provider. HMOs require that the member chooses a primary
care physician (PCP who is most often a family doctor, or paediatrician for
children) who is responsible for managing and coordinating all of his health
care.

4.5 If the member needs care from a physician specialist in the network or a
diagnostic service such as a laboratory test or X-ray, the PCP will have to

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provide a referral. If the member does not have a referral or chooses to go to a

doctor outside of his health plan’s network, he will most likely have to pay all
or most of the costs for that care, unless it was pre-authorised by the HMO, or
deemed as an emergency.

4.6 The HMO is the most restrictive type of health plan, because the member has
the least choice in selecting his healthcare provider.

B. Preferred Provider Organisations (PPOs)

4.7 With an HMO plan, you must always see your PCP first, who will then refer
you to an in-network specialist. With a PPO plan, you can see a specialist
without a referral.

4.8 A Preferred Provider Organisation (PPO) has negotiated contracts with a

network of preferred providers from which a member can choose. A member
does not need to select a PCP and does not need referrals to see other
providers in the network. However, to encourage the use of network providers
and/or get a referral for a specialist, PPO offers “richer” benefits to members
as financial incentives. These include lower or no deductible, lower or no co-
payment, and higher benefits. For example, if a member sees a network
provider, he will not need to pay for the medical cost. However, if he sees a
non-network provider, he may have to pay as much as 50% of the total bill.

4.9 PPOs are less restrictive than HMOs in the choice of healthcare providers.
However, they tend to require greater "out-of-pocket" payments from the
members.

C. Point-of-Service (POS) Plan

4.10 A POS plan is a combination of a HMO and a PPO.

4.11 A POS plan is like an HMO plan in that it requires a policyholder to choose an
in-network PCP and get referrals from that doctor if he wants the plan to cover
a specialist’s services.

4.12 A POS plan is also like a PPO plan in that it still provides coverage for out-of-
network services, but the policyholder has to pay more for those services than
if he uses in-network providers.

4.13 The plan is known as point-of-service, because each time a member needs
healthcare service (the time or “point” of service), he can decide to stay in the
network to allow his PCP to manage his care service, or to go outside the
network on his own, without a referral from his PCP.

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5. CHOICE OF PROVIDERS VERSUS COST CONTROL

5.1 As mentioned, MHCOs help to contain the cost of healthcare by managing the
access to providers, the cost of providing healthcare, as well as the quality of
care. Figure 8.4 illustrates the relationship between the degree of control over
the cost and access, and their effects on the purchaser.

Figure 8.4: Degree Of Choice Of Providers Versus Degree Of Cost Control

High
Traditional Medical Expense Insurance
Degree Of Choice of Providers

PPO

POS

HMO

Low High
Cost Control

5.2 Note from Figure 8.4 that the HMO has the greatest cost control, but its
members have the lowest degree of choice of providers. The cost saved is
passed on to the purchasers who are charged a lower price for participating in
the plan. At the other extreme, there is no control over the access to
healthcare providers under a traditional Medical Expense Insurance, and no
cost control too. As a result, the premium for a traditional Medical Expense
Insurance policy is higher as compared to the MHC plan.

5.3 At present, no MHC plan can offer high level of benefits, unlimited access to
providers and low cost, all at the same time. The best that any plan can expect
to accomplish is two of the three features. Some plans will focus on costs and
access, while others will focus on benefits and costs, or access and benefits.

6. MANAGED HEALTHCARE (MHC) INSURANCE

6.1 Let us look at an example of an MHC Insurance.

A. Benefits Offered

6.2 For fixed annual premiums, insurers offering MHC plans may provide their
policy owners with some or all of the coverage as described below:
(a) Primary Care – provided by a wide network of general physicians in
clinics all over Singapore. It includes consultation, medication,
procedures and tests deemed medically necessary.

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(b) Specialist Care - provided by a wide network of specialists from different

medical specialties. It includes consultation, medication, tests and
surgery upon referral from a PCP.
(c) Hospital Care – provided for confinement in private, public or community
hospitals. Reimbursement for the hospital and surgical expenses will be
subject to limits under the insured plan.
(d) Emergency Care – provides 24-hour cover for accident and emergency.
(e) Preventive Care − provides educational programmes, such as talks,
seminars and workshops on nutritional counselling, etc., designed to
keep members free from diseases.

6.3 The benefits offered by the MHCOs may differ, as some may provide only
outpatient care, while others may provide the full spectrum of benefits. These
benefits can also be extended to dependants.

6.4 Like other Health Insurance policies, there is a minimum, as well as a

maximum entry age for MHC plans, but it usually varies among insurers.

B. Co-payments

6.5 Like Medical Expense Insurance, co-payments such as co-insurance,

deductible and pro-ration factors may apply in MHC Insurance.

C. Exclusions

6.6 The common exclusions under MHC Insurance policy include:

(a) pre-existing conditions;
(b) congenital anomaly, hereditary condition and disorder;
(c) mental illness and personality disorder;
(d) infertility, sub-fertility, assisted conception treatment;
(e) treatment of sexually transmitted disease;
(f) Acquired lmmune Deficiency Syndrome (AIDS), AIDS related complex or
infection by human immunodeficiency virus (HIV);
(g) self-inflicted injuries;
(h) drug addiction or alcoholism;
(i) purchase of eyewear or related eye care items;
(j) purchase of kidney dialysis machine, iron-lung, prosthesis and other
special appliances;
(k) private nursing charges;
(l) injuries arising from direct participation in strike, riot or civil commotion;
(m) injuries arising directly or indirectly from nuclear fallout, war (whether
declared or not declared) and related risks;
(n) childbirth and abortion or routine ante-natal and post-natal visits;
(o) cosmetic surgery (except for treatment necessitated by an accident);

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(p) general exclusions imposed on Medical Expense Insurance policies are

also applicable to MHC Insurance plans;
(q) optional items which are outside the scope of treatment; and
(r) reimbursements for Work Injury Compensation Insurance and other
forms of insurance coverage.

6.7 Note that the exclusions vary from insurer to insurer. Hence, you need to find
out what the exclusions of your insurer are and highlight them to your clients.

D. Underwriting

6.8 The underwriting requirements for MHC are discussed in a later chapter of this
Study Text. They are similar to those for Medical Expense Insurance cover.

E. Claims

6.9 The procedure for MHC claims is mainly between the MHCO and the
providers. Members who use the in-network care are not required to file any
claims with the insurer. Only members who use out-of-network providers will
need to file claims with the MHCO. The relevant supporting documents to be
submitted for such a case include:
▪ the claimant’s statement; and
▪ original itemised medical bill.

7. MHC MODEL IN SINGAPORE

7.1 The MHC arrangements are not common in Singapore. Employers here either
engage MHCO or an insurance company to offer cashless medical services to
employees. Such services include cashless outpatient general practitioner
(GP) and specialist consultation visits. To ensure the specialist cost is covered,
an employee needs to obtain a GP’s referral to see a specialist. The GP acts as
a gatekeeper to minimise unnecessary specialist visit.

7.2 Employees have to go to the selected panel to enjoy cashless facilities. The
cost and quality of care are managed by MHCO or the insurer. If an employee
chooses to visit a non-panel clinic, the cost is either not covered or partially
covered, subject to co-payments and/or benefit limits.

7.3 If the arrangement is under an insured scheme, the insurer will also provide
an added hospitalisation cover (Group Hospital & Surgical) which may be
cashless with the provision of letter of guarantee to the hospital.

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08
MANAGED HEALTHCARE

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Managed Healthcare MHC refers to an overall strategy for containing medical care costs, while assuring
(MHC) that people receive appropriate medical care. It will pay for most of the medical
bills, when an individual sees a General Practitioner (GP), specialist or receives
treatment in a hospital.
How MHC works? MHC providers set up a healthcare network to manage the accessibility, cost and
quality of care of its members. They negotiate and contract with doctors, hospitals,
clinics, and other health care providers, such as pharmacies, laboratories, X-ray
centres, and medical equipment vendors, in exchange for more patients directed to
them.
Payment methods used MHCO pre-pays its providers a fixed amount for each member’s medical care
by Managed Healthcare usually on a monthly basis. The provider is paid the same amount each month,
Organisations (MHCOs) regardless of how often the member receives medical attention or the cost of that
• Capitation medical attention. The fixed fee may not be the same for all the MHCO members.
Payment methods used MHCO pays its physicians a certain percentage of their normal fees (e.g. 90% of the
by Managed Healthcare normal fee), thereby achieving a discount of 10% on the physicians’ fees.
Organisations (MHCOs)
• Discounted-fee-for-
service
Payment methods used This method is used in the Staff Model HMO (Health Maintenance Organisation).
by Managed Healthcare Under this method, the HMO compensates the physicians with a fixed salary. These
Organisations (MHCOs) salaries are based on the average earnings of local physicians in the same field or
• Salary specialty. The HMO also pays the physicians performance-based bonuses or gives
incentive payments.
Payment methods used MHCO places caps or limits on the dollar amounts that will be reimbursed for
by Managed Healthcare covered medical procedures and services. When using this fee schedule payment
Organisations (MHCOs) structure, the MHCO will pay no more than the specified maximum fee allowed for
• Fee schedule each procedure.
Common types of MHC • Health Maintenance Organisation (HMO);
plans • Preferred Provider Organisation (PPO); and
• Point-of-Service (POS) plan.

30
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Degree of control the
High
Insurers/MHOs have over
Traditional Medical Expense Insurance
cost and the choice of
providers PPO

Degree of Choice
of Providers
POS

HMO

Low High
Cost Control

Some benefits provided • Primary Care.

under a MHC Insurance • Specialist Care.
policy • Hospital Care.
• Emergency Care.
• Preventive Care.
Elements of copayments Like Medical Expense Insurance, co-payments such as co-insurance, deductible and
pro-ration factors may apply in MHC Insurance.
Common exclusions under • Pre-existing conditions;
a typical MHC Insurance • Congenital anomaly, hereditary condition and disorder;
policy • Mental illness and personality disorder;
• Infertility, sub-fertility, assisted conception treatment;
• Treatment of sexually transmitted disease;
• Acquired lmmune Deficiency Syndrome (AIDS), AIDS related complex or
infection by human immunodeficiency virus (HIV);
• Self-inflicted injuries;
• Drug addiction or alcoholism;
• Purchase of eyewear or related eye care items;
• Purchase of kidney dialysis machine, iron-lung, prosthesis and other special
appliances;
• Private nursing charges;
• Injuries arising from direct participation in strike, riot or civil commotion;
• Injuries arising directly or indirectly from nuclear fallout, war (whether declared
or not declared) and related risks;
• Childbirth and abortion or routine ante-natal and post-natal visits;
• Cosmetic surgery (except for treatment necessitated by an accident);
• General exclusions imposed on Medical Expense Insurance policies are also
applicable to MHC Insurance plans;
• Optional items which are outside the scope of treatment; and
• Reimbursements for Work Injury Compensation Insurance and other forms of
insurance coverage.

Note that the exclusions vary from insurer to insurer.

Underwriting Similar to those for Medical Expense Insurance cover.
requirements for MHC
Insurance
Procedures for claims • Mainly between the MHCO and the providers.
under a MHC Insurance • If using out-of-network providers will need to file claims with the MHCO. The
policy relevant supporting documents to be submitted for such a case include:
» Claimant’s statement; and
» Original itemised medical bill.
MHC scheme available in • Not common in Singapore.
Singapore • Employers either engage MHCO or insurance company to offer cashless medical
services to employees.

31
 9. Part I Healthcare Financing

CHAPTER 9
PART I HEALTHCARE FINANCING

CHAPTER OUTLINE

1. Introduction
2. Healthcare Subsidies
3. MediShield Life
4. Integrated Shield Plans (IPs)
5. MediSave
6. Claiming from MediShield Life/IP & MediSave

LEARNING OUTCOMES

After studying this chapter, you should be able to:

 understand Singapore’s healthcare financing philosophy
 describe the available Singapore Government subsidies
 describe the following healthcare financing schemes:
- Community Health Assist Scheme (CHAS)
- MediSave
- MediShield Life
- Integrated Shield Plans
- ElderShield & ElderShield Supplements
- CareShield Life & CareShield Life Supplements
 outline how MediSave can be used to meet a CPF member’s healthcare needs and
buy approved Health Insurance
 explain the shift from MediShield to MediShield Life
 describe the enhanced benefits under MediShield Life
 describe how MediShield Life premiums are kept affordable
 explain how MediShield Life interacts with Integrated Shield Plans
 know the claims process for MediShield Life, Integrated Shield Plans, and MediSave

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Contents
CHAPTER OUTLINE ......................................................................................................... 161
LEARNING OUTCOMES .................................................................................................. 161
1. INTRODUCTION ..................................................................................................... 163
2. HEALTHCARE SUBSIDIES ..................................................................................... 163
A. Public Hospitals ................................................................................................. 164
B. Other Healthcare Services ................................................................................ 165
3. MEDISHIELD LIFE ................................................................................................... 166
A. MediShield Life Premiums ................................................................................ 166
B. MediShield Life Subsidies................................................................................. 167
C. MediShield Life Benefits ................................................................................... 168
D. How Are MediShield Life Claim Payouts Computed? ..................................... 168
E. MediShield Life Fund ........................................................................................ 171
4. INTEGRATED SHIELD PLANS (IPs) ....................................................................... 171
A. Integrated Structure of IPs ................................................................................ 173
B. Standard IP ........................................................................................................ 175
C. MediSave Use For IP Premiums ....................................................................... 175
D. Riders ................................................................................................................. 176
E. Terminating or Switching IP/Switching Insurer ............................................... 177
F. Risk-Loading by Private Insurers ...................................................................... 178
G. Pre-Authorisation for IP..................................................................................... 178
5. MEDISAVE .............................................................................................................. 178
A. Basic Healthcare Sum ....................................................................................... 179
B. Uses Of MediSave ............................................................................................. 180
C. How Much MediSave Can Be Used? ................................................................ 184
6. CLAIMING FROM MEDISHIELD LIFE/IP & MEDISAVE.......................................... 185
A. Letter of Guarantee ........................................................................................... 185
B. Claims process................................................................................................... 186
C. Claiming From Non-MediSave payable Private Insurance ............................. 186
APPENDIX 9A .................................................................................................................. 188
APPENDIX 9B .................................................................................................................. 191
APPENDIX 9C .................................................................................................................. 193

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 9. Part I Healthcare Financing

1. INTRODUCTION

1.1 In this chapter, we will review the various subsidies and healthcare financing
schemes that the Singapore Government has put in place to help
Singaporeans meet the costs of healthcare.

1.2 Through a mixed financing system (see Figure 9.1 below), Singapore has
secured good healthcare outcomes for its population. For example, life
expectancy at birth has increased from 80.3 in 2006 to 83.93 in 2022 1, and
infant mortality rate improved from 2.6 per thousand live births to 1.8 per
thousand live births 2 as of 2020. The Government has done so with a current
national health expenditure of about 4.4% of the country’s Gross Domestic
Product (GDP) in 2019, a percentage which is low among developed countries
(although this is expected to grow with an ageing population over the years).

Figure 9.1: Main Components in Singapore's Healthcare Financing System

Source: Ministry of Health, 2023.

2. HEALTHCARE SUBSIDIES

2.1 The Government provides funding to public healthcare institutions (e.g. public
hospitals, national specialty centres and polyclinics), as well as selected
private clinics and voluntary welfare organisations (VWOs) which offer a range
of community and home-based care. This enables Singaporeans to have
access to subsidised care.

2.2 In many healthcare settings, a means-test is used to target subsidies, so that

needy patients can receive more help; lower-income patients receive more
subsidies than higher-income patients. This approach targets limited
resources to those who need them more and ensures that the Government
subsidies are sustainable.

1
https://www.macrotrends.net/countries/SGP/singapore/life-expectancy
2
https://www.statista.com/statistics/624889/singapore-infant-mortality-rate/

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A. Public Hospitals

A1. Inpatient Medisave

Hospital Bills

2.3 Patients can choose different ward classes if they need to

be admitted into a hospital. These ward classes differ only in the type of
physical amenities and level of comfort and range from single-bedded rooms
(Class A wards) to rooms with multiple beds (Class B/C wards). The standard
of medical care is the same regardless of the ward class.

2.4 The subsidies provided by the government will differ according to the ward
class. The wards with basic amenities (e.g. Class C wards) are heavily
subsidised. Those who desire more amenities can choose a higher ward class
but will receive less subsidy. Class B2 and C ward admissions (81% of public
hospital beds) are heavily subsidised, ranging from 50% to 80% for Singapore
Citizens, and 25% to 50% for Permanent Residents. 3 Patients who opt for Class
B1 or Class A admissions wards will receive little to no subsidy. 4

2.5 In January 2009, means-testing in public hospitals was introduced to better

target the heavy subsidies for Class B2 and Class C wards to the lower-income
group. The basis of subsidy is dependent on the patient’s Per Capita
Household Income or Annual Value of Residence, for households with no
income.

2.6 Patients requiring follow-ups at specialist outpatient clinics (SOCs) after their
hospitalisation may opt to continue their treatment in either subsidised or
private SOCs, regardless of their choice of inpatient ward class.

A2. Specialist Outpatient Clinics (SOCs)

2.7 In general, the eligibility for higher subsidy is based on the Per Capita
Household Income (PCHI), or annual value of residence (for any household
with no income).

2.8 For SOC services, eligible patients can receive subsidies ranging from 30% to
70%, depending on their Per Capita Household Income (PCHI) and Annual
Value of Residence (where applicable). Lower- to middle-income SOC patients
can receive higher subsidies. Permanent Residents will continue to receive
25% subsidy.

2.9 For standard drugs at SOCs, subsidised patients can receive means-tested
subsidies of 50% or 75% subsidy, depending on their PCHI.

3
https://www.moh.gov.sg/cost-financing/healthcare-schemes-subsidies/subsidies-for-acute-inpatient-care-
at-public-healthcare-institutions
4
https://www.moh.gov.sg/home/our-healthcare-system/healthcare-services-and-facilities/hospital-services

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 9. Part I Healthcare Financing

A3. Other Services

2.10 Other services such as day surgery and Accident & Emergency (A&E) services
are subsidised up to 80% and 50% respectively. Day surgeries will be
subsidised at between 50% to 80% for Singapore Citizens and 25% to 50% for
Permanent Residents. Patients who use A&E services are charged at a flat rate
for basic investigations and services.

B. Other Healthcare Services

2.11 The services provided at Government polyclinics are subsidised at about 50%
(75% if the patient is a child or an elderly person). All lower- to middle-income
patients at the polyclinics will enjoy a 75% subsidy for all standard drugs.

B1. Community Health Assist Scheme (CHAS)

2.12 The Community Health Assist Scheme (CHAS) enables eligible Singapore
Citizens to receive subsidies for medical and/or dental care* at participating
General Practitioner (GP) and dental clinics. With effect from Nov 2019, this
scheme has been expanded to include all Singapore Citizens regardless of
their income levels.
*Only for CHAS Blue, CHAS Orange, MG and PG cardholders.

2.13 The colour of the CHAS card indicates the subsidy tier that cardholders are
entitled to, namely the CHAS Blue, Orange or Green tier. All Pioneer
Generation (PG) and Merdeka Generation (MG) seniors also receive special
subsidies at CHAS clinics.

2.14 The amount that cardholders pay will be based on the fees charged by the
clinic, less the CHAS subsidies. The fees will vary according to each patient’s
condition and clinic’s charges.

2.15 Besides subsidies for care at CHAS clinics, CHAS, MG and PG cardholders
enjoy subsidised referrals to public Specialist Outpatient Clinics (SOCs), where
eligible. Subsidised referrals from CHAS Dental clinics to the National Dental
Centre Singapore and National University Centre for Oral Health Singapore
only apply to CHAS Blue/Orange, MG and PG cardholders.

2.16 For patients with chronic conditions, CHAS subsidies complement the Chronic
Disease Management Programme (CDMP), where MediSave can be used for
outpatient treatment (for the same set of chronic conditions) covered under
CHAS.

2.17 Eligible patients who seek treatment for their chronic conditions at CHAS GP
clinics can also receive subsidised rates for healthcare services such as
Diabetic Foot Screening (DFS), Diabetic Retinal Photography (DRP) and nurse
counselling at Community Health Centres (CHCs) and Primary Care Network
(PCN) providers.

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2.18 Subsidies are also given to long-term care providers which offer healthcare
services, such as renal dialysis, mental rehabilitation and nursing home care.
MOH provides subsidies of up to 80% depending on the type of intermediate
long-term care service required.

3. MEDISHIELD LIFE

3.1 MediShield Life is a basic health insurance scheme that protects all Singapore
Citizens (SCs) and Permanent Residents (PRs) against large medical bills for
life, regardless of age or health conditions. By risk-pooling across the entire
population, MediShield Life provides universal coverage for all Residents for
life. The claim limits are designed to adequately cover 9 in 10 subsidised bills
incurred for hospitalisation in class B2/C wards, day surgery, and selected
costly outpatient treatments (e.g., dialysis and chemotherapy) in the public
hospitals.

3.2 There is no need to apply for MediShield Life. All SCs and PRs are
automatically enrolled in MediShield Life from 1 Nov 2015. New SCs are
covered from birth or from the day they attain citizenship. PRs are covered
from the day they attain permanent residency.

3.3 MediShield Life provides coverage for both subsidised and non-subsidised
ward class hospitalisation at all public healthcare institutions and private
medical institutions. However, MediShield Life claim limits are designed to
adequately cover 9 in 10 subsidised bills incurred for hospitalisation in class
B2/C wards, day surgery, and selected costly outpatient treatments (e.g.,
dialysis and chemotherapy in the public hospitals. This is to keep premiums
affordable. Those who would like additional coverage in Class A/B1 wards or
private hospitals may consider buying Integrated Shield Plans (IP). As IPs
premiums are higher than MediShield Life premiums and increase with age,
one should consider the affordability of premiums over the longer-term prior
to purchasing an IP.

A. MediShield Life Premiums

3.4 MediShield Life premiums are actuarially priced based on the health risks and
expected healthcare utilisation of each age group so that each age group’s
payouts are broadly supported by their own premiums. This ensures that
MediShield Life remains sustainable even as our population ages. Any
applicable subsidies are automatically applied to the premium before
premium payment.

3.5 Those with pre-existing medical conditions can enjoy coverage for their
conditions. Only those with serious pre-existing medical conditions listed in
the MOH website are required to pay a nominal Additional Premium of 30%
for the first 10 years of coverage, in addition to the standard MediShield Life
premiums.

3.6 MediShield Life premiums can be fully paid by MediSave. One can pay
premiums using their own MediSave or using their family members'

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MediSave. Parents may also tap on the MediSave Grant for Newborns to pay
for their child’s MediShield Life premiums.

B. MediShield Life Subsidies

3.7 The Government provides various premium subsidies and support measures
to help SCs and PRs with their MediShield Life premiums, including those
who need to pay Additional Premiums:
(a) Premium Subsidies for the lower to middle income;
(b) Premium Subsidies for Pioneer and Merdeka Generation seniors; and
(c) Additional Premium Support for those who, even after using subsidies
and Medisave are still unable to afford their premiums and have limited
family support.
No one will lose MediShield Life coverage due to an inability to pay
premiums.

B1. Premium Subsidies for the lower- to middle- income

3.8 This is a permanent feature, available to lower- to middle- income families

with household monthly income per person of S$2,800 and below, and living
in homes with an Annual Value (AV) of S$21,000 and below. Those who own
more than one property will not be eligible for this subsidy.

3.9 Those eligible can receive subsidies of up to 50% of their premiums. PRs will
receive half the subsidy applicable to SCs.

B2. Pioneer Generation Premium Subsidies and MediSave top-ups

3.10 Pioneers refer to Singapore Citizens born on or before 31 December 1949 and
obtained citizenship on or before 31 December 1986.

3.11 Pioneers receive special Pioneer Generation Subsidies of between 40% - 60%
depending on age. This is regardless of their household monthly income or
the Annual Value of their home.

3.12 Pioneers also receive S$250 - S$900 a year in MediSave top-ups (depending
on year of birth) for life, which can be used to pay for their MediShield Life
premiums.

3.13 Older Pioneer Generation Seniors who have serious pre-existing conditions
also receive additional MediSave top-ups of S$50 - S$200 annually from 2021
to 2025, which can be used to pay for their MediShield Life premiums.

B3. Merdeka Generation Premium Subsidies and MediSave top-ups

3.14 Merdeka Generation seniors refer to:

(i) living Singapore Citizens who were born from 1 January 1950 to 31
December 1959 and had obtained citizenship on or before 31 December
1996; and

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(ii) those who were born on or before 31 December 1949, had obtained
citizenship on or before 31 December 1996 and did not receive the Pioneer
Generation Package.

3.15 From 1 July 2019, Merdeka Generation seniors receive additional Merdeka
Generation Subsidies of 5% of their annual MediShield Life premiums,
increasing to 10% after they turn 75 years old, regardless of their household
monthly income or the Annual Value of their home. This is on top of the above
Premium Subsidies that the seniors may receive.

3.16 Merdeka Generation members will also receive S$200 a year in MediSave top-
ups for five years from 2019 to 2023. These top-ups can be used to pay for
their MediShield Life premiums.

B4. Additional Premium Support

3.17 Individuals who are unable to afford MediShield Life premiums after
Government subsidies, MediSave usage and have limited family support will
be invited by the Government to apply for Additional Premium Support (APS).
If approved, APS will cover the outstanding MediShield Life premiums (if any)
as well as the premiums for the next two years. . If granted, APS would also
cover CareShield Life (CSHL) premiums if applicants are covered under CSHL.
However, individuals will lose their APS if they purchase an Integrated Shield
Plan or ElderShield/CSHL Supplement. This is to ensure that APS is targeted at
members who are needy and have financial difficulties.

C. MediShield Life Benefits

3.18 MediShield Life benefits are reviewed regularly to keep pace with the evolving
healthcare landscape and cost inflation so that it remains sustainable and
relevant to the needs of Singaporeans. Appendix 9B shows the MediShield
Life benefits applicable for admissions or treatments received on or after 1
April 2023.

D. How Are MediShield Life Claim Payouts Computed?

3.19 The MediShield Life Scheme pays on a reimbursement basis, subject to the
claim limits imposed on the covered medical expenses, as well as deductible,
co-insurance and pro-ration factors.

3.20 The deductible is the fixed amount payable by the insured each policy year
(the year following his policy renewal month), before the MediShield Life
payout starts. The deductible is payable only once every policy year. It helps
to filter out smaller, more affordable bills, which can be paid using MediSave
and/or cash and helps to keep the premiums affordable by focusing
MediShield Life payouts on larger bills where support is more critical.

3.21 Co-insurance is the patient’s share of the claimable amount which the insured
will have to pay, along with the deductible. It decreases from 10% to 3% as the
bill size increases. Co-insurance helps to prevent over-consumption of medical

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services and over-servicing by healthcare providers.

3.22 As private hospital bills and Class A/B1 bills in public hospitals are generally
higher than the Class B2/C bills that MediShield Life is designed for, they are
pro-rated to the equivalent level of a Class B2/C bill before MediShield Life
payouts are computed. This ensures comparable payouts for subsidised and
private patients.

3.23 Table 9.2 shows an example of how the reimbursement under MediShield Life
is arrived at.

Table 9.2: Claim Computation Of MediShield Life For Singapore Citizen

Hospitalised In Class A Ward

Claim computation for a Singapore Citizen aged 60 who stays in a Class A

ward
Length of Stay: 18 Days
Procedure Performed: Hip Replacement
Pro-ration Factor based on ward class 35%
Hospital Bill 35% of Hospital MediShield
Bill 5 Life
Claim
Computation
Daily Ward & S$12,000 S$4,200 S$4,200 6
Treatment Charges (S$12,000 x 35%)
(18 days normal
ward)
Surgical Procedure S$8,500 S$2,975 S$2,180 7
(Table 5C) (S$8,500 x 35%)
Implant S$4,000 S$1,400 S$1,400 8
(S$4,000 x 35%)
Total S$24,500 S$8,575 S$7,780
Less Deductible 9
- - (S$2,000)
Claimable Amount - - S$5,780
(less Deductible)
Less Co-insurance - - (S$439) 10
Medishield Life pays - - S$5,341
MediSave and/or - - S$19,159
Cash

5
As the insured member stayed in Class A ward, the MediShield Life claim is computed based on 35% of
the bill
6
Lower of the claim limit in Table A for Daily Ward & Treatment Charges, ($700 x 18 days) = $12,600, on
35% of charges incurred of $12,000 = $4,200. Therefore, the claimable amount is $4,200.
7
Lower of the claim limit in Table A for surgical procedure, $2,180 (Table 5C), or 35% of charges incurred
of $8,500 = $2,975. Therefore, the claimable amount is $2,180.
8
Lower of the claim limit in Table A for Implants ($7,000 per treatment) or 35% of charges incurred of
$4,000 = $1,400. Therefore, the claimable amount is $1,400.
9
The insured member is below 80 years old, subject to deductible of $2,000 for Class A ward.
10
Co-insurance = ($3,000 x 10%) + ($2,780 x 5%) = $439.

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3.24 Note from Table 9.2 that MediShield Life does not cover the majority of the
Class A ward hospital bills. The insured’s hospital bill was pro-rated to the
equivalent Class B2/C bill, before being subject to the claim limits. He may use
his MediSave (subject to the MediSave limits, based on the number of days
stayed in hospital and the surgical table relating to his surgical procedure)
and/or cash to pay the remaining portion of his bill (S$19,159).

3.25 Therefore, it is important for the insured to consider his insurance coverage
carefully, before he chooses the hospital or ward to which he wishes to be
admitted. If he wishes to have coverage for Class A/B1 ward and private
hospital stays, he may apply to any of the approved insurers for an IP.

3.26 Exclusions are imposed on certain medical treatments and expenses. For such
expenses incurred, the insured will not be able to claim under his MediShield
Life.

3.27 The following treatment items, procedures, conditions, activities are not
covered by MediShield Life and cannot be claimed (Applicable for admissions
or treatments received on or after 1 March 2021):
(a) Treatment for any contraceptive operation or procedure, infertility, sub-
fertility, or assisted conception or sex re-assignment surgery;
(b) Surgical interventions for the following conditions: Trisomy 13, Bilateral
Renal Agenesis, Bart’s Hydrops and Anecephaly;
(c) Cosmetic surgery;
(d) Dental work (except due to accidental injuries);
(e) Outright purchase of kidney dialysis machines, iron-lung and other
special appliances;
(f) Optional items such as television, telephone, special requested meals
and other items which are not necessary for the treatment of any illness,
condition or any injury or disability;
(g) Private nursing charges;
(h) Ambulance services;
(i) Vaccination;
(j) Treatment for injuries and disablement resulting from insured person’s
own criminal act;
(k) Treatment of injuries arising directly or indirectly from nuclear fallout,
war and related risk;
(l) Treatment of injuries arising from direct participation in civil commotion,
riot or strike;
(m) Expenses incurred after the 7th calendar day from being certified to be
medically fit for discharge from inpatient treatment and assessed to have
a feasible discharge option by a medical practitioner;
(n) Overseas medical treatment;
(o) Treatment which has received reimbursement from Workmen’s
Compensation and other forms of insurance coverage; and

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(p) Maternity charges (including Caesarean operations) or abortions,

including their related complications, except treatments for serious
complications related to pregnancy and childbirth.

E. MediShield Life Fund

3.28 The MediShield Life Scheme is a non-profit scheme. All premiums collected
are placed in the MediShield Life Fund and are used solely for the benefit of
policyholders and in the administration of the scheme. The financial accounts
for the Fund are audited by an external auditor and submitted to Parliament
every year.

4. INTEGRATED SHIELD PLANS (IPs)

4.1 Integrated Shield Plans (IPs) are MediSave-approved hospitalisation insurance

plans made up of two parts. The first is the MediShield Life component
administered by the CPF Board. The second is an additional private insurance
coverage component administered by approved private insurers, typically to
cover Class A/B1 wards of public hospitals or private hospitals. Following the
implementation of MediShield Life on 1 November 2015, MediShield Life
automatically replaced the MediShield component of IPs. Thus, those who
have IPs are already covered by MediShield Life, and there is no duplication of
coverage between IPs and MediShield Life.

4.2 The following plans are IPs (as at 1 Apr 2023): AIA HealthShield Gold Max,
Singlife Shield, HSBC Life Shield, Great Eastern SupremeHealth, Income
Insurance Limited’s Enhanced IncomeShield, Prudential’s PRUShield and
RHI’s Raffles Shield. To aid your understanding of the different IPs offered,
you are advised to refer to the updated comparison tables of IPs across
insurers, categorised by ward class, at the MOH Website11.

4.3 The figure below illustrates the components of Integrated Shield Plans (IPs) as
outlined above.

11
https://www.moh.gov.sg/cost-financing/healthcare-schemes-subsidies/medishield-life/comparison-of-
integrated-shield-plans

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With the different IPs available, it is necessary for the sellers of such plans to
understand the different plans offered in the insurance market, and to
advise their prospective clients, based on the needs and long-term
affordability of each individual client’s position.

(a) As part of due diligence, clients should be informed of the key

differences in premiums, benefits, exclusions, deductibles, co-
insurance and other co-payment features between the various IPs
offered by their insurer, versus MediShield Life. There are different
benefits provided in the IP policy, and plans can be “as charged” or
“non-as-charged” (i.e. they have sub-limits imposed). Information
provided should be easy to understand, unambiguous and clearly
explained to help clients make an informed decision.

(b) Clients should consider if they would wish to stay in a private or

subsidised ward in a public hospital, or in a private hospital, and if they
wish to choose their own doctors. To aid them in this decision, clients
should be informed of how a given plan’s coverage and their co-
payment might differ according to their choice of ward, hospital, and
doctor. Where possible, clients should be reminded of these
considerations prior to seeking any treatment, including the need to
confirm the panel status of their medical provider if they prefer to
access panel benefits. Subsidised treatments in public hospitals (B2/C
wards) currently make up around two-thirds of all admissions from
Singapore residents. For the vast majority of these treatments,
MediShield Life provides sufficient coverage, meaning that having an
IP plan would not provide any additional payout. As such, clients may
not need to purchase an IP if they intend to stay in Class B2/C wards.

(c) Premiums for IPs are higher than for MediShield Life. Premiums for
health insurance usually increase with age and are subject to change.
IP premiums may thus increase significantly as an insured person gets
older. The private insurance component of the IP premiums could be
up to 5 times the MediShield Life premiums for those in their late-70s
or early-80s this year. Clients should consider if they can afford their IP

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premiums in the long term.

(d) Clients who pay for, or are insured under IPs are not eligible for APS. If
clients are currently receiving APS to pay their MediShield Life and/or
CareShield Life premiums, they will stop receiving APS if they choose
to be insured under an IP. In addition, if a client chooses to be insured
under an IP, the person paying for the client’s IP will stop receiving
APS, if he or she is currently receiving APS.

(e) The additional private insurance component of IP premiums is payable

by MediSave only up to the Additional Withdrawal Limit (AWL), which
is often exceeded at older ages. The policyholders may have to pay a
substantial portion of their IP premiums in cash, especially at the older
ages.

(f) Unlike MediShield Life which provides coverage for pre-existing

medical conditions (with Additional Premiums for the first 10 years),
the coverage for the private insurance component of the IP may be
declined or imposed with exclusions for pre-existing conditions. The
private insurance component may also have premium loading, arising
from pre-existing conditions. Clients should be advised to disclose
their medical history truthfully and completely, to avoid unexpected
policy exclusions subsequently. Once their policy has been approved,
clients should be made to understand their full list of policy exclusions
from their insurer or agent, and be advised of their free-look period
where they can review their purchase and obtain a full refund of
premiums if they choose to cancel their policy. Where possible, clients
should be reminded again of their exclusions prior to any treatment,
procedure or admission, including both general exclusions and specific
medical exclusions of pre-existing conditions.

A. Integrated Structure of IPs

4.4 Under the integrated structure of IPs, if a Singapore Citizen or Permanent

Resident purchases an IP, he will enjoy the benefits of MediShield Life within
his IP. However, he will be serviced by his private insurer. In other words, he
will continue to pay one premium and needs to make only one claim with just
his private insurer. His private insurer will then arrange with the CPF Board on
the amount claimable under the MediShield Life component of the plan. The
insured will not need to liaise with both parties (i.e. his insurer and the CPF
Board).

A1. Coverage

4.5 As mentioned above, a person insured with an IP already benefits from the
MediShield Life component within his IP. He will have coverage for pre-
existing conditions and be assured of lifelong coverage under the MediShield
Life component of his IP. This is so, even if the condition is excluded from the
additional private insurance coverage by the IP insurer.

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4.6 Due to COVID-19, the seven authorised IP insurers have extended their
coverage of hospitalisation resulting from COVID-19 vaccine complications
until December 31, 2022, as mentioned by the Life Insurance Association,
Singapore (LIA Singapore). The extended coverage will continue to apply to
all IP policyholders who received COVID-19 vaccines under the national
vaccination programme, as well as those approved by the World Health
Organisation (WHO) under its emergency use listing and administered in
Singapore under the special access route.

A2. Premiums & MediShield Life Subsidies

4.7 The IP premiums paid to private insurers also comprise two parts, namely the
premium for the MediShield Life component, and the premiums for the
additional private insurance component. A person insured under an IP will
also be able to receive the applicable MediShield Life subsidies (i.e. Premium
Subsidies for lower- to middle-income; Pioneer and Merdeka Generation
Subsidies; Transitional Subsidies) if he meets the eligibility criteria, but will
not be eligible for Additional Premium Support. Those who cannot afford to
pay for IP premiums should remain on MediShield Life.

4.8 When deciding on the level of premiums for the additional private insurance
component, private insurers will also need to factor in claims experience and
medical inflation along with the benefits offered. Clients concerned with the
affordability of IP premiums should first consider more affordable insurance
options if it is within their means, such as IPs with a lower ward entitlement.
They could also consider whether MediShield Life (which provides sufficient
coverage for the vast majority of subsidised treatments (e.g., B2/C wards) has
adequately met their needs.

4.9 The main differences between the MediShield Life Scheme and an IP are
described in Table 9.3 below.

Table 9.3: Differences Between MediShield Life & IP

MediShield Life Scheme Integrated Shield Plan (IP)
(a) It is administered by the CPF (a) It is administered by private
Board. insurers, as approved by MOH.
(b) Its coverage is sized for stays in (b) It provides for enhanced coverage
Class B2/C wards of public beyond MediShield Life, with
hospitals. various plan types available for
stays in private hospitals and/or
Class A/B1 wards of public
hospitals.
(c) It covers all pre-existing (c) Coverage for the private
conditions. insurance component of the IP
may be declined or imposed with
exclusions and/or premium
loading, arising from pre-existing
conditions.
(d) There is no minimum or (d) It may have a minimum or
maximum age limit. maximum entry age limit.

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(e) There are sub-limits applicable.(e) It may have sub-limits, although

most do not have sub-limits.
(f) MediShield Life premiums are (f) The MediShield Life component
fully payable by MediSave. of the IP is fully payable by
MediSave, while the private
insurance component of the IP is
payable by MediSave only up to
Additional Withdrawal Limit
(AWL), and the remainder has to
be paid in cash.
(g) All Singapore Citizens and (g) Application to private insurers is
Permanent Residents are required.
automatically covered for life.
No application is required.

B. Standard IP

4.10 The Government has worked with IP insurers to develop the Standard IP, a
“no frills” product targeted at covering large Class B1 ward hospital bills and
selected outpatient treatments.

4.11 From 1 May 2016, all IP insurers were required to sell the Standard IP. The
benefits of the Standard IP are regulated by MOH and are identical across all
IP insurers. The Standard IP has claim limits sized to fully cover nine out of ten
Class B1 bills. Like other IPs, it also has co-insurance and deductible
components.

4.12 As a private plan that provides coverage beyond MediShield Life, the
Standard IP is managed by insurers. Like all other IPs, premiums and
underwriting decisions for the plan are determined by each insurer, based on
their own commercial considerations and risk assessment frameworks.
Therefore, premiums vary, depending on each insurer’s approach.

4.13 Nonetheless, the Standard IP is an affordable option for Singapore Citizens

and Permanent Residents who want additional coverage beyond MediShield
Life and may find other higher coverage IPs too expensive. It is also a viable
option for those who want to switch from their Class A and Private Hospital
IPs to a more affordable plan.

C. MediSave Use For IP Premiums

4.14 MediSave can be used to pay premiums for IPs, either in full or in part,
depending on the age group and the IP plan type. The MediShield Life
component of the IP premiums is fully payable by MediSave. This takes into
account any Additional Premiums (for those with serious pre-existing
conditions) and MediShield Life subsidies (where applicable). From 1
November 2015, MediSave use for the additional private insurance
component of the IP premiums is subject to the new Additional Withdrawal
Limit (AWL). The AWL is set per insured person per policy year, as stated
below:

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(a) Age Next Birthday (ANB) 40 years and below: S$300

(b) ANB 41 to 70 years: S$600
(c) ANB 71 years and above: S$900

D. Riders

4.15 IP insurers also sell rider plans, which pay for the co-insurance and deductible
portion of the IP, subject to minimum 5% co-payment. These riders are not
approved for MediSave use, and insurers are not allowed to market riders as
part of IPs. Sellers of such riders should highlight the distinction between IPs
and riders to policyholders and share that riders can be paid using only cash.
Importantly, they should remind policyholders that rider premiums rise
significantly with age. Instead of paying for a rider, the deductible and co-
insurance portion incurred in the event of hospitalisation can be saved for and
paid via MediSave or cash.

4.16 On 8 March 2018, MOH introduced requirements for new IP riders to have:
(a) a co-payment of 5% or more, to encourage prudent use and appropriate
charging of healthcare services, and
(b) a co-payment cap for panel/pre-authorised treatment to protect
policyholders against the unlikely event of large bills. Insurers can set the
cap at S$3,000 or more per policy year.

4.17 These requirements apply to new policyholders who purchase riders on and
after 8 March 2018.

D1. The Principle Underlying the Need For Co-Payments 12

4.18 Co-payment is an important principle in the design of healthcare insurance. It

encourages policyholders and their doctors, to consider the necessity of the
medical treatment and its cost, so that they can make an informed decision on
the appropriate healthcare services. This encourages prudence and keeps
healthcare cost, and health insurance premiums, affordable and sustainable in
the long term.

4.19 This principle applies regardless of hospital category. Full riders that covered
the entire co-payment under the IPs were not in line with this principle. Such
riders allowed policyholders to avoid co-payment regardless of their bill size,
and had contributed to over-consumption, over-servicing and over-charging.

4.20 This was one of the reasons why MOH had announced the requirement for a
minimum 5% co-payment for new riders across all settings in March
2018. This applied for new riders sold from 1 April 2019. Additionally, riders
sold after the announcement, between 8 March 2018 and 31 March 2019, had
to transition to these new co-payment riders by 1 April 2021.

12
Partially extracted and adapted from https://www.moh.gov.sg/news-highlights/details/co-payment-in-
integrated-shield-plans-for-specific-hospital-categories-and-breakdown-of-average-claims-made-through-
full-riders-of-integrated-shield-plans.

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4.21 While this co-payment requirement was not mandated for riders purchased
before 8 March 2018, some insurers announced that they will also be
including a co-payment component to these riders. This is allowed under their
contractual terms with their policyholders. MOH has encouraged the insurers,
in considering these changes, to ensure that their policyholders’ interests are
safeguarded even as insurers seek to ensure the sustainability of their
portfolios. As an additional safeguard, insurers are required to clearly explain
these changes to their policyholders at least 30 days before they take effect.

4.22 To provide their policyholders more assurance after these changes, some
insurers had also introduced co-payment limits for treatments that are
provided by their panel doctors, or for pre-authorised treatments. However,
even if policyholders do not seek treatment with a panel doctor or are unable
to seek pre-authorisation prior to treatment, they may still claim under their IP
and rider, though additional benefits such as the co-payment limit may not
apply. Policyholders can also continue to tap on MediSave to pay the co-
payment amount under their riders, subject to the MediSave withdrawal
limits.

E. Terminating or Switching IP/Switching Insurer

4.23 An IP policyholder who cannot afford, or does not wish to continue paying the
premium for his IP, can switch his plan to a lower coverage plan within the
same insurer at any point in time, without additional underwriting involved.
He can also terminate his IP at any point in time, and still be covered by
MediShield Life which provides basic health insurance, regardless of any pre-
existing conditions.

4.24 In the event that the person with an existing IP switches to a new IP with
another insurer, his original IP with the previous insurer will be automatically
terminated. Moreover, under the new IP with the new insurer, he will undergo
underwriting again. As such, he may lose coverage for his existing medical
conditions covered by his original plan with his existing insurer and may not
be able to re-apply for his original coverage subsequently.

4.25 Any policyholder who switches his IP from one insurer to another will have
the option to go back to the previous insurer within 30 days from the date of
notification of termination given to the previous insurer. No re-underwriting is
allowed by the previous insurer, and it would be as if the first IP had never
been terminated.

4.26 If a claim is received by the new insurer and the claim incurred date falls
within 30 days from the commencement date of the new policy and the new
insurer is not able to admit the claim for any reason, the new insurer has the
option to request the policyholder to reinstate his policy with the previous
insurer. The previous insurer will take the claim incurred date (or claim event
date) to be the date of request to reinstate the policy. Once reinstated, the
claim will be assessed by the previous insurer, and the claim will be paid by
the previous insurer if the liability under the previous insurer’s policy is
established.

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F. Risk-Loading by Private Insurers

4.27 With effect from the launch of MediShield Life, MOH allows IP insurers to risk-
load insured members with pre-existing conditions for the private insurance
component of the IPs. If offered, this could help to reduce uncertainty of
coverage owing to exclusions. It also affords insured members who prefer to
pay higher private insurance premiums the peace of mind, knowing that they
are also covered for their pre-existing conditions by the private insurance
component of their IPs. More details on this will be shared by private insurers
if and when they decide to offer risk-loading to their insured members.

G. Pre-Authorisation for IP

4.28 The LIA has issued a guidance paper on Pre-Authorisation Process for IPs. Pre-
authorisation is a service where the IP insurer gives prior approval to the
hospitalisation and/or medical treatment and associated costs before the
actual surgery or admission. It is designed for elective treatments in the
private healthcare sector, for patients (policyholders) seeking specialist care
by private doctors in private hospitals.

4.29 The benefits of Pre-authorisation are:

(a) Insurers can assess the medical necessity and cost of treatment to
ensure it is within the terms and conditions of the policy’s coverage;
(b) Patients will have a peace of mind in knowing that their procedure is
within their insurance coverage; and
(c) Healthcare providers have better clarity on the type of procedures
covered by insurance to better advise their patients prior to the actual
procedure.

Policyholders are thus encouraged to seek pre-authorisation for planned

procedures as far as possible if the option is provided by the insurer.

4.30 All IP insurers offering pre-authorisation services to its IP policyholders have

to use the standard LIA Pre-Authorisation Form. (See Appendix 9C)

4.31 IP insurers will directly settle pre-authorised bills with the hospital, day
surgery centre or clinic.

5. MEDISAVE

5.1 MediSave is a mandatory national health savings scheme in Singapore under

the Central Provident Fund (CPF) umbrella. Between 8% and 10.5% of each
CPF member’s monthly salary (depending on his age) is set aside in his
personal MediSave Account (MA). This amount consists of contributions from
him and his employer. 13 In the case of self-employed persons, they must make

13
Self-employed persons are also required to make contributions of between 4% and 10.5% of yearly
income. These rates apply up to the monthly wage ceiling of each CPF Member’s monthly wage, and to
any additional wages; in other words, the maximum contribution per month for monthly wages is 10.5%
of $6,000 as at 2022, which is $630.

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compulsory contributions to their MediSave Accounts after receiving a Notice

of Computation (NOC) of CPF contributions from IRAS. The MediSave
contribution is computed based on the self-employed person’s age and Net
Trade Income (NTI). The Government also provides MediSave top-ups for
Singaporeans, especially lower-income workers and elderly persons.

5.2 Amounts in the MA earn an attractive annual interest income, with additional
interest accruing to older CPF members to protect their savings against
inflation. Since its introduction on 1 April 1984, MediSave has helped many
Singaporeans save for their healthcare needs. Saving for future healthcare
expenses is important, since the need for healthcare increases significantly as
one grows older.

5.3 Starting from 1 January 2022, the maximum amount members can top up to
MediSave will be the difference between their Basic Healthcare Sum (BHS)
and their current MediSave balances. Members were previously only able to
contribute the lower of the CPF Annual Limit and the difference between the
BHS and their current MediSave balance. With the simplification, there is no
longer a need to consider the CPF Annual Limit, which is typically made
known only at the end of each year.

5.4 Furthermore, with effect from 1 January 2022, members can enjoy annual tax
relief of:
(a) up to S$8,000 (previously S$7,000) when the member tops up his/her
own Special/Retirement Account and/or MA; and
(b) an additional tax relief of up to S$8,000 (previously S$7,000) when the
member tops up his/her loved ones’ Special/Retirement Account and/or
MA.
Note that the changes related to top-ups to MA do not apply to self-employed
persons.

5.5 With the MediSave Grant for Newborns, each Singaporean baby is now a CPF
member at birth. The grant ensures that newborns have enough to pay for
their MeidiShield Life premiums from birth till age 21.

A. Basic Healthcare Sum

5.6 Contributions to the MA are subject to a maximum amount, known as the

Basic Healthcare Sum (BHS). The BHS is designed to be enough for a CPF
member’s basic, subsidised healthcare needs in his old age.

5.7 Amounts above the BHS will flow to the CPF member’s Special or Retirement
Accounts to boost his monthly payouts. If the CPF member has already met
his Full Retirement Sum, the amounts will flow to his Ordinary Account, and
can be withdrawn as cash from the age of 55 years.

5.8 As life expectancy and healthcare costs rise, successive cohorts of CPF
members will need more MediSave savings for their healthcare expenses in
their old age. Therefore, the BHS is adjusted yearly in January, to keep pace
with the growth in MediSave use by the elderly.

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5.9 The yearly BHS adjustment will apply only to CPF members aged 65 years and
below in that year. When a CPF member reaches the age of 65 years, the BHS
for him will be fixed at the prevailing BHS, and the amount will not change for
the rest of his life. 14

5.10 Refer to the following link at the CPF Website for the current BHS:
https://www.cpf.gov.sg/member/faq/healthcare-financing/basic-healthcare-
sum/what-is-the-basic-healthcare-sum

B. Uses Of MediSave

5.11 MediSave can be used to pay for:

(a) the CPF member’s healthcare expenses at accredited institutions,
including both public and private sectors;
(b) healthcare expenses of the CPF member’s approved dependants, namely
his spouse, children, parents, siblings, and grandparents. If paying for a
sibling or grandparent, the patient must be a Singapore Citizen or
Singapore Permanent Resident (SPR); and
(c) Health insurance such as MediShield Life, ElderShield, CareShield Life
and Integrated Shield Plans (IPs).

5.12 Let us now look at these uses of MediSave in greater detail.

B1. Outpatient Treatments

5.13 MediSave can be used to pay for selected outpatient services, including
chronic disease treatments and preventative care at GPs, polyclinics and
Specialist Outpatient Clinics (SOCs).

(a) Outpatient Treatment For Approved Chronic Diseases Under The

Chronic Disease Management Programme
(i) MediSave can be used to pay for outpatient treatment for 23
approved chronic conditions under the Chronic Disease
Management Programme (CDMP). The full list of approved chronic
conditions under the CDMP is available on the MOH Website at the
following link:
https://www.moh.gov.sg/policies-and-legislation/chronic-disease-
management-programme-(cdmp)
(ii) These are chronic conditions which can:
 result in serious complications like heart disease, kidney failure
and leg amputations, when not well managed; and
 have high cost of treating the condition over the long term if
poorly controlled.
(iii) The aim of allowing MediSave use under the CDMP is to:
 lower long-term healthcare costs; and

14
For example, all cohorts aged 65 years and above in 2016 will have the same BHS of S$49,800 for the
rest of their lives.

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 improve care for patients with chronic conditions, resulting in

better health outcomes.
(iv) A CPF member can use up to S$500 for non-complex chronic
conditions, or S$700 for complex chronic conditions per patient per
year, under the MediSave500/700 scheme.

(b) Outpatient Treatment for Vaccinations

MediSave500/700 can also be used to pay for vaccinations under the
National Childhood Immunisation Schedule (NCIS) and National Adult
Immunisation Schedule (NAIS). For the list of vaccinations which are
payable by MediSave, please visit the CPF website at
https://www.cpf.gov.sg/member/healthcare-financing/using-your-
medisave-savings/using-medisave-for-outpatient-treatments

(c) Outpatient Treatment for Health Screenings

The MediSave500/700 scheme can be used to pay for approved health
screenings. MediSave-eligible health screenings include:
 Mammogram screenings (for women aged 50 and above); and
 Selected screening tests for newborns.

(d) Flexi-MediSave for the Elderly

Under the Flexi-MediSave scheme, patients aged 60 and above can use
up to S$300 per patient per year from their own or their spouse’s
MediSave Account (if the spouse is also aged 60 and above) for
outpatient medical treatment, as well as approved vaccinations and
screenings.

Flexi-MediSave can be used at:

 SOCs in the public hospitals and national specialty centres;
 Polyclinics; and
 Participating GP clinics.

Flexi-MediSave can be used together with other outpatient MediSave

limits, such as the MediSave500/700 limit.

B2. Inpatient Treatments

5.14 There are several types of hospitalisation and day surgery expenses that can
be paid with MediSave.

5.15 The inpatient daily hospital limit applies if the patient is admitted to the
hospital for at least 8 hours, while the day surgery limit applies if a patient
undergoes a surgical operation listed under the Table of Surgical Procedures
(TOSP) and is admitted and discharged within the same day. Visit the website:
https://www.cpf.gov.sg/member/healthcare-financing/using-your-medisave-
savings/using-medisave-for-hospitalisation to view the TOSP for the full list of
MediSave-claimable surgeries and their corresponding withdrawal limits.

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5.16 Let us look at some of these items:

(a) Inpatient Episodes

The CPF member can use up to S$550 per day for the first two days and
S$400 per day thereafter under the daily hospital limit, which includes
daily ward charges, daily treatment fees, investigations, and medicines.

MediSave can also be used to pay for surgical procedures required

during the inpatient stay. The withdrawal limit depends on the
complexity of the surgery, and ranges from S$250 to S$7,550 (refer to
the MOH and the CPF Board websites for details).

For a CPF member who passes away during his hospitalisation, the
patient’s own MediSave can be used to pay for the last inpatient
hospital bill in full, without being subject to existing MediSave
withdrawal limits. This is because the need to save for future healthcare
needs is no longer relevant following his death.

(b) Inpatient Psychiatric Episodes

The CPF member can use up to S$150 per day can be used for hospital
charges, subject to a maximum of S$5,000 a year.

(c) Day Surgery Episodes

The CPF member can use up to S$300 per day for hospital charges,
which include daily ward charges, daily treatment fees, investigations,
and medicines.

MediSave can also be used to pay for the day surgical procedure. The
withdrawal limit depends on the complexity of the surgery, and ranges
from S$250 to S$7,550 (refer to the MOH and the CPF Board websites
for details).

(d) Assisted Conception Procedures

MediSave may be used for Assisted Conception Procedures regardless
of whether treatment is received in inpatient or outpatient setting. Only
the MediSave accounts of the patient or her spouse may be used.

B3. Long-Term Care

(a) Rehabilitation
MediSave can be used to cover the costs of rehabilitative care, if the
patient is:
 An inpatient at an approved community hospital (for S$250 per day,
up to S$5,000 per annum)
 An inpatient at an approved convalescent hospital (for S$50 per day,
up to S$3,000 per annum)
 An inpatient at an approved day hospital (for S$150 per day, up to
S$3,000 per annum)
 An outpatient at an approved day rehabilitation centre (for S$25 per
rehab service per day, up to S$1,500 per annum)

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(b) Palliative Care

MediSave can be used to pay for palliative care, subject to the
following withdrawal limits:
 Approved inpatient hospice palliative care services (up to S$250
per day for general palliative care, and up to S$350 per day for
specialised palliative care)
 Home palliative care and day hospice (up to S$2,500 per lifetime). If
the patient has terminal cancer, end-stage organ failure or
advanced dementia, there will not be any withdrawal limit if the bill
is paid using the patient’s own MediSave.

(c) Disability Care

Under MediSave Care, Singapore Residents aged 30 and above, with
severe disability, will be able to withdraw up to a total of S$200 per
month in cash from their own or their spouse’s MediSave account for
their long-term care needs. The withdrawal quantum depends on the
MediSave balance at the point of monthly withdrawal (see Appendix
9A).

B4. Insurance Premiums

5.17 Besides using MediSave to pay for medical expenses, a CPF member can use
his MediSave to pay for his own health insurance premiums, or those of his
approved dependants. MediShield Life and ElderShield or CareShield Life
premiums can be paid fully with MediSave whereas Integrated Shield Plans
(IPs) and ElderShield or CareShield Life supplement premiums are subject to
withdrawal limits which are periodically reviewed by MOH.

5.18 Table 9.1 summarises the uses of the MediSave Account.

Table 9.1: Uses of MediSave Account

Uses of Medisave Items that can be paid using MediSave
Outpatient Treatments Selected outpatient treatments such as:
 Approved chronic conditions under the
CDMP
 Approved vaccinations
 Approved health screenings
Inpatient Treatments Inpatient care such as:
 Inpatient episodes
 Inpatient psychiatric episodes
 Day surgery episodes
 Assisted Conception Procedures
Long-Term Care Long-Term Care includes:
 Rehabilitative care
 Palliative care
 Disability care
Insurance Premiums Premium payments of:
 MediShield Life

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 ElderShield/CareShield Life which can be

fully paid with MediSave
 Integrated Shield Plans and
ElderShield/CareShield Life supplements
which are subject to withdrawal limits
periodically reviewed by MOH

C. How Much MediSave Can Be Used?

5.19 MediSave use is subject to withdrawal limits, which are generally sufficient for
subsidised treatments in public healthcare institutions. This ensures that there
continues to be sufficient savings for future healthcare needs. Those seeking
treatments in Class B1 and Class A wards of public hospitals or the private
sector will usually have some out-of-pocket cash payments. The types of
limits include:
(i) Withdrawal Limit – the maximum amount that the CPF member can
withdraw from his/her MediSave Account for his or her medical expenses.
For the different categories and corresponding withdrawal limits, please
refer to Appendix 9A.
(ii) Additional Withdrawal Limit (AWL) – the maximum amount of MediSave
that can be used to pay for additional private insurance premiums. The
excess premiums above AWLs are payable in cash. Please refer to
Appendix 9A for the AWL for Integrated Shield Plans (IP) and
ElderShield/CareShield Life supplements.

C1. Where Can MediSave Be Used?

5.20 Payments via MediSave are allowed in all public healthcare institutions, as
well as approved private healthcare institutions. For an updated list of medical
institutions participating in MediSave, refer to the CPF Board Website.

C2. Whose MediSave Can Be Used?

5.21 All CPF members can use their MediSave to pay for their approved
dependents’ medical expenses; and there may be more than one payer per
bill, e.g. two children can pay for their mother’s hospitalisation bill. Each CPF
member should specify to the institution the amount of MediSave that he
would like to use to pay for the hospitalisation bill.

5.22 If the approved dependants’ MediSave are not sufficient to pay for the
hospitalisation bill, then the patient’s family members can make an appeal to
the hospital to have the bill settled by non-immediate family members via
MediSave, e.g. children-in-law. However, this option is available only if the
patient meets certain conditions, such as having stayed in the Class B2 or
Class C ward of a public hospital.

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C3. Distribution Of MediSave Upon Demise

5.23 If a patient was hospitalised just before death and had authorised the use of
his MediSave to pay for his medical bill, his MediSave balance would be used
in full, without being subject to the existing MediSave withdrawal limits, to
pay for his last inpatient medical bill.

5.24 If the patient had not authorised the use of his MediSave before his demise,
his immediate family member (spouse, parent, or child who is aged 21 years
and above), or donee or deputy who are not lacking mental capacity can also
do so for the last inpatient medical bill, provided that it has not been paid out
to the patient’s nominated beneficiaries. In the event that the patient does not
have any immediate family member, or donee or deputy to authorise the use
of the patient’s MediSave, a relative who has been taking care of the patient
may also write to MOH through the hospital to seek approval for the relative
to authorise the withdrawal of patient’s MediSave, to pay for the last inpatient
medical bill.

5.25 The remaining MediSave balance, after the payment of the last medical bill,
would be distributed to the nominated beneficiaries of the patient’s CPF
account if a nomination was made before his death. If there was no
nomination made, the balance in the deceased patient’s MA would be
distributed by the Public Trustee to his family members under the intestacy
laws for non-Muslims, or the Muslim inheritance law for Muslims.

6. CLAIMING FROM MEDISHIELD LIFE/IP & MEDISAVE

6.1 Any patient who wishes to claim from his MediShield Life, IP, and/or
MediSave will need to complete the Medical Claims Authorisation Form to:
(a) allow the hospital to claim from his insurer; and
(b) instruct the CPF Board to deduct from his MediSave to pay for his hospital
bill, while the insurer settles the claim, which may take some time.

A. Letter of Guarantee

6.2 The patient may be required to pay a deposit in cash upon his hospital
admission, as his MediSave may not cover the full hospital charges. This is
usually the case for non-subsidised ward classes.

6.3 Prior to a treatment episode, IP policyholders can approach the medical

institution to request for a Letter of Guarantee (LOG) from his insurer. The
LOG is a service provided by IP insurers for policyholders, to waive the
upfront cash required by the medical institution, up to the eligible LOG
amount.

6.4 Insurers may not offer LOGs for all treatment settings (e.g., inpatient / day
surgery / outpatient; public / private medical institution). Policyholders should
check with their insurer to find out if they can obtain a LOG for their particular
treatment setting.

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6.5 Depending on the insurer, the LOG amount will either be: (i) computed based
on the estimated IP payout in respect of the plan’s benefits, subject to the
respective caps imposed by the insurer(s), or (ii) a flat amount for all eligible
policyholders and treatment settings. The medical institution may fully or
partially waive the deposit in such a case. A policyholder may not get the LOG
if he does not meet the eligibility criteria, for example, if the reason for
hospitalization is within his excluded conditions. It is important that the
policyholder understands that a LOG may not mean that the insurer will pay
for the specified amount. To obtain assurance that their bill will be covered,
the policyholder may wish to apply for pre-authorisation instead, if available.

B. Claims process

6.6 For any IP policyholder who wants to claim from MediShield Life, IP and/or
MediSave, the hospital will submit the claim on his behalf through the
MediClaim online system after he has been discharged.

6.7 For MediShield Life claims, the CPF Board will calculate how much MediShield
Life will pay and settle the amount directly with the hospital.

6.8 For IP claims, the hospital will submit the claim electronically to the insurers
directly. For payouts, the IP insurer will calculate how much the IP will pay
based on the IP benefits, and the CPF Board will independently calculate how
much MediShield Life will pay based on the MediShield Life benefits. The
eventual payout will be the higher of the two amounts. For example, if the
payout computed based on the full IP benefits is S$2,000, and the payout
based on MediShield Life benefits is S$500, the policyholder will receive
S$2,000, which comprises S$500 from the MediShield Life payout, and
S$1,500 from the IP’s additional coverage payout. In the case where the
payout based on MediShield Life benefits is higher than the IP benefits, the
eventual payout will be based on the MediShield Life benefits.

6.9 The patient can make use of his MediSave to pay for part of his bill, up to the
prevailing MediSave withdrawal limits. The hospital will have to submit the
claim electronically. Once the claim is approved, the CPF Board will make
payment to the hospital from the patient’s MediSave. Any outstanding
amount not covered by MediShield Life/IP, MediSave, or other private
insurance (e.g. Group Hospital & Surgical Insurance policy effected by the
patient’s employer) will have to be settled by the patient in cash.

C. Claiming From Non-MediSave payable Private Insurance

6.10 For someone who is covered by his employer’s medical benefits or other
private insurance plans, he will need to show his insurance card (provided by
some insurers for certain Medical Expense Insurance plans) to the hospital
admission staff. The hospital may fully or partially waive the deposit in such a
case.

6.11 Some hospitals will send the hospitalisation bill directly to the patient’s non-
MediSave payable private insurer or employer. In other cases, the patient will

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have to personally submit the bill to the insurer. If the bill is more than the
reimbursement from the insurer or the employer, he can choose to claim the
remainder from MediShield Life/his IP and/or his MediSave, up to prevailing
limits and subject to co-payment, where applicable.

6.12 For members who are covered under multiple schemes, the Ministry of Health
has set out the following claims protocol to avoid duplicative payouts:

(a) Employer, private insurance, other third party pays first

(b) Followed by MediShield Life / IP
(c) Then MediSave
(d) Then Cash

6.13 Patients should inform their medical institutions of all the parties that they
intend to make claims from, as early as possible. If the patient has filed a claim
against MediShield Life / IP first and subsequently with a third-party payer, the
patient or the third-party payer must reimburse the relevant amount to
MediShield Life / IP, in line with the claims protocol above.

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APPENDIX 9A
Withdrawal Limits for Inpatient, Outpatient, Long-Term Care and Insurance Premiums

Updated as of May 2023. Refer to MOH’s website 15 for the latest MediSave withdrawal
limits.

MediSave Limits for Inpatient Treatments

MediSave limits for acute hospital stays
Type of acute hospital stay MediSave limits
Inpatient episodes S$550 per day for the first two days, S$400 per
day afterwards
Inpatient psychiatric episodes S$150 per day. Maximum of S$5,000 a year
Day surgery episodes S$300 per day
Surgical procedures Between S$250 and S$7,550 depending on the
complexity of the surgery
MediSave limits for non-acute hospital stays
Non-acute hospital type MediSave limits
Approved community hospitals S$250 per day. Maximum of S$5,000 a year
Approved convalescent hospitals S$50 per day. Maximum of S$3,000 a year
Approved day hospitals S$150 per day. Maximum of S$3,000 a year
MediSave limits for Assisted Conception Procedures (ACP)
ACP Cycle MediSave limits
1st S$6,000
2nd S$5,000
3rd and subsequent S$4,000 (capped at lifetime MediSave
withdrawal limit of S$15,000 per patient)
MediSave limits for delivery of a child
MediSave Maternity Package Prevailing inpatient limits (up to S$550 per day
for the first two days and S$400 per day for the
third and subsequent day in the hospital and
applicable surgical withdrawal limit depending
on the delivery procedure) plus an additional
S$900 for pre-delivery medical expenses.

MediSave Limits for Outpatient Treatments

MediSave limits for chronic disease management, health screenings and
vaccinations
MediSave500/700 Scheme Patients with complex chronic conditions will be
able to use up to S$700 per patient yearly, while
other patients will be able to use up to S$500
per patient yearly.
Additional MediSave limits for elderly
Flexi-MediSave Patients aged 60 and above can use up to S$300
per patient per year for outpatient medical
treatment, approved vaccinations and
screenings. Spouse’s MediSave savings can
also be used if he or she is also over 60 years
old.

15
https://www.moh.gov.sg/healthcare-schemes-subsidies/medisave

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MediSave limits for other outpatient treatments

Renal dialysis treatment S$450 a month
Outpatient radiotherapy for S$80 per treatment for external radiotherapy or
cancer patients hemi-body radiotherapy
S$360 per treatment for brachytherapy with or
without external radiotherapy
S$2,800 per treatment for stereotactic
radiotherapy
Radiosurgery treatment for cancer S$7,500 per treatment
patients (Gamma Knife or Novalis
shaped beam)
Cancer drug treatment for cancer S$1,200 per month for cancer drug treatments
drugs on the Cancer Drug List on the CDL with MediShield Life claim limit
(CDL) above S$5,400.
S$600 per month for all other cancer drug
treatments on the CDL.
Cancer Drug Services and other S$600 per year per patient
cancer scans
Scans for diagnosis or treatment S$300 per year per patient
of a medical condition (non-
cancer)
Anti-retroviral treatment for HIV S$550 per month per patient
patients
Hyperbaric oxygen therapy S$100 per treatment cycle

Intravenous antibiotic treatment S$600 per weekly cycle. Up to S$2,400 a year

Long term oxygen therapy and S$150 per month per patient
infant continuous positive airway
pressure therapy
Immuno-suppressants for S$300 per month per patient
patients after organ transplants
Long-term parenteral nutrition S$200 per month per patient
Autologous bone marrow S$2,800 per year per patient
transplant for multiple myeloma
treatment
Desferrioxamine drug and blood S$550 per month per patient
transfusion for thalassemia

MediSave Limits for Long-Term Care

MediSave limits for Long-Term Care
Approved inpatient hospice S$250 per day for general palliative care, and
palliative care services S$350 per day for specialised palliative care
Day rehabilitation at approved S$25 per rehabilitative service per day, subject to
day rehabilitation centres a maximum of S$1,500 a year
Home palliative and day hospice A combined lifetime withdrawal limit of S$2,500
care per patient for day hospice and home palliative
care (adults and paediatrics)

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MediSave Care
MediSave Balance Monthly Withdrawal
Quantum
S$20,000 and above S$200
S$15,000 and above S$150
S$10,000 and above S$100
S$5,000 and above S$50
Below S$5,000 Nil

MediSave Limits for IP and ElderShield or CareShield Life Supplement Premiums

Additional Withdrawal Limit (AWL) for IP
Age next birthday AWL for IP policyholders16
40 and below S$300
41 to 70 S$600
71 and above S$900
Additional Withdrawal Limit (AWL) for ElderShield or CareShield Life Supplements
ElderShield or CareShield Life S$600 per calendar year per person insured
Supplements

16
https://www.cpf.gov.sg/member/infohub/educational-resources/read-this-before-buying-ip

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APPENDIX 9B
MediShield Life Benefits

Updated as of May 2023. Refer to MOH’s website 17 for the latest MediShield Life
benefits.

Inpatient/Day Surgery Claims limits

Daily Ward and Treatment Charges 18

- Normal Ward S$800 per day

- Intensive Care Unit Ward S$2,200 per day
*An additional claim limit of $200 per day applies for the first two inpatient days
- Psychiatric (Up to 60 days per policy year) S$160 per day
- Community Hospital(Rehabilitative) S$350 per day
- Community Hospital (Sub-acute) S$430 per day
- Inpatient Palliative Care Service (General) S$250 per day
- Inpatient Palliative Care Service S$350 per day
(Specialised)
Surgical Procedures A B C
- Table 1 A/B/C (less complex procedures) S$240 S$340 S$340
- Table 2 A/B/C S$580 S$760 S$760
- Table 3 A/B/C S$1,060 S$1,160 S$1,280
- Table 4 A/B/C S$1,540 S$1,580 S$1,640
- Table 5 A/B/C S$1,800 S$2,180 S$2,180
- Table 6 A/B/C S$2,360 S$2,360 S$2,360
- Table 7 A/B/C (more complex procedures) S$2,600 S$2,600 S$2,600
Implants S$7,000 per treatment
Radiosurgery, including Proton Beam Therapy – S$10,000 per course of treatment
Category 4
Autologous Bone Marrow Transplant S$6,000 per treatment
Treatment for Multiple Myeloma
Outpatient Treatment
Cancer Drug Treatment S$200 - S$9,600 per month,
depending on cancer drug
treatment
Cancer Drug Services S$3,600 per year
Radiotherapy for Cancer
- External (Except Hemi-Body) S$300 per treatment
- Brachytherapy S$500 per treatment
- Hemi-Body S$900 per treatment
- Stereotactic S$1,800 per treatment
- Proton Beam Therapy – Category 1 S$300 per treatment
- Proton Beam Therapy – Category 2 S$500 per treatment
- Proton Beam Therapy – Category 3 S$1,800 per treatment
Kidney Dialysis S$1,100 per month
Immunosuppressants for Organ Transplant S$550 per month

17
https://www.moh.gov.sg/home/our-healthcare-system/medishield-life/what-is-medishield-life/what-
medishield-life-benefits
18
Includes meal charges, prescription, professional charges, investigations and other miscellaneous
charges

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Health Insurance

Erythropoietin for Chronic Kidney Failure S$200 per month

Long-term Parenteral Nutrition S$1,700 per month
Maximum Claim Limits
Per Policy Year S$150,000
Lifetime No Limit

Deductible 19
(Based on age next birthday at the start of the policy year. Applicable for
admissions or treatments received on or after 1/3/2021.)
Ward Class / Treatment Age 80 and below 81 and above

Class C1 S$1,500 S$2,000

Class B2 and above S$2,000 S$3,000
(including stay in private
hospital)
Day Surgery S$1,500 S$2,000
Outpatient Treatments Not Applicable
1
Subsidised patients will follow the deductible for Class C and non-subsidised
patients will follow the deductible for class B2 for Community Hospital, Inpatient
Palliative Care Service, Short Stay Wards and Continuation of Autologous Bone
Marrow Transplant for Multiple Myeloma.
Co-insurance
Inpatient/Day Surgery
Claimable amount accumulated within a policy year
First S$5,0002 10%
Next S$5,000 5%
Above S$10,000 3%
Outpatient Treatment 10%
2
Inclusive of deductible

https://www.moh.gov.sg/home/our-healthcare-system/medishield-life/what-is-medishield-life/how-to-
19

make-a-medishield-life-claim

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 9. Part I Healthcare Financing

Insert Company Logo, if applicable

APPENDIX 9C

LIA Standardised Pre-Authorisation Form (To Be Completed By Attending Doctor)

PRE-AUTHORISATION FORM TO BE COMPLETED BY ATTENDING DOCTOR

(Indicate “NA” if not applicable.)

Fill dates in format “DDMMYYYY”

Name of Patient NRIC / FIN No

A. Details of Hospitalisation

Name of Principal Doctor and Clinic Name of Hospital / Surgery Centre

Preferred Ward Type Date of Admission Est. Length of Stay (No.

of days)
Private
 Day Surgery  2 Bed
 Standard Single Bed  4 Bed Is the condition typically managed on an
outpatient basis? If Yes, please provide
 Others: reason for this hospitalisation.
 No  Yes, reasons are:
Public/Restructured
 Day Surgery (subsidised)  Class B1/B1+
 Day Surgery (non-subsidised)  Class B2/B2+
 Class A  Class C

Date of first consultation Date of diagnosis/ Diagnosis / Provisional diagnosis in ICD 10

of symptoms provisional diagnosis AM with description

Date of onset of symptoms / Duration of symptoms Description of symptoms

Did the patient come to see you with a referral letter? Based on the information available to you,
 No  Yes does the patient have any of the following
major co-morbidities? (Note: Only co-
(If a referral letter is available, please attach a copy to speed
up the pre-authorisation process.) morbidities that have impact on the patient’s
treatment, impact on the duration of
hospitalisation, or which are medically related to
the patient’s condition, need to be indicated.)

Based on the information available to you, is the event Comorbidities Date of

for which pre-authorisation is being requested: diagnosis,
if available
 For a routine check-up/screening  Cancer
 Related to a clinical trial/study
 Related to self-inflicted injuries/attempted suicide  Stroke, Heart Failure,
 Related to alcohol/drug abuse Cardiovascular Disease
 Related to a congenital anomaly/genetic disorder  Diabetes

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Health Insurance

 Related to a mental/psychiatric disorder

 Hyperlipidaemia
 Related to an elective cosmetic procedure
 Related to a dental procedure
 Related to an STD or HIV/AIDS  Hypertension

Name of Clinic and Doctor who had treated the patient  Kidney Failure
for the above comorbidity, if available
 Other Significant Comorbidities
that impact the patient’s care
(Please state):

B. Best Estimated Costs S$

1. Total Professional Fees

Breakdown as: ……………
…………
TOSP Code and Description:

Surgeon fees S$
Anaesthetist fees S$

TOSP Code and Description:

Surgeon fees S$
Anaesthetist fees S$

TOSP Code and Description:

Surgeon fees S$
Anaesthetist fees S$

2. Total Attendance Fees

……………
…………

3. Total of Other Fees (E.g. Secondary treating doctors’ fees, surgical implants, medical
consumables, and other charges.)
Breakdown as:
a. S$
b. S$
c. S$
…………
d. S$ …………
…

4. Total Hospital Charges …………

…………
…
5. Total Bill Size = 1 + 2 + 3 + 4
…………
…………...

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 9. Part I Healthcare Financing

C. Principal Doctor’s Declaration & Signature

1. I represent and warrant that:

(a) I have personally examined and treated the Insured (i.e. patient) in respect of the medical condition
described above and that the information stated above represent my genuine and honest opinion of
his/her condition and my recommended treatment; and
(b) the answers given above are true, accurate and complete to the best of my knowledge and belief and
that no information has been withheld.

2. I agree and authorize (name of insurer) to release this medical information, with the patient’s consent
if such disclosure is required by the Financial Industry Disputes Resolution Centre Ltd (FIDReC) of
Singapore or any claim dispute resolution organisation.

Official Stamp of Hospital / Clinic

Name of Doctor: ________________________________

Doctor’s MCR: __________________________________

Doctor’s Signature and Date: ___________________________

© Copyright 2022 Life Insurance Association Singapore

Version 20220117 for implementation from April 2022

Source: https://www.lia.org.sg/media/3278/lia-pre-authorisation-form_-20220117.pdf

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Health Insurance

0 CHAPTER 9
PART II HEALTHCARE FINANCING

CHAPTER OUTLINE

7. ElderShield & ElderShield Supplements

8. CareShield Life & CareShield Life Supplements
9. Other Healthcare Financing Schemes Set Up By The Singapore Government

LEARNING OUTCOMES

After studying this chapter, you should be able to:

 describe how ElderShield and ElderShield Supplements work
 explain the shift from ElderShield to CareShield Life
 describe the enhanced benefits under CareShield Life
 describe other healthcare financing schemes set up by the Singapore Government:
- Pioneer Generation Package
- Merdeka Generation Package
- Interim Disability Assistance Programme for the Elderly (IDAPE)
- ElderFund
- MediFund

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Contents
CHAPTER OUTLINE ......................................................................................................... 196
LEARNING OUTCOMES .................................................................................................. 196
7. ELDERSHIELD & ELDERSHIELD SUPPLEMENTS ................................................... 199
A. Eligibility Criteria For Payment Of ElderShield Benefits ................................. 200
A1. Meets The Waiting Period Requirement................................................... 200
A2. Unable To Perform The Specified Number Of Activities Of Daily Living As
Defined ....................................................................................................... 200
A3. Meets The Deferment Period Requirement .............................................. 201
B. How To Make A Claim Under ElderShield? ..................................................... 201
C. How Are ElderShield Benefits Paid? ................................................................ 201
D. Non-Forfeiture Feature ..................................................................................... 201
E. Other Key Features Of ElderShield .................................................................. 202
F. Exclusions.......................................................................................................... 202
G. Termination Of Cover ....................................................................................... 202
H. Government Administration of ElderShield .................................................... 203
8. CARESHIELD LIFE AND CARESHIELD LIFE SUPPLEMENTS.................................. 203
A. Coverage ........................................................................................................... 204
B. Benefits Under CareShield Life ........................................................................ 205
C. CareShield Life Premiums ................................................................................ 205
D. Pioneer and Merdeka Generation Incentives .................................................. 207
E. Eligibility Criteria for Payment of CareShield Life Benefits ............................ 207
E1. Unable To Perform The Specified Number Of Activities Of Daily Living As
Defined ....................................................................................................... 207
E2. Meets The Deferment Period Requirement .............................................. 207
F. How to Make a Claim Under CareShield Life? ................................................ 207
G. Other Key Features of CareShield Life ............................................................. 208
9. OTHER HEALTHCARE FINANCING SCHEMES SET UP BY THE SINGAPORE
GOVERNMENT ......................................................................................................... 208
A. Pioneer Generation Package ............................................................................ 208
A1. Outpatient Care .......................................................................................... 209
A2. MediShield Life .......................................................................................... 209
A3. MediSave Top-ups ..................................................................................... 209
A4. Pioneer Generation Disability Assistance Scheme .................................. 209
A5. CareShield Life ........................................................................................... 209
B. Merdeka Generation Package........................................................................... 209
B1. Passion Silver Card Top-Ups ..................................................................... 210
B2. MediSave Top-Ups .................................................................................... 210

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B3. Outpatient Care .......................................................................................... 210

B4. MediShield Life .......................................................................................... 210
B5. CareShield Life ........................................................................................... 210
C. Interim Disability Assistance Programme for The Elderly (IDAPE) ................ 210
D. ElderFund .......................................................................................................... 212
E. MediFund .......................................................................................................... 212

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7. ELDERSHIELD & ELDERSHIELD SUPPLEMENTS

7.1 ElderShield is a long-term care insurance scheme launched in September

2002. It provides basic financial protection to those who need long-term care,
especially during old age.

7.2 Unlike MediShield Life, which is compulsory for all, ElderShield is an opt-out
scheme. That means that all Singapore Citizens (SCs) and Singapore
Permanent Residents (SPRs) can choose to opt-out of the insurance scheme if
they wish. For new cohorts born in 1980 and after, they would be enrolled into
CareShield Life instead of ElderShield on 1 Oct 2020 or when they turn 30,
whichever is later. Those born in 1979 or earlier have the option to join
CareShield Life if they do not have severe disability.

7.3 Premiums can be paid fully through MediSave. There are two ElderShield
schemes, namely ElderShield300 and ElderShield400. ElderShield300 was
launched on 30 September 2002 offering a cash payout of S$300 per month
for a maximum of 60 months. ElderShield400 was introduced in 2007 offering
an improved coverage with cash payout of S$400 per month for a maximum
of 72 months. SCs and SPRs who joined ElderShield after 30 September 2007
will be on the ElderShield400 scheme.

7.4 Before 1 November 2021, the Government had appointed three private
insurers, Aviva Ltd (now known as Singlife), Great Eastern Life Assurance Co
Ltd and Income Insurance Limited, to offer ElderShield. Any CPF member who
is a SC or SPR and who attained the age of 40 years was automatically
covered under the scheme if he/she did not opt out. SCs or SPRs who opted
out of ElderShield and thereafter wished to opt back in would need to undergo
medical underwriting.

7.5 The Government had taken over the ElderShield administration from 1
November 2021, and ElderShield had become a closed scheme from 1 August
2021 onwards. New cohorts born in 1980 or later were covered under
CareShield Life from 1 Oct 2020 (more details in Section 7 of this Chapter), but
SCs and SPRs born in 1979 or earlier could still opt in to the ElderShield
scheme up till 1 Aug 2021 if they were below 65. Existing ElderShield
policyholders can continue to remain covered under the scheme with no
changes to their coverage and benefits.

7.6 It should be noted that existing ElderShield insureds who wish to obtain
higher severe disability insurance coverage can purchase ElderShield
Supplements. ElderShield Supplement plans complement the current
ElderShield scheme, by offering additional benefits such as:
(a) increasing the monthly payout; and/or
(b) extending the payout period.

7.7 To purchase and maintain an ElderShield Supplement, an insured must have

an ElderShield policy. Premiums for ElderShield Supplement can be paid
using MediSave (up to a limit of S$600 per insured per calendar year) and/or
by cash. As ElderShield and ElderShield Supplements are structured as stand-

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alone policies, claims can be made under both policies if the insured fulfils the
claim eligibility criteria. Supplement plans are currently (as of May 2023) only
offered by the three approved insurers who were administering ElderShield
prior to 1 November 2021.

A. Eligibility Criteria For Payment Of ElderShield Benefits

A1. Meets The Waiting Period Requirement

7.8 There is a waiting period of 90 days from the policy commencement date. The
benefit will not be payable if the insured becomes disabled in the first 90 days
of coverage. Instead, the insurer will terminate the policy and refund all the
premiums paid. However, the waiting period does not apply if the disability is
due solely to an accident. The waiting period is waived for policyholders who
were auto enrolled.

A2. Unable To Perform The Specified Number Of Activities Of Daily Living As

Defined

7.9 The ElderShield scheme will pay a monthly benefit of either S$300 up to 60
months, or S$400 up to 72 months, depending on the type of the scheme in
which the CPF member is covered. It pays the benefits if the insured is unable
to perform at least three of the six Activities of Daily Living (ADLs) as
illustrated in the diagram below:

Dressing
Washing Feeding

Activities of Daily Living (ADLs)

Toileting
Transferring
Mobility

7.10 The ADLs are defined as below:

(a) Washing – the ability to wash in the bath or shower (including getting
into and out of the bath or shower) or wash by other means.
(b) Dressing – the ability to put on, take off, secure and unfasten all
garments and, as appropriate, any braces, artificial limbs or other
surgical and medical appliances.
(c) Feeding – the ability to feed oneself after the food has been prepared
and made available.
(d) Toileting – the ability to use the lavatory or manage bowel and bladder
function through the use of protective undergarments (e.g. diapers) or
surgical appliances (e.g. urinary catheters) if appropriate.
(e) Mobility – the ability to move indoors from room to room on level
surfaces.
(f) Transferring – the ability to move from a bed to an upright chair or
wheelchair, and vice versa.

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A3. Meets The Deferment Period Requirement

7.11 There is a deferment period of 90 days starting from the claim date, i.e. the
date that the claim application is received by the AIC. If the insured is still
disabled after this period, he will then be eligible for the benefit, provided that
he satisfies the other conditions as specified in the policy. If he recovers from
the disability within the period, then no benefits are payable.

7.12 However, the deferment period will not apply if the insured suffers a relapse
from the same cause within 180 days of recovery, provided that he has been
disabled for at least 90 days during the first disability.

B. How To Make A Claim Under ElderShield?

7.13 To make a claim, the insured has to make an appointment with an MOH-
accredited severe disability assessor to have a disability assessment done.
The assessor will then complete the assessment form and submit it to the
Agency for Integrated Care (AIC). The list of accredited assessors can be found
on the AIC’s website.

7.14 Next, the insured needs to complete a claim form. In the event that he is not
able to complete it on his own, his immediate family member or caregiver
may do so on his behalf.

7.15 It will cost S$100 for an assessment at the assessor’s clinic, and S$250 if the
insured requires the assessor to make a house call. The fees for the initial or
subsequent assessments will be reimbursed to the insured by AIC if the
outcome of the assessment is severe disability.

C. How Are ElderShield Benefits Paid?

7.16 ElderShield benefits are payable on a monthly basis. The premium under the
policy will be waived during the benefit payout period. If an insured recovers
from his disability, the monthly cash payout will stop and the premium
payment will re-commence. However, if he becomes disabled again some
years later, he can still make a claim under his policy, as long as he has not
claimed more than 60 months or 72 months in total, depending on the
ElderShield plan under which the insured is covered. The cash payout under
this scheme is not tied to institutional care, and can be used to pay for any
expenses, such as home nursing services, nursing home stay, day
rehabilitation or medical bills, etc.

D. Non-Forfeiture Feature

7.17 ElderShield premiums are pre-funded. This enables the policy to acquire a
reserve. The accumulated reserve enables the insured to enjoy reduced
benefits (i.e. the policy will be converted into a paid-up policy) if he decides to
stop paying his premiums after the policy has been in force for a number of
years.

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7.18 For example, an insured who joins ElderShield at the age of 40 years will be
eligible for a reduced benefit of around S$100 per month if he decides to stop
paying his premiums 11 years after the policy has been in force.

E. Other Key Features Of ElderShield

7.19 The other key features of the ElderShield scheme are described below:
(a) It is guaranteed renewability on an annual basis.
(b) It provides worldwide coverage.
(c) It has minimum (i.e. 40 years old) and maximum entry age (i.e. 64 years
old).
(d) A grace period of 75 days is allowed for payment of the overdue
premiums.
(e) Reinstatement of the policy is allowed within 180 days from the expiry of
the grace period, subject to evidence of insurability at the insured’s
expense and payment of the overdue premiums with interest.
(f) The insurer has the right to appoint an assessor to examine the insured
periodically.
(g) Where the insured is overseas at the time of a claim, the insurer has the
right to commute the benefit payments to a single payment reflecting
the present value of future benefit payments, or withhold the claim
payment if it is unable to assess the claim after having made reasonable
attempts to do so.
(h) There is no cash surrender value.
(i) There is a free-look period of 60 days from the policy commencement
date during which the insured may cancel his policy and receive a full
refund of the premiums paid.

F. Exclusions

7.20 The ElderShield policy does not cover any disability arising directly or
indirectly, wholly or partly, from any one of the following occurrences:
(a) self-inflicted injury, suicide or attempted suicide;
(b) alcoholism or drug addiction; or
(c) war, whether declared or undeclared.

7.21 CPF members who are suffering from pre-existing disabilities, will not be
covered under ElderShield.

G. Termination Of Cover

7.22 The cover under the ElderShield policy will be terminated upon the occurrence
of any one of the following events:
(a) expiry of the grace period if the ElderShield policy is not eligible for the
non-forfeiture benefit (i.e. it has been in force for too short a period for it
to acquire sufficient reserves to be converted into a paid-up policy);

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(b) death of the insured;

(c) date in which the last benefit payment has been received; or
(d) date in which the written notice from the insured to cancel the policy is
received by the insurer (if the policy does not have sufficient reserves, it
will not be converted into a paid-up policy).

H. Government Administration of ElderShield

7.23 From 1 November 2021, the Government has taken over the administration of
ElderShield from private insurers (Singlife, Great Eastern Life Assurance Co
Ltd, and Income Insurance Limited). This allows ElderShield policyholders to
upgrade to CareShield Life more smoothly, and benefit from improvements to
the claims assessment process that is being implemented for CareShield Life.

7.24 ElderShield policyholders who did not upgrade to CareShield Life remain
covered by their existing ElderShield policies. The Government administers
the ElderShield scheme on a not-for-profit basis. In the event that the actual
claims experience turns out better than expected, there will continue to be
premium rebates for ElderShield policyholders.

7.25 Holders of ElderShield Supplements were not affected. They continue to be

served by their existing ElderShield Supplement insurers.

8. CARESHIELD LIFE AND CARESHIELD LIFE SUPPLEMENTS

8.1 CareShield Life was introduced in 2020 and is administered by the

Government. As Singapore’s population ages and more people need long-
term care, the role of risk-pooling via insurance was strengthened to help
Singaporeans better prepare for their long-term care needs.

8.2 CareShield Life provides worldwide coverage with payouts as long as one has
severe disability. Singaporeans will continue to be covered for life once they
have completed paying all their premiums, which will happen in the year they
reach the age of 67 or for 10 years, whichever is longer. Regardless of the
place of residence, Singaporeans will remain covered, and be able to make a
claim and receive payouts, if they have severe disability and continue to pay
their premiums.

8.3 In order to make a claim, the insured needs to be assessed by a MOH-

accredited severe disability assessor as being unable to perform at least three
out of the six Activities of Daily Living (ADLs).

8.4 CareShield Life is administered by the Government on a not-for-profit basis,

and offers:
(a) better protection and higher payouts that increase over time, so that
claimants can better afford their basic long-term care needs; and
(b) protection for life.

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8.5 To ensure that no one will lose CareShield Life coverage due to genuine
inability to pay premiums, the Government provides the following premium
subsidies and support:
(a) Means-tested premium subsidies of up to 30% of base premiums of
CareShield Life, to help lower- to middle-income households;
(b) Participation incentives of up to S$2,500 for Singapore Citizens, if they
join CareShield Life by 31 December 2023, to encourage those born in
1979 or earlier to join CareShield Life;
(c) Additional participation incentives of S$1,500 for Merdeka and Pioneer
Generation citizens if they join CareShield Life by 31 December 2023; and
(d) Additional Premium Support for Singaporeans who are unable to pay
their CareShield Life premiums even after premium subsidies, so that no
one will lose coverage under CareShield Life due to genuine inability to
pay premiums.

8.6 ElderShield became a closed scheme from 1 August 2021. However, existing
ElderShield300 and ElderShield400 policyholders can continue participating in
the ElderShield scheme with no change to their benefits and coverage, unless
they choose to join CareShield Life.

8.7 It is important to note that any CareShield Life policyholder who wishes to
obtain higher long-term care insurance coverage can also purchase
Supplements. Supplements are plans which complement one’s basic
CareShield Life plan by offering additional benefits, such as higher monthly
payout amounts, which enhances the coverage.

8.8 An insured must have a CareShield Life or ElderShield policy in order to

purchase a Supplement. Premiums for Supplements can be paid using
MediSave (up to a limit of S$600 per insured per calendar year) and/or by
cash. As CareShield Life and Supplements are structured as stand-alone
policies, claims can be made under both policies if the insured fulfils the claim
eligibility criteria. The Supplement plans are currently (as of May 2023) only
offered by the three insurers (Great Eastern, Income Insurance Limited,
Singlife) who were previously administering ElderShield.

A. Coverage

8.9 For SCs and SPRs born in 1980 or later, CareShield Life is universal. There is
no need to apply for CareShield Life. They are automatically covered on their
30th birthday or when the scheme was launched in October 2020, whichever is
later, even if they have pre-existing disabilities or medical conditions.

8.10 SCs and SPRs born in 1979 or before, joining CareShield Life is optional. They
can choose to apply to join CareShield Life from 6 November 2021 onwards as
long as they do not have any severe disability. However, they can still join the
scheme if they have pre-existing conditions (e.g. diabetes, hypertension).
There is no age limit to join CareShield Life. However, once they join
CareShield Life, they will not be able to leave the scheme after the 60-day free
look period expires. The following are worth noting:

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(a) To increase the convenience of joining, SCs and SPRs born between
1970 and 1979, and who are insured under ElderShield400, had been
auto-enrolled into CareShield Life from 1 December 2021. They have up
to 31 December 2023 to opt-out of the scheme. If they opt-out, they will
be reinstated onto ElderShield400.
(b) Unlike for existing SCs and SPRs born in 1979 or before, it is mandatory
for new SCs and SPRs to join CareShield Life, as long as they do not
have any pre-existing severe disability.

B. Benefits Under CareShield Life

8.11 CareShield Life features higher payouts that increase over time with no cap on
payout duration, to provide better protection against the uncertainty of long-
term care costs in the event of severe disability. The following points are
worth noting:
(a) Lifetime cash payouts are given for as long as the policyholder has
severe disability.
(b) Payouts increase annually until age 67 or when a successful claim is
made, whichever is earlier, with payouts starting at S$600 per month in
2020.

8.12 For more details on the estimated monthly payouts applicable, please refer to
https://www.moh.gov.sg/careshieldlife/about-careshield-life

C. CareShield Life Premiums

8.13 The CareShield Life scheme makes use of pre-funded premiums, where the
insured CPF members pay more than the cost of their health risk while they
are younger, so as to to cover for the higher risk in their later years. Insured
CPF members will pay premiums until the year they reach the age of 67 or for
10 years, whichever is longer, but will remain insured for life, even after
completion of the premium payments. Premiums are not guaranteed and are
subject to review. The premiums are fully payable by MediSave.

8.14 For SCs born in 1980 or later, premiums are paid from the age of enrolment
until age 67. Premiums will increase over time, to support payout increases.
For the first five years of CareShield Life’s implementation, payouts and
premiums will both increase by 2% per year. Beyond 2025, an independent
CareShield Life Council will advise the Government on premium and payout
adjustments based on an actuarially sound adjustment framework.

8.15 SCs born in 1979 or earlier (optional cohorts) will pay a base premium. The
base premium is generally paid from the age of enrolment until age 67, but
Singapore residents who join at age 59 or older will be able to spread their
catch-up premiums over 10 years, beyond age 67. Other points in this regard
are as follows:

(a) Base premiums will increase over time to support payout increases, until
the year policyholders turn 67. Premiums and payouts do not increase
after the year policyholders turn 67. For the first five years of CareShield

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Life’s implementation, payouts and base premiums for policyholders age

67 and below will both increase by 2% per year.

(b) ElderShield 400 policyholders who have been consistently on an

ElderShield policy (i.e. never opted out, or upgraded from ElderShield
300 to ElderShield 400 in 2007 when they had the chance to) will only
pay the base premium each year, if they join CareShield Life in 2021.

(c) Other groups, including existing ElderShield 300 policyholders, existing

ElderShield 400 policyholders who upgraded to CareShield Life later
than 2021 as well as those not insured under ElderShield, will need to
pay an additional catch-up component (which differs for each group), as
they would not have paid as much premiums as those in their same
cohort who were consistently insured under the ElderShield 400 scheme
and upgraded to CareShield Life in 2021. The catch-up component will
be paid over 10 years and will remain flat.

The diagram below further illustrates the points highlighted above.

Illustration of Base Premium and Catch-up Component Payable by Singaporeans from Optional
Cohorts who join CareShield Life

Note: Optional Cohorts who join CareShield Life at age of 59 or older will end their premium payment after age 67 as
they will have a 10-year premium payment term.
Diagram not drawn to scale

8.16 SCs may obtain estimates of the premiums and subsidies through
www.careshieldlife.sg.

8.17 CareShield Life premiums are fully payable by MediSave. Subsidies and
support are available to make sure the premiums remain affordable, so the
insured does not need to worry about losing coverage if he/she has a genuine
inability to pay premiums.

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D. Pioneer and Merdeka Generation Incentives

8.18 Pioneer and Merdeka Generation seniors who join CareShield Life by 31 Dec
2023, will receive additional participation incentives of S$1,500, spread over
10 years (i.e. total participation incentives of S$4,000 for MG and PG
members).

8.19 Pioneer and Merdeka Generation seniors are classified as follows:

(a) Pioneer Generation seniors refer to living Singapore Citizens born on or
before 31 December 1949 and obtained citizenship on or before 31
December 1986.
(b) Merdeka Generation seniors refer to living Singapore Citizens who were
born from 1 January 1950 to 31 December 1959 and had obtained
citizenship on or before 31 December 1996; or
(c) those who were born on or before 31 December 1949, had obtained
citizenship on or before 31 December 1996 and do not receive the
Pioneer Generation Package.

E. Eligibility Criteria for Payment of CareShield Life Benefits

8.20 The eligibility criteria for CareShield Life benefits is similar to that of
ElderShield.

E1. Unable To Perform The Specified Number Of Activities Of Daily Living As

Defined

8.21 CareShield Life will pay a monthly benefit of at least S$600 for as long as the
insured has severe disability. It pays the benefits if the insured is unable to
perform at least three of the six Activities of Daily Living (ADLs) as defined.

E2. Meets The Deferment Period Requirement

8.22 There may be a deferment period of 90 days starting from the claim date, i.e.
the date that the claim application is received by the AIC. If the insured is still
disabled after this period, he will then be eligible for the benefit, provided that
he satisfies the other conditions as specified in the policy.

F. How to Make a Claim Under CareShield Life?

8.23 To make a claim, the insured has to make an appointment with an MOH-
accredited severe disability assessor to have a disability assessment done.
The assessor will then complete the assessment and submit it to AIC directly.
The list of accredited assessors can be found on the Agency of Integrated Care
(AIC)’s website.

8.24 Next, the insured needs to submit a claim application to AIC. In the event that
he is not able to complete it on his own e.g. if he lacks mental capacity, his
donee/deputy/immediate family member or caregiver may do so on his behalf.

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8.25 The fees for the first CareShield Life disability assessment are waived
regardless of whether the claim is eventually assessed to be payable.
Thereafter, the fees for subsequent assessments will only be reimbursed to
the insured by AIC if the claim is assessed to be payable. More details on the
applicable assessment fees can be found on AIC’s website.

G. Other Key Features of CareShield Life

8.26 The other key features of the CareShield Life scheme are stated below:
(a) It is guaranteed renewable on an annual basis.
(b) It provides worldwide coverage.
(c) It has a minimum entry age of 30 years old, but no maximum entry age.
(d) The CareShield Life policy will be terminated if the insured is no longer a
SC or SPR.
(e) There is no cash surrender value or death benefit.

9. OTHER HEALTHCARE FINANCING SCHEMES SET UP BY THE SINGAPORE

GOVERNMENT

9.1 Besides the Government subsidies, MediSave and insurance schemes as

discussed above, the Government has also put in place a number of other
schemes, to help Pioneers and needy Singaporeans. The schemes are as
follows:
(a) Pioneer Generation Package;
(b) Merdeka Generation Package;
(c) Interim Disability Assistance Programme For The Elderly (IDAPE);
(d) ElderFund; and
(e) Medifund.

A. Pioneer Generation Package

9.2 The Government introduced the Pioneer Generation Package in 2014 to honour
and thank the Pioneer Generations for their significant contributions in the early
years of nation-building.

9.3 The “Pioneer Generation” refers to living Singaporeans who meet two criteria,
namely:
(a) aged 16 years and above in 1965 (born on or before 31 December 1949,
which also means that they were aged 65 years and above in 2014); and
(b) obtained citizenship on or before 31 December 1986.

9.4 The package provides the benefits (as described below) which the Pioneer
Generation will enjoy for life.

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A1. Outpatient Care

(a) Additional 50% off remaining bill for subsidised services and
medications at polyclinics and Specialist Outpatient Clinics.
(b) Special subsidies at participating GP and dental clinics under CHAS.
(c) Cash of S$1,200 a year for those with moderate to severe functional
disabilities under the Pioneer Generation Disability Assistance Scheme.

A2. MediShield Life

9.5 Pioneers will receive special Pioneer Generation Subsidies for their
MediShield Life premiums.

A3. MediSave Top-ups

9.6 All Pioneers will receive annual MediSave top-ups for life, which range from
S$250-S$900 depending on birth cohort. These top-ups can be used to further
offset premiums for MediShield Life, ElderShield, and CareShield Life. Older
Pioneers with serious pre-existing conditions will receive additional MediSave
top-ups of S$50-S$200 from 2021-2025, to help with their higher MediShield
Life premiums.

A4. Pioneer Generation Disability Assistance Scheme

9.7 This scheme is for Pioneers who permanently need at least moderate
assistance in a minimum of three of these ADLs:
 Eating;
 Bathing;
 Dressing;
 Transferring;
 Toileting; or
 Walking or moving around.

9.8 Lifelong cash assistance of S$100 each month is provided to help Pioneers
with their care expenses.

A5. CareShield Life

9.9 Pioneers will receive CareShield Life Additional Participation Incentives of

S$2,500 if they join CareShield Life by 31 December 2023. Do refer to earlier
section of this Chapter for more information on this.

B. Merdeka Generation Package

9.10 The Government introduced the Merdeka Generation Package (MGP) in 2019
to honour and thank our Merdeka Generation (MG) for their contributions. The
MGP supports the aspirations of MG seniors in their silver years by helping
them to stay active and healthy, and providing them better peace of mind over
future healthcare costs.

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9.11 The “Merdeka Generation” refers to living Singaporeans who:

(a) were born from 1 January 1950 to 31 December 1959, and
(b) had obtained citizenship on or before 31 December 1996.

9.12 The MGP is also extended to living Singaporeans who:

(a) were born on or before 31 December 1949,
(b) had obtained citizenship on or before 31 December 1996, and
(c) do not receive the Pioneer Generation Package.

9.13 The package comprises the following benefits:

B1. Passion Silver Card Top-Ups

9.14 MG seniors receive a one-time S$100 top-up to their PAssion Silver cards.
They can use this to pay for use on active ageing programmes, public
transport, entries to swimming pools and other purchases at all EZ-Link
merchants.

B2. MediSave Top-Ups

9.15 MG seniors receive a MediSave top-up of S$200 per year for five years, from
2019 to 2023. This will help them save more for their healthcare needs. This is
on top of the GST Voucher – MediSave top-ups that eligible seniors aged 65
and above receive every year.

B3. Outpatient Care

(a) Additional 25% off remaining bill for subsidised services and
medications at polyclinics and Specialist Outpatient Clinics.
(b) Special subsidies at participating GP and dental clinics under CHAS.

B4. MediShield Life

9.16 MG seniors receive additional Merdeka Generation Subsidies for their

MediShield Life premiums, which is on top of other premium subsidies that
the seniors may receive.

B5. CareShield Life

9.17 MG seniors will receive CareShield Life Additional Participation Incentives of

S$2,500 if they join CareShield Life by 31 December 2023. Do refer to earlier
section of this Chapter for more information on this.

C. Interim Disability Assistance Programme for The Elderly (IDAPE)

9.18 IDAPE was launched by the Government to take care of Singaporeans who
were not eligible to join the ElderShield scheme, when it was launched in
September 2002, either because they exceeded the maximum entry age or

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they had a pre-existing disability. It is aimed at helping this group of people to

cope with their medical expenses, in the event that they develop severe
disability. Individuals covered under the scheme need not pay any premiums.

9.19 A Singaporean will qualify for IDAPE if:

(a) He is unable to perform three or more of the 6 Activities of Daily Living

(ADL) - washing, feeding, dressing, toileting, mobility and transferring.

(b) He is a Singapore citizen born before 30 September 1932 OR born

between 1 October 1932 and 30 September 1962 (both dates inclusive) but
with pre-existing disabilities as at 30 September 2002.

(c) His per capita household monthly income is S$2,800 or less OR he has no
household income and is living in a residence with Annual Value of
S$13,000 and below.

9.20 The payment under the scheme is dependent on the individual’s per capita
household income as shown in Table 9.4.

Table 9.4: IDAPE Payout

Per Capita Household Income* IDAPE Payout

(With Effect From 1 July 2013)
(a) S$0 to S$2,000 (a) S$250 per month for up to 72 months
(b) S$2,001 to S$2,800 (b) S$150 per month for up to 72 months
*An IDAPE applicant from a household with no income will qualify for the S$250 monthly
payout if the annual value of his place of residence is S$13,000 or lower.

Source: MOH Website

9.21 IDAPE is currently administered by the Agency for Integrated Care (AIC). Other
than the fact that the payout is lower than the ElderShield scheme, the
definition of disability and the claim procedures are the same as those for
ElderShield with the following exceptions.
(a) those making claims under IDAPE will be subject to a means testing
administered by the Ministry of Health Holdings (MOHH); and
(b) the recipient of the payout will need to pay S$100 for an assessment at the
assessor’s clinic, and S$250 if the recipient requires the assessor to make
a house call. The assessment fees will be reimbursed to the recipient, by
AIC, upon successful application.

9.22 As you can see, the payouts under ElderShield and IDAPE are basic and limited
to 72 months. Those on Eldershield who wish to have higher payouts or longer
payout periods, and able to afford the premiums for the extra coverage, can
consider purchasing additional Long-Term Care Insurance coverage. Existing
and prospective CareShield Life clients can also purchase additional Long-Term
Care Insurance coverage, if they wish to have higher payouts.

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D. ElderFund

9.23 ElderFund is a discretionary assistance scheme launched on 31 January 2020. It

is targeted at lower-income Singapore Citizens aged 30 and older, with severe
disability, low Medisave balances, inadequate personal savings and are not
able to benefit from CareShield Life, ElderShield, and the Interim Disability
Assistance Programme for the Elderly (IDAPE). The goal is to meet their long-
term care needs. Eligible Singapore Citizens can receive up to S$250 cash per
month for as long as they remain eligible, and meet the terms and conditions
needed for receipt of payment.

E. MediFund

9.24 MediFund is an endowment fund set up by the Government. It provides a safety

net for needy Singaporeans who face difficulties paying for their remaining
healthcare bills after Government subsidies, insurance and MediSave.

9.25 MediFund Silver and MediFund Junior are carved out from MediFund to
provide more targeted assistance for the needy elderly and children
respectively.

9.26 As an endowment fund, interest income generated from the capital sum are
allocated to MediFund-approved healthcare institutions, to assist with the
healthcare bill payments of needy patients. Every MediFund-approved
institution has an independent MediFund Committee to consider and approve
applications, and decide on the appropriate quantum of assistance.

9.27 To apply for MediFund assistance, one must:

(a) be a Singapore citizen;

(b) be a subsidised patient;
(c) have received or require treatment from a MediFund-approved institution;
and
(d) have difficulties paying for his/her remaining healthcare bills after tapping
on Government subsidies and other available means, including
MediShield Life and MediSave.

9.28 The patient’s application will be assessed holistically by the medical social
workers and the MediFund Committees, taking into consideration his and his
family’s financial, health and social circumstances.

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09
HEALTHCARE FINANCING PART I & II

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Singapore government • Government provides funding to public healthcare institutions (e.g. public
subsidies hospitals, national specialty centres and polyclinics), as well as selected private
clinics and voluntary welfare organisations (VWOs).
• Means-test is used to target subsidies, so that needy patients can receive
more help; lower-income patients receive more subsidies than higher-income
patients.
Singapore's Healthcare Through a mixed financing system (see figure below), Singapore has secured good
Financing Philosophy healthcare outcomes for its population. For example, life expectancy at birth has
increased from 80.3 in 2006 to 83.93 in 2022, and infant mortality rate improved
from 2.6 per thousand live births to 1.8 per thousand live births as of 2020. The
Government has done so with a current national health expenditure of about 4.4%
of the country’s Gross Domestic Product (GDP) in 2019, a percentage which is low
among developed countries (although this is expected to grow with an ageing
population over the years).
Main components of
Singapore’s Healthcare
Financing System

MediSave • National healthcare savings scheme in Singapore under the Central Provident
Board (CPF) umbrella.
• Contributions to the Medisave Account (MA) are subject to a maximum amount,
known as the Basic Healthcare Sum (BHS). The BHS is designed to be enough
for a CPF member’s basic, subsidised healthcare needs in his old age. Hence,
amounts in the MA up to the BHS cannot be withdrawn as cash.
• Amounts above the BHS will flow to the CPF member’s Special or Retirement
Accounts to boost his monthly payouts. If the CPF member has already met his
Full Retirement Sum, the amounts will flow to his Ordinary Account, and can be
withdrawn as cash from the age of 55 years.
• Can be used to pay for the CPF member’s medical expenses at all accredited
institutions, in both the public and private sector.
• Can also be used to pay for medical expenses of the CPF member’s approved
dependents, namely his spouse, children, parents, siblings, and grandparents. If
paying for a sibling or grandparent, the patient must be a Singapore Citizen or
Singapore Permanent Resident (SPR).

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Community Health Assist The Community Health Assist Scheme (CHAS) enables eligible Singapore Citizens
Scheme (CHAS) to receive subsidies for medical and/or dental care at participating General
Practitioner (GP) and dental clinics. With effect from Nov 2019, this scheme has
been expanded to include all Singapore Citizens regardless of their income levels.

The colour of the CHAS card indicates the subsidy tier that cardholders are entitled
to, namely the CHAS Blue, Orange or Green tier. All Pioneer Generation (PG) and
Merdeka Generation (MG) seniors also receive special subsidies at CHAS clinics.

The amount that cardholders pay will be based on the fees charged by the clinic,
less the CHAS subsidies. The fees will vary according to each patient’s condition and
clinic’s charges.
Uses of MediSave Account
Uses of Medisave Items that can be paid using MediSave

Outpatient Selected outpatient treatments such as:

Treatments • Approved chronic conditions under the chronic
disease management programme
• Vaccinations
• Flexi-MediSave for the elderly
• Health screenings
Inpatient Treatments Inpatient care which includes:
• Inpatient episodes
• Inpatient psychiatric episodes
• Day surgery
• Assisted Conception Procedures
Long-Term Care Long-Term Care treatments which include:
• Rehabilitative care
• Palliative care
• Disability care
Insurance Premiums Premium payments of:
• MediShield Life
• ElderShield/CareShield Life
which can be fully paid with MediSave
• Integrated Shield Plans and ElderShield/CareShield
Life supplements
which are subject to withdrawal limits periodically
reviewed by MOH
How much Medisave can The use of MediSave is subject to:
be used • Withdrawal Limit.
• Additional Withdrawal Limit (AWL).

Payments via MediSave are allowed in all public healthcare institutions, as well as
approved private hospitals and medical institutions

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Distribution Of MediSave • If a patient was hospitalised just before death and had authorised the use of his
Upon Demise MediSave to pay for his medical bill, his MediSave balance would be used in full,
without being subject to the existing MediSave withdrawal limits, to pay for his
last inpatient medical bill.
• If the patient had not authorised the use of his MediSave before his demise, his
immediate family member (spouse, parent, or child who is aged 21 years and
above), or donee or deputy can also do so for the last inpatient medical bill,
provided that it has not been paid out to the patient’s nominated beneficiaries.
• In the event that the patient does not have any immediate family member,
or donee or deputy to authorise the use of the patient’s MediSave, a relative
who has been taking care of the patient may also write to MOH through the
hospital to seek approval for the relative to authorise the withdrawal of patient’s
MediSave, to pay for the last inpatient medical bill.
• Remaining MediSave balance, after the payment of the last medical bill, would
be distributed to the nominated beneficiaries of the patient’s CPF account if a
nomination was made before his death. If there was no nomination made, the
balance in the deceased patient’s MA would be distributed by the Public Trustee
to his family members under the intestacy laws for non-Muslims, or the Muslim
inheritance law for Muslims.
MediShield Life • Basic healthcare insurance scheme.
• Covers all Singapore Citizens and Singapore Permanent Residents against large
medical bills for life, regardless of age or health conditions.
• The claim limits are sized to cover subsidised bills incurred for hospitalisation in
class B2/C wards, day surgery, and selected costly outpatient treatments (e.g.,
dialysis and chemotherapy) in the public hospitals.
• However, MediShield Life benefits are designed based on Class B2/C bills, so
as to keep premiums affordable. Those who would like additional coverage in
Class A/B1 wards or private hospitals may consider buying Integrated Shield
Plans (IP).
• No need to apply for MediShield Life. All SCs and PRs are automatically covered
under MediShield Life from 1 Nov 2015. New SCs are covered from birth or
from the day they attain citizenship. PRs are covered from the day they attain
permanent residency.
• MediShield Life premiums may be fully paid from MediSave.
• Please refer to the Study Text for a list of treatment items, procedures,
conditions, activities which are not covered by MediShield Life and cannot be
claimed.
MediShield Life Premiums • Actuarially priced based on the health risks and expected healthcare utilisation
of each age group so that each age group’s payouts are broadly supported by
their own premiums.
• Those with pre-existing medical conditions can enjoy coverage for their
conditions. Only those with serious pre-existing medical conditions listed in the
MOH website need to pay a nominal Additional Premium of 30% for the first 10
years, in addition to the standard MediShield Life premiums.
• One can pay premiums from own MediSave, or family members may pay one’s
premium using their MediSave. Parents may also tap on the MediSave Grant for
newborns to pay for their child’s MediShield Life premiums.
How Are MediShield Life • Pays on a reimbursement basis, subject to the claim limits imposed on the
Claim Payouts Computed? covered medical expenses, as well as deductible, co-insurance and pro-ration
factors.
• The deductible is the fixed amount payable by the insured each policy year (the
year following his policy renewal month), before the MediShield Life payout
starts. The deductible is payable only once every policy year.
• Co-insurance is the patient’s share of the claimable amount which the insured
will have to pay, along with the deductible.

Please refer to the Study Text for example of how the reimbursement under
MediShield Life is arrived at.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Integrated Shield Plans Integrated Shield Plans (IPs) are MediSave-approved hospitalisation insurance plans
made up of two parts.
• MediShield Life component administered by the CPF Board.
• An additional private insurance coverage component administered by approved
private insurers, typically to cover Class A/B1 wards of public hospitals or
private hospitals.

Following the implementation of MediShield Life on 1 November 2015, MediShield

Life automatically replaced the MediShield component of IPs. Thus, those who have
IPs are already covered by MediShield Life, and there is no duplication of coverage
between IPs and MediShield Life.
Consideration on • With the different IPs available, it is necessary for the sellers of such plans to
Integrated Shield Plans (IP) understand the different plans offered in the insurance market, and to advise
their prospective clients, based on the needs and long-term affordability of each
individual client’s position.
• As part of due diligence, clients should be informed of the key differences
in premiums, benefits, exclusions, deductibles, co-insurance and other co-
payment features between the various IPs offered by their insurer, versus
MediShield Life. There are different benefits provided in the IP policy, and plans
can be “as charged” or “non -as-charged” (i.e. they have sub-limits imposed).
Information provided should be easy to understand, unambiguous and clearly
explained to help clients make an informed decision.
• Clients should consider if they would wish to stay in a private or subsidised
ward in a public hospital, or in a private hospital, and if they wish to choose
their own doctors.
• Clients should consider if they can afford their IP premiums in the long term as
the policyholders may have to pay a substantial portion of their IP premiums in
cash, especially at the older ages.
• Unlike MediShield Life which provides coverage for pre-existing medical
conditions (with Additional Premiums for the first 10 years), the coverage for
the private insurance component of the IP may be declined or imposed with
exclusions for pre-existing conditions. The private insurance component may
also have premium loading, arising from pre-existing conditions.
How MediSave can be used MediSave can be used to pay premiums for IPs, either in full or in part, depending
to meet a CPF member’s on the age group and the IP plan type. From 1 November 2015, MediSave use for
healthcare needs and buy the additional private insurance component of the IP premiums is subject to the
approved Medical Expense new Additional Withdrawal Limit (AWL). The AWL is set per insured person per
Insurance? policy year, as stated below:
• Age Next Birthday (ANB) 40 years and below: S$300
• ANB 41 to 70 years: S$600
• ANB 71 years and above: S$900
How MediShield Life • Premium Subsidies for lower- to middle-income.
premiums are kept • Pioneer and Merdeka Generation Subsidies.
affordable? • COVID-19 Subsidies.
• Additional premium support.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
How MediShield Life MediShield Life Scheme Integrated Shield Plan (IP)
interacts with Integrated
Shield Plans? It is administered by the CPF Board It is administered by private insurers, as
approved by MOH.
Its coverage is sized for stays in Class B2/C It provides for enhanced coverage beyond
wards of public hospitals. MediShield Life, with various plan types
available for stays in private hospitals and/
or Class A/B1 wards of public hospitals.
It covers all pre-existing conditions. Coverage for the private insurance
component of the IP may be declined
or imposed with exclusions and/or
premium loading, arising from pre-existing
conditions.
There is no minimum or maximum age It may have a minimum or maximum entry
limit. age limit.
There are sub-limits applicable. It may have sub-limits, although most do
not have sub-limits.
MediShield Life premiums are fully payable MediShield Life component of the IP is
by MediSave. fully payable by MediSave, while private
insurance component of the IP is payable
by MediSave up to Additional Withdrawal
Limit, and the remainder is payable by
cash.
All Singapore Citizens and Permanent Application to private insurers is required.
Residents are automatically covered for
life. No application is required.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Standard IP • “No frills” product targeted at covering large Class B1 ward hospital bills and
selected outpatient treatments.
• Affordable option for Singapore Citizens and Permanent Residents who want
additional coverage beyond MediShield Life and may find other higher coverage
IPs too expensive.
Riders • Pay for the co-insurance and deductible portion of the IP, and may pay cash
payouts upon hospitalisation.
Need for Co-Payments • Co-payment is an important principle in the design of healthcare insurance. It
encourages policyholders and their doctors, to consider the necessity of the
medical treatment and its cost, so that they can make an informed decision
on the appropriate healthcare services. This encourages prudence and keeps
healthcare cost, and health insurance premiums, affordable and sustainable in
the long term.
Terminating or Switching • An IP policyholder who cannot afford, or does not wish to continue paying the
IP/Switching Insurer premium for his IP, can switch his plan to a lower coverage plan within the
same insurer at any point in time, without additional underwriting involved.
• He can also terminate his IP at any point in time, and still be covered by
MediShield Life which provides basic health insurance, regardless of any pre-
existing conditions.
• If the person with an existing IP switches to a new IP with another insurer,
Original IP with the previous insurer will be automatically terminated.
• Option to go back to the previous insurer within 30 days from the date of
notification of termination from the previous insurer.
Risk-Loading by private • MOH allows IP insurers to risk-load insured members with pre-existing
insurers conditions for the private insurance component of the IPs.
Benefits in having Pre- • Insurers can assess the medical necessity and cost of treatment to ensure it is
Authorisation for IP within the terms and conditions of the policy’s coverage.
• Patients will have a peace of mind in knowing that their procedure is within
their insurance coverage; and
• Healthcare providers have better clarity on the type of procedures covered by
insurance to better advise their patients prior to the actual procedure.

Policyholders are thus encouraged to seek pre-authorisation for planned

procedures as far as possible if the option is provided by the insurer.
Claims process of Any insured CPF member who wishes to claim from his MediShield Life, IP and/or
MediShield Life, Integrated MediSave will need to complete the Medical Claims Authorisation Form to:
Shield Plans, other Medical • Allow the hospital to claim from his insurer; and
Expense Insurance and • Instruct the CPF Board to deduct from his MA to pay for his hospital bill, while
MediSave the insurer settles the claim.

For any insured CPF member who wants to claim from MediShield Life, IP and/or
MediSave, the hospital will submit the claim on his behalf through the MediClaim
online system after he has been discharged.

If there is no pre-authorisation, the insured CPF member under an IP can approach

the hospital to trigger a request for a Letter of Guarantee (LOG) from his insurer
upon hospital admission. It is important that the insured CPF member understands
that a LOG may not mean that the insurer will pay for the specified amount. To
obtain assurance that their bill will be covered, the insured CPF member may wish
to apply for pre-authorisation instead, if available.

For someone who is covered by his employer medical benefits or other private
insurance plans, he will need to show his insurance card (provided by some insurers
for certain Medical Expense Insurance plans) to the hospital admission staff. The
hospital may fully or partially waive the deposit in such a case.
• Some hospitals will send the hospitalisation bill directly to the CPF member’s
non-IP private insurer or employer. In other cases, the insured CPF member will
have to submit the bill himself to the insurer.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Withdrawal Limits for Please refer to the Study Text for the full list.
Inpatient, Outpatient,
Long-Term Care and
Insurance Premiums
MediShield Life Benefits Please refer to the Study Text for the full list.
Claiming from MediShield Any patient who wishes to claim from his MediShield Life, IP, and/or MediSave will
Life/IP & MediSave need to complete the Medical Claims Authorisation Form to:
• allow the hospital to claim from his insurer; and
• instruct the CPF Board to deduct from his MediSave to pay for his hospital bill,
while the insurer settles the claim, which may take some time.
Letter of Guarantee (LOG) Prior to a treatment episode, IP policyholders can approach the medical institution
to request for a LOG from his insurer. The LOG is a service provided by IP insurers
for policyholders, to waive the upfront cash required by the medical institution, up
to the eligible LOG amount.
ElderShield & ElderShield ElderShield is a long-term care insurance scheme launched in September 2002. It
Supplements provides basic financial protection to those who need long-term care, especially
during old age.

ElderShield Supplement plans complement the current ElderShield scheme, by

offering additional benefits at different pricing levels which increase the insured’s
coverage through:
• increasing the monthly payout; and/or
• extending the payout period.
How ElderShield and To purchase and maintain an ElderShield Supplement, an insured must have
ElderShield Supplements an ElderShield policy. Premiums for ElderShield Supplement can be paid using
work? MediSave (up to a limit of S$600 per insured per calendar year) and/or by cash. As
ElderShield and ElderShield Supplements are structured as stand-alone policies,
claims can be made under both policies if the insured fulfils the claim eligibility
criteria. Supplement plans are currently (as of May 2023) only offered by the three
approved insurers who were administering ElderShield prior to 1 November 2021.
Eligibility Criteria For • Meets the waiting period requirement.
Payment Of ElderShield • Unable to perform the specified number of activities of daily living
benefits • Meets the deferment period requirement (If he recovers from the disability
within the period, then no benefits are payable).
• Please also note on making a claim under ElderShield and how the benefits are
paid.
Features of ElderShield • Non-forfeiture feature.
• Guaranteed renewability on an annual basis.
• Worldwide coverage.
• Minimum (i.e. 40 years old) and maximum entry age (i.e. 64 years old).
• Grace period of 75 days is allowed for payment of the overdue premiums.
• Reinstatement of the policy is allowed within 180 days from the expiry of the
grace period, subject to evidence of insurability at the insured’s expense and
payment of the overdue premiums with interest.
• Insurer has the right to appoint an assessor to examine the insured periodically.
• Where the insured is overseas at the time of a claim, the insurer has the right
to commute the benefit payments to a single payment reflecting the present
value of future benefit payments, or withhold the claim payment if it is unable
to assess the claim after having made reasonable attempts to do so.
• No cash surrender value.
• Free-look period of 60 days from the policy commencement date during which
the insured may cancel his policy, and receive a full refund of the premiums
paid.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Exclusions of ElderShield • Self-inflicted injury, suicide or attempted suicide;
• Alcoholism or drug addiction; or
• War, whether declared or undeclared.
• CPF members who are suffering from pre-existing disabilities, will not be
covered under ElderShield.
Termination of cover for • Expiry of the grace period if the ElderShield policy is not eligible for the non-
ElderShield forfeiture benefit (i.e. it has been in force for too short a period for it to acquire
sufficient reserves to be converted into a paid-up policy);
• Death of the insured;
• Date in which the last benefit payment has been received; or
• Date in which the written notice from the insured to cancel the policy is received
by the insurer (if the policy does not have sufficient reserves, it will not be
converted into a paid-up policy).
ElderShield to CareShield • From 1 November 2021, the Government has taken over the administration
Life of ElderShield from private insurers (Singlife, Great Eastern Life Assurance Co
Ltd, and Income Insurance Limited). This allows ElderShield policyholders to
upgrade to CareShield Life more smoothly, and benefit from improvements to
the claims assessment process that is being implemented for CareShield Life.
• ElderShield policyholders who did not upgrade to CareShield Life remain
covered by their existing ElderShield policies. The Government administers the
ElderShield scheme on a not-for-profit basis. In the event that the actual claims
experience turns out better than expected, there will continue to be premium
rebates for ElderShield policyholders.
• Holders of ElderShield Supplements were not affected. They continue to be
served by their existing ElderShield Supplement insurers.
CareShield Life & CareShield Life was introduced in 2020, as an enhancement of ElderShield and is
CareShield Life administered by the Government on a not-for-profit basis, and offers;
Supplements • Better protection and higher payouts that increase over time, so that claimants
can better afford their basic long-term care needs; and
• Protection for life.
Any CareShield Life policyholder who wishes to obtain higher long-term care
insurance coverage can also purchase Supplements. Supplements are plans which
complement one’s basic CareShield Life plan by offering additional benefits, such as
higher monthly payout amounts, which enhances the coverage.
CareShield Life premium To ensure that no one will lose CareShield Life coverage due to genuine inability to
subsidies and support pay, the Government provides the following premium subsidies and support:
• Means-tested premium subsidies of up to 30% of premiums of CareShield Life,
to help lower- to middle-income households.
• Participation incentives of up to $2,500 for Singapore Citizens, if they join
CareShield Life by 31 December 2023, to encourage those born in 1979 or
earlier to join CareShield Life.
• Additional participation incentives of $1,500 for Merdeka and Pioneer
Generation citizens if they join CareShield Life by 31 December 2023.
• Additional Premium Support for Singaporeans who are unable to pay their
CareShield Life premiums even after premium subsidies, so that no one will lose
coverage under CareShield Life due to genuine inability to pay premiums.
Enhanced benefits under CareShield Life features higher payouts that increase over time with no cap on
CareShield Life payout duration, to provide better protection against the uncertainty of long-term
care costs in the event of severe disability.
• Lifetime cash payouts for as long as the policyholder is severely disabled.
• Payouts increase until age 67 or when a claim is made, whichever is earlier, with
payouts starting at S$600 per month in 2020.
CareShield Life Premiums • The CareShield Life scheme makes use of pre-funded premiums i.e. the insured
CPF members pay more than the cost of their health risk, while they are
younger, to cover for the higher risk in their later years.
• For Singapore Residents born 1980 or later (future cohorts), premiums are paid
from the age of enrolment until age 67. Premiums will increase over time, to
support payout increases.
• Singapore Residents born in 1979 or earlier (existing cohorts) will pay a base
premium.
• Fully payable by MediSave.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Eligibility Criteria for Similar to that of ElderShield.
Payment of CareShield Life
Benefits
Other key features of • Guaranteed renewable on an annual basis.
CareShield Life • Worldwide coverage.
• Minimum entry age of 30 years old, but no maximum entry age.
• CareShield Life policy will be terminated if the insured is no longer a Singapore
Citizen or SPR.
• No cash surrender value.
Other healthcare financing • Pioneer Generation Package;
schemes set up by the • Merdeka Generation Package;
Singapore government • Interim Disability Assistance Programme For The Elderly (IDAPE);
• ElderFund and
• Medifund.
Interim Disability • IDAPE was launched by the Government to take care of Singaporeans who were
Assistance Programme For not eligible to join the ElderShield scheme, when it was launched in September
The Elderly (IDAPE) 2002, either because they exceeded the maximum entry age or they had a pre-
existing disability.

Singaporean will qualify for IDAPE if:

• He is unable to perform three or more of the 6 Activities of Daily Living (ADL) -
washing, feeding, dressing, toileting, mobility and transferring.
• He is a Singapore citizen born before 30 September 1932 OR born between
1 October 1932 and 30 September 1962 (both dates inclusive) but with pre-
existing disabilities as at 30 September 2002.
• His per capita household monthly income is $2,800 or less OR he has no
household income and is living in a residence with Annual Value of $13,000 and
below.
Pioneer Generation The “Pioneer Generation” refers to living Singaporeans who meet two criteria,
Package namely:
a. aged 16 years and above in 1965 (born on or before 31 December 1949, which
also means that they were aged 65 years and above in 2014); and
b. obtained citizenship on or before 31 December 1986.

The package provides the benefits (as described below) which the Pioneer
Generation will enjoy for life:
1. Outpatient Care
2. MediShield Life
3. MediSave Top-Ups
4. Pioneer Generation Disability Assistance Scheme
5. CareShield Life
Merdeka Generation The “Merdeka Generation” refers to living Singaporeans who:
Package a. were born from 1 January 1950 to 31 December 1959, and
b. had obtained citizenship on or before 31 December 1996.

The MGP is also extended to living Singaporeans who:

a. were born on or before 31 December 1949,
b. had obtained citizenship on or before 31 December 1996, and
c. do not receive the Pioneer Generation Package.

The package provides the benefits (as described below) which the Pioneer
Generation will enjoy for life:
1. Passion Silver Card Top-Ups
2. MediSave Top-Ups
3. Outpatient Care
4. MediShield Life
5. CareShield Life

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
IDAPE Payout
IDAPE Payout
Per Capita Household Income*
(With Effect From 1 July 2013)
(a) S$0 to S$2,000 (a) S$250 per month for up to 72
months
(b) S$2,001 to S$2,800 (b) S$150 per month for up to 72
months

*An IDAPE applicant from a household with no income will qualify for the S$250
monthly payout if the annual value of his place of residence is S$13,000 or lower.
ElderFund ElderFund is a discretionary assistance scheme launched on 31 January 2020. It is
targeted at severely disabled lower-income Singapore Citizens aged 30 and older,
who are not able to benefit from CareShield Life, ElderShield, and the Interim
Disability Assistance Programme for the Elderly (IDAPE), have low MediSave
balances and have inadequate personal savings to meet their long-term care needs.
MediFund MediFund is an endowment fund set up by the Government. It provides a safety net
for needy Singaporeans who face difficulties paying for their remaining healthcare
bills after Government subsidies, insurance and MediSave.

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 10. Common Policy Provisions

CHAPTER 10
COMMON POLICY PROVISIONS

CHAPTER OUTLINE

1. Introduction
2. Sections Of A Policy Contract
3. Policy Schedule
4. Insuring Clause & Definitions
5. General Conditions
6. Benefit Provisions
7. Exclusions
8. Claim Conditions
9. Endorsements
10. Conclusion
Appendix 10A – Policy Schedule

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ list the sections of a Health Insurance policy contract
▪ know the information contained in a Health Insurance policy schedule
▪ outline what an insuring clause is
▪ define the following common terms under a Health Insurance policy:
- insured/insured person
- accident
- emergency
- hospital
- covered charges
- day of hospital confinement
- registered medical practitioner/physician
- medically necessary treatment
- period of hospital confinement
- pre-existing condition
- policyholder/policy owner
- reasonable expenses
- waiting period
- illness
- pre-hospitalisation benefits
- per policy year limit
- lifetime limit
- deductible and co-insurance
- pro-ration factor

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▪ explain the general conditions sections that outline the rights of the policy owner and
the insurer:
- entire contract clause
- effective date of cover
- premium clauses
- free-look period
- actively at work
- termination of cover
- overseas treatment renewal
- misstatement of age or gender
- grace period
- reinstatement
- incontestability
- change of occupation
- co-ordination of benefits
- cancellation
- change of plan
- currency
- last payer status
- nomination of beneficiaries
- Policy Owners’ Protection Scheme
▪ explain the various bases upon which Health Insurance policies can be issued:
- cancellable
- optionally renewable
- conditionally renewable
- guaranteed renewable
- non-renewable
▪ understand the purposes and functions of the benefit provisions section of the Health
Insurance policy
▪ list the common exclusions that are found in Health Insurance policies
▪ explain some of the important general claim conditions commonly found in Health
Insurance policies:
- notification of claim condition
- physical examination provision
- mediation/arbitration and legal actions provision
▪ explain what an endorsement is

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Contents
CHAPTER OUTLINE ......................................................................................................... 213
LEARNING OUTCOMES .................................................................................................. 213
1. INTRODUCTION ..................................................................................................... 217
2. SECTIONS OF A POLICY CONTRACT ................................................................... 217
3. POLICY SCHEDULE ................................................................................................ 217
4. INSURING CLAUSE & DEFINITIONS..................................................................... 218
A. Insuring Clause ................................................................................................ 218
B. Definitions........................................................................................................ 218
5. GENERAL CONDITIONS ........................................................................................ 222
A. Entire Contract Clause..................................................................................... 222
B. Effective Date Of Cover ................................................................................... 222
C. Premium Clauses ............................................................................................ 222
D. Free-look Period .............................................................................................. 222
E. Actively At Work .............................................................................................. 222
F. Termination Of Cover...................................................................................... 223
G. Overseas Treatment ........................................................................................ 223
H. Renewal ........................................................................................................... 224
H1. Cancellable Policy..................................................................................... 224
H2. Optionally & Conditionally Renewable Policies...................................... 224
H3. Guaranteed Renewable Policy ................................................................. 225
H4. Non-renewable ......................................................................................... 226
I. Misstatement Of Age Or Gender .................................................................... 226
J. Grace Period .................................................................................................... 226
K. Reinstatement ................................................................................................. 226
L. Incontestability ................................................................................................ 226
M. Change Of Occupation .................................................................................... 227
N. Co-ordination Of Benefits ............................................................................... 227
O. Cancellation ..................................................................................................... 227
P. Change Of Plan ................................................................................................ 227
Q. Currency .......................................................................................................... 228
R. Last Payer Status ............................................................................................. 228
S. Nomination Of Beneficiaries........................................................................... 228
T. Policy Owners’ Protection Scheme ................................................................ 228
6. BENEFIT PROVISIONS ........................................................................................... 229
7. EXCLUSIONS ......................................................................................................... 230
8. CLAIM CONDITIONS .............................................................................................. 232

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A. Notification Of Claim Condition ..................................................................... 232

B. Submission Of Claim ...................................................................................... 232
C. Right to examine ............................................................................................. 232
D. Mediation/Arbitration & Legal Action Provision............................................ 233
9. ENDORSEMENTS................................................................................................... 233
10. CONCLUSION ......................................................................................................... 234
APPENDIX 10A ................................................................................................................ 235

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1. INTRODUCTION

1.1 A Health Insurance policy is the written evidence of a contract between the
insurer and the policy owner who can be an individual or a corporation. It
specifies the precise terms of the agreement between the two parties to the
contract. The details of the contract terms are clearly laid out in various policy
provisions. This chapter will describe the common and important provisions
of Individual and Group Health Insurance contracts.

1.2 It is very important to fully understand the various policy provisions to avoid
any dispute later on. Health Insurance
Policy
1. Policy Schedule
2. Insuring Clause &
Definitions
3. General Conditions
4. Benefit Provisions
5. Exclusions
6. Claim Conditions
7. Endorsements

2. SECTIONS OF A POLICY CONTRACT

2.1 There are various sections in a Health Insurance policy contract.

2.2 The sequence or header of the sections in a policy document may vary among
the different insurers.

3. POLICY SCHEDULE

3.1 The schedule contains details of the policy owner, insured person(s), as well
as the insurance coverage, coverage limits and sum insured. The schedule is
not a stand-alone document and must always be read together with the policy
wording “as one contract”. The schedule will also outline additional clauses or
exclusions specific to the policy owner’s own circumstances.

3.2 The schedule will include information as follows:

(a) policy number;
(b) effective date of cover;
(c) expiry date of cover;
(d) date at which the policy is issued;
(e) contract currency;
(f) name and identity number of the policy owner;
(g) name, age, gender and identity number of the insured person;
(h) name of insurance plan;
(i) types of riders and the coverage limits (if any);
(j) premiums for the insurance plan and riders;
(k) coverage details on benefit limits or sum insured; and
(l) special provisions/endorsements indicating the types of endorsements
attached to the policy.

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3.3 The policy schedule gives the specific details of the policy contract (refer to
Appendix 10A of this chapter for a sample copy of the first page of a policy
schedule.

4. INSURING CLAUSE & DEFINITIONS

A. Insuring Clause

4.1 The insuring clause details the risks the insurer is liable to pay and the scope
of coverage. It serves to:
(a) describe the scope of coverage;
(b) provide definitions required; and
(c) set forth the conditions under which the benefits are payable.

B. Definitions

4.2 To ensure a common understanding for both parties, the policy contains
definitions of key words used in the policy. In this section, we highlight the
important terms in a Health Insurance policy and their sample definitions
(note that the actual definitions vary from insurer to insurer).

(a) Insured/Insured Person

The insured is the person covered by the insurance.

For coverage that allows inclusion of child(ren) in the same policy (such
as Travel Insurance), the insured is regarded as an insured child if he is
below 21 years old or younger, or up to 25 years old if still studying full-
time in a recognised institute of higher learning.

(b) Accident
It means an unexpected incident caused entirely by being hit by an
external object resulting in an injury that is visible. Drowning, food
poisoning, choking on food or suffocation by gas may also be defined as
accidents.

(c) Emergency HOSPITAL

It means a sudden or unexpected serious medical condition

or injury which needs immediate surgery or medical
treatment in a hospital to prevent death or serious damage to
the insured’s immediate or long-term health.

(d) Hospital
It means a restructured hospital, a private hospital or a community
hospital.

(e) Covered Charges

They refer to the charges incurred by the insured person, while the
policy is in force, for a service, supply or period of confinement, which
has been ordered or prescribed by a physician.

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A covered charge is deemed to be incurred at the time the service or

supply is received or rendered. The covered charges for a period of
hospital confinement are deemed to be incurred at the time of admission
to a hospital. However, some insurers take into account the actual date
of provision of service.

(f) Day Of Hospital Confinement

It refers to a full 24-hour period of hospital confinement where room and
board charges are made. This also includes day surgery where overnight
stay is not needed.

(g) Registered Medical Practitioner/Physician

It means a doctor registered with the Singapore Medical Council to
render medical and surgical services. It cannot be the insured person, his
spouse, child, parent, siblings or relatives.

(h) Medically Necessary treatment

It means a treatment, supply or day of hospital confinement, which is
ordered by a physician and which is:
(i) provided for the diagnosis or direct treatment of an illness or
disability;
(ii) cost-effective, appropriate and consistent with the current standards
of professional medical care;
(iii) provided in accordance with generally accepted medical practices on
a national basis;
(iv) not provided for the convenience of the insured or doctor;
(v) not for prevention or for health screening or promoting good health;
and
(vi) not of an experimental or investigative nature, or research purposes.

The fact that the insured person’s physician prescribes a treatment,

supply or day of hospital confinement does not automatically make them
medically necessary.

(i) Period Of Hospital Confinement

It means a continual period of time during which an insured person is
confined to a hospital for medically necessary treatment.

(j) Pre-existing Condition

It is defined as a condition which has existed and:
(i) for which the insured person asked for or received treatment or
medical advice;
(ii) in respect of which the insured person showed symptoms;
(iii) of which the insured person was aware of; and
(iv) would have led a reasonable and sensible person to get medical
advice or treatment before the date of policy issue or the date that
the cover was reinstated.

(k) Policyholder/ Policy Owner

The policy owner owns the policy and is responsible for the payment of
premiums and receipt of claims and benefits under the policy. He has the

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right to make changes to the contract and receive all payments due
under the policy.

(l) Reasonable Expenses

It means the expenses which are appropriate and consistent with the
diagnosis and according to accepted medical standards. The expenses
are those, if avoided, would have a negative impact on the insured’s
medical condition. The expenses:

(i) must be within the general level of charges made by other medical
provider for the services and supplies; and
(ii) must be within the current range of fee guidelines published by the
Singapore government, Ministry of Health or official bodies.

(m) Waiting Period

For Medical Expense Insurance, it refers to the period of time starting
from the date of policy issue or reinstatement date, where the insured
person's medical expenses are not covered by the policy. Waiting period
differs from insurer to insurer and applies only to medical expenses
arising from an illness, not from an accident.

For Disability Income Insurance, it refers to a specified period of time,

beginning with the onset of the disability, where benefits are not
payable. The waiting period in a Disability Income Insurance policy is
sometimes called the “elimination period” or the “probationary period”.

For Long-Term Care (LTC) Insurance, it refers to a period of time

beginning from the first day when the insured person is unable to
perform the specified Activities of Daily Living (ADLs), during which no
LTC Insurance benefit will be payable. For LTC Insurance, this may also
be known as the deferred period.

(n) Illness
Illness refers to a physical condition marked by a pathological deviation
from the normal healthy state.

(o) Pre-hospitalisation Benefits

This refers to the diagnostic X-ray, laboratory tests and specialist
consultation for an illness or injury which occurred within a specified
number of days prior to hospitalisation. The insurer will only pay for
such outpatient treatments if they lead to hospitalisation or surgical
operation, within the time frame as specified in the policy.

(p) Per Policy Year Limit

This is the maximum amount that a Medical Expense Insurance (MEI)
policy will pay for all the eligible medical expenses that an insured
person incurs within each policy year.

(q) Lifetime Limit

This is the maximum amount that a MEI policy will pay for all the eligible
medical expenses that an insured person incurs under the policy.

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(r) Deductible & Co-insurance

A deductible is a fixed amount of covered medical expenses that an
insured person must first incur, before the insurer will make any benefit
payment under a MEI policy.
Co-insurance is the amount the insured must pay after the deductible.
Co-insurance percentage applies to all claims made under the policy
except for death benefit.

(s) Pro-ration Factor

If the insured person is admitted to a ward/hospital higher than what he
is entitled to under the policy, a pro-ration factor will apply to his claim.
This is the percentage that the insurer will use to pro-rate the hospital
bills before it computes the claim payout. The percentage is applied on
the actual charges incurred and covered under the policy, including
charges of pre-hospital and post-hospital treatments received in
connection with the hospitalisation. Therefore, the benefit payable is
reduced to take into account the difference in Government subsidies
applicable to the ward type of the selected plan.

If the insured person receives inpatient treatment in a luxury or deluxe

suite or any other special room of a hospital, the room charge benefit
will be pro-rated to the actual charges which the life assured has to pay
for each type of plan.

Here is an example of how an insurer will apply deductible, co-insurance

and pro-ration factor on a hospital claim.

 Plan Entitlement: Single Bed Restructured hospital

 Hospital Admission: Private Hospital Standard Single Bed Ward
 Deductible: S$3,500 Co-insurance: 10% Pro-ration factor: 50%
Expenses Limits Amount Pro-rated Amount
Incurred Amount covered
(50% pro- by
ration insurer
factor)
Daily room, board As charged S$3,000 S$1,500 S$1,500
and medical related
services
Surgical benefit As charged S$7,000 S$3,500 S$3,500
Total bill S$10,000 S$5,000 S$5,000

Annual Deductible S$3,500

Co-insurance S$150
(10% X (S$5,000 –
S$3,500))
Insured pays S$8,650 (S$5,000 + S$3,500 + S$150)
Insurer pays S$1,350 (S$5,000 – S$3,500 – S$150)

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5. GENERAL CONDITIONS

5.1 The general conditions section outlines the rights of both the policy owner
and the insurer. In this section, we highlight some of the important conditions
as found in a typical Health Insurance policy.

A. Entire Contract Clause

5.2 This clause states that the insurance contract consists of proposal form,
declarations and questionnaires provided to the insurer during underwriting,
the policy contract, the policy certificate, the schedule of benefits, the riders,
as well as endorsements or subsequent endorsements.

5.3 This clause also states that, the insurer will begin providing benefits as set out
in the policy on the policy start date upon receiving the first premium.

B. Effective Date Of Cover

5.4 It is the date on which the insured person begins to be covered under the
policy.

5.5 The effective date of cover applies to all types of covers under the policy,
unless there is a special arrangement to have one or more of the covers to
become effective at some later date.

5.6 For instance, the effective date of cover for an accident or illness may be
different. For an accident, cover will commence as at the effective date of the
insurance. For an illness, the cover can commence only after the waiting
period is over.

C. Premium Clauses

5.7 Premiums must be paid before the start of cover. From the second and
subsequent years, a Grace Period is given for policy renewal and premium
must be paid within the grace period, failing which the policy will be
cancelled.

D. Free-look Period

5.8 Free-look period is the period of time after delivery of the policy document
during which the policy owner may review the policy and return it for a refund
of the premium paid to the insurer (less any medical fees incurred). Full
coverage is in force during this period. This can be up to 14 days from the date
of receipt of the policy document. The policy document is deemed to have
been received by the policy owner within seven days after the insurer has
despatched it.

E. Actively At Work

5.9 This provision is usually found in Group Insurance, as well as Disability

Income Insurance. When applied to Group Insurance, it provides that an

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employee is not eligible for coverage, if he is absent from work because of an

illness, injury and other reasons on the effective date of his coverage.
However, in Disability Income Insurance, it provides that the cover will
automatically terminate, when the person is not working owing to illness or
termination of service.

F. Termination Of Cover

5.10 This clause lists the situations, whereby the cover for Health Insurance will
cease:
(a) when the insured person dies;
(b) when the policy owner fails to pay the renewal premium at the end of
the grace period;
(c) when the total amount of claims paid by the insurer has reached the
limit of indemnity; or
(d) when the insured person reaches the specified maximum age during
which the insurer is not willing to offer cover.

5.11 It also states that the termination of a policy will not affect the payment of any
claim that has arisen before the termination, and that there will be no refund
of premium if the policy is terminated before the expiry of the cover.

G. Overseas Treatment

5.12 Insurers may cover one or both types of overseas treatments – emergency
overseas treatment and planned overseas treatment.
(a) Emergency overseas treatment.
If hospitalisation is required from an emergency while overseas, the
insurer will pay either the actual hospital expenses or reasonable
expenses that would have been paid under your plan for equivalent
medical treatment in a Singapore hospital, whichever of the two is
lower.
(b) Planned overseas treatment
If this is covered under the policy, an insured who chooses to seek
treatment overseas may claim for planned inpatient treatment or day
surgery at an overseas hospital that has an approved working
arrangement with a Medisave-accredited institution/referral centre in
Singapore. The insurer will pay either the actual hospital expenses or
reasonable expenses that would have been paid under your plan for
equivalent medical treatment in a Singapore hospital, whichever is
lower.

5.13 All covered charges incurred during the period of confinement will be subject
to the exclusions, limitations and conditions as specified in the policy, and all
benefits will be payable in the “Currency” 1 based on the “Exchange Rate” 2
used by the insurer.

1
“Currency” refers to any currency other than Singapore dollars.
2
“Exchange Rate” refers to the rate of exchange used for the settlement of a claim.

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5.14 The purpose of this clause is to restrict the Health Insurance coverage to the
country where the policy is issued; except when the insured person is
travelling abroad and requires emergency medical treatment. In such
emergency cases, , the charges for overseas hospital treatment will be
covered. As the cost of healthcare varies from country to country, pricing of
the product does not usually take into account any foreign country’s claim
costs. Furthermore, it complicates claim administration and adjudication.

H. Renewal

5.15 The Renewal Provision describes:

(a) the circumstances under which the insurer has the right to refuse
renewal or to cancel the coverage; and
(b) the insurer’s right to increase the amount of premium payable on the
policy.

5.16 Health Insurance policies can be issued on any of the following bases:
(a) cancellable;
(b) optionally renewable;
(c) conditionally renewable;
(d) guaranteed renewable; or
(e) non-renewable.

H1. Cancellable Policy

5.17 In a cancellable policy (e.g. some Medical Expense Insurance policies) the
insurer has the right to terminate the policy at any time, for any reason, simply
by notifying the policy owner in writing that the policy is cancelled, and by
refunding any advance premium that has been paid for the policy.

H2. Optionally & Conditionally Renewable Policies

5.18 Health Insurance policies may also include specific conditions for the insurer
to refuse a policy renewal.
(a) Optionally Renewable Policy
This allows the insurer the right to refuse renewal on certain dates as
specified in the policy, usually either on the policy anniversary date or on
any premium due date. The insurer can also increase premium rate and
add coverage limitations, such as eliminating coverage for injuries to
certain parts of the body or limiting the extent of coverage for certain
occurrences.
(b) Conditionally Renewable Policy
This allows the insurer not to renew only under conditions as specified
in the policy. These conditions cannot be related to the insured person’s
health. As long as the insurer is still offering this type of policy, the age
and employment status of the insured person are often listed as reasons
for possible non-renewal. For example, an individual Disability Income

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Insurance policy may state that the insurer will renew the policy until the
insured person reaches a certain age (e.g. 65 years), or until the insured
person retires from gainful employment. A conditionally renewable
policy also gives the insurer the right to increase the premium rate.

To protect the insured person when a valid claim is being paid or is

eligible for payment at the time when the premium is due, the insurer
may not undermine that claim. In other words, the claim will be paid if
the insurer elects not to renew the policy.

H3. Guaranteed Renewable Policy

5.19 The insurer relinquishes the rights to cancel the policy at any time, as well as
to refuse renewal at a premium due date. This type of policy is said to be
guaranteed renewable, and it includes several important features, such as:
(a) renewal is guaranteed, as long as the policy owner pays the premium;
(b) the insurer may not cancel the policy, unless the policy owner fails to
pay the premium;
(c) premiums may be increased on the basis of an entire classification, such
as occupation or sub-plan; and
(d) guaranteed policy renewal until the specified age, such as 60, 65, 70 or
75 years, depending on the insurer’s policy.

5.20 Non-payment of premium is the only reason that an insurer may cancel or
refuse to renew a guaranteed renewable policy.

5.21 However, it may increase the premiums based on a class basis. One common
classification, for example, is by occupational groups. Based on experience,
the insurer knows that certain occupations are subject to a higher risk of
accidental injury or death than other occupations. For example, compare the
different risks faced by an office administrator to a construction worker.

5.22 With a guaranteed renewable policy, the insurer must renew the policy when
it is due. However, based on new experience ratings within the insured
person’s occupational class, the insurer may increase the premiums for all
insured persons in that class of risk.

5.23 The guaranteed renewable feature is often limited. In some policies, the
insurer regains the right to cancel and refuse to renew, when the insured
person reaches a specified age. Commonly, the policy will stipulate this right,
when the insured person reaches a normally accepted retirement age, such as
60, 65, 70 or 75 years.

5.24 By relinquishing the rights to refuse renewal and to cancel such policies,
insurers charge a higher premium on guaranteed renewable policies than
those for cancellable policies.

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H4. Non-renewable

5.25 In some situations, an individual may need Health Insurance for a fixed,
limited period of time. Coverage that extends only for a specified length of
time is called Term Insurance. Such a policy cannot be renewed at all. When it
expires, the insured person must purchase another policy.

5.26 Travel Insurance is a typical example of a form of Term Insurance. It

essentially covers from the start to the end of the trip. Student Personal
Accident Insurance policy is another example, beginning when the school
term starts and ending when the school term is over.

I. Misstatement Of Age Or Gender

5.27 The provision specifies that, in the case of an insured person mis-stating his
age or gender, the insurer will adjust the premium based on his correct age
and gender. Any excess premium paid will be refunded by the insurer, and
any shortfall in premium will have to be made up by the policy owner.
However, if at the correct age, an insured person would not have been eligible
for coverage under the policy, then no benefit would be payable by the
insurer.

J. Grace Period

5.28 Individual Health Insurance policies contain a Grace Period provision that
allows the policy owner to pay a renewal premium, within a stated grace
period, following the premium due date. The length of the grace period may
vary depending on how frequently the renewal premium is payable. The grace
period is 30 days for most policies. Coverage remains in force during the
grace period.

K. Reinstatement

5.29 An individual Health Insurance policy includes a Reinstatement provision for

the insurer to reinstate a policy that has lapsed due to non-payment of
premiums. In addition to completing a health declaration, the policy owner
must pay any overdue premium with interest. The insurer has the right to
evaluate the reinstatement application and decline to reinstate the policy on
the basis of statements made in that application. Coverage will only be
effective after the policy is reinstated.

L. Incontestability

5.30 Health Insurance riders attached to Life Insurance policies will be subject to
the Incontestability Clause. The Incontestability provision makes Life
Insurance policies indisputable after they have been in force for a certain
minimum period (usually one year), with the exception of fraud. In other
words, this provision stops the insurer from repudiating liability under a policy
purely on grounds of breach of utmost good faith, except when fraud has
been proven.

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M. Change Of Occupation

5.31 Many individual Disability Income Insurance policies contain a Change Of

Occupation provision that permits the insurer to adjust the premium rate or
the amount of benefits payable under the policy if the insured person changes
occupation. The insured person’s occupation has a direct effect on his
morbidity risk. The Change Of Occupation provision typically permits the
insurer to reduce the maximum benefit amount payable under the policy
should the insured person change to a more hazardous occupation. Should
the insured person change to a less hazardous occupation, this provision
would also permit the insurer to reduce the premium rate of the policy.

N. Co-ordination Of Benefits

5.32 Many individual Health Insurance policies contain a Co-ordination of Benefits

provision (may also be known as Over-insurance provision or Contribution
provision) that is intended to prevent the insured person from profiting from a
claim. This provision states that the benefits payable under the policy will be
reduced if the insured person is eligible for reimbursement from other
sources.

5.33 Co-ordination of Benefits provision will apply whether or not the insurer has
been notified of other coverage at the application stage. Should there be
over-insurance, the insurer would reduce the amount of benefits that would
otherwise be payable under the policy. Where the insurer is aware that the
insured person has also received benefits from other sources only after it has
paid out the benefits, the insurer may, at its discretion, demand a return of all
or part of the benefits previously paid under the policy.

O. Cancellation

5.34 The policy owner has the option to cancel the policy by giving advance written
notice to the insurer or by allowing it to lapse at a premium due date by not
paying the premium. Depending on the terms of the policy, premium paid for
any unused period may not be refunded.

5.35 The insurer will not be liable for any benefits in respect of covered charges
incurred during the policy year after the cancellation becomes effective.

P. Change Of Plan

5.36 A Medical Expense Insurance policy has a provision to allow the insured
person to upgrade or downgrade the coverage plan. Any upgrading of plan is
subject to satisfactory evidence of insurability at the policy owner’s expense.
He may request for a change of plan either at the next policy renewal date or
the next premium due date. An application for change of plan should be
submitted by the insured person to the insurer at least 30 days, before the
policy renewal date or premium due date. However, the insurer may refuse to
accept such an application.

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5.37 Any medical condition that is covered under the plan immediately before the
plan change will continue to be covered, and claims on such conditions will be
payable according to the limits of the plan before its change.

Q. Currency

5.38 Where payment of claims is on reimbursement basis, the policy will state the
currency for the benefits payable. Generally, payment of all claims and
benefits will be made in Singapore currency. Charges incurred in any other
currency outside Singapore shall be payable in Singapore currency on the
basis of the exchange rate used by the insurer.

R. Last Payer Status

5.39 This clause appears in the MediShield Life and Private Integrated Shield Plans.
It states that, if the insured person has other medical insurance policies
including employee benefits, which he can claim for reimbursement of
medical expenses, the insured must first claim from these policies before
making any claim under MediShield Life or Private Integrated Shield Plans.

5.40 If benefits payable under the policy have been made to the insured person
first, before a claim is made under such other medical insurance policies or
employee benefits, the other medical insurers or the employer will need to
refund the existing insurer its share. The insured person shall provide the
insurer with the full details of such other insurance policies or employee
benefits, and all relevant documentary proof necessary to make a claim.

S. Nomination Of Beneficiaries

5.41 The introduction of the Nomination Of Beneficiaries (NOB) under Part 3C of

the Insurance Act 1966 as from 1 September 2009 gives policyowners of Life
Insurance policies or A&H Insurance policies with death benefits, a clear and
affordable legal means to distribute the policy benefits to their nominees.

5.42 CI Insurance policies that have built-in death benefits will come under the NOB
framework, allowing the policyowner to make a nomination as long as he has
attained the age of 18 years. Nomination can either be irrevocable or
revocable:
(a) Trust or Irrevocable Nomination (Section 132 of the Act) – The insured
loses all rights to the ownership of the policy. To revoke this trust
nomination, the insured needs the written consent of all the nominees.
(b) Revocable Nomination (Section 133 of the Act) – The insured retains the
ownership of the policy and is free to change, add or remove nominees,
without their consent.

T. Policy Owners’ Protection Scheme

5.43 Singapore consumers enjoy the benefits of a sound financial system. Insurers
licensed in Singapore are supervised by the Monetary Authority of Singapore
(MAS) whose aim is to ensure the stability of the financial system in

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Singapore, and to require financial institutions to have sound risk

management systems and adequate internal controls. However, MAS does
not guarantee the soundness of individual financial institutions. Therefore, the
Policy Owners’ Protection Scheme (PPF Scheme) has been set up to protect
the policy owners in the event of failure of a life or general insurer, which is a
member of the PPF Scheme.

5.44 The scope of PPF Scheme includes (but not limited to) individual and group
short-term or long-term accident and health (A&H) policies (e.g. Hospital
Income, Medical Expense, Personal Accident, Disability Income, Long-Term
Care Insurance).

5.45 The PPF Scheme is administered by the Singapore Deposit Insurance

Corporation (SDIC). Coverage under the PPF Scheme is automatic, and no
further action is required from the policy owners. For more information on the
types of benefits that are covered under the scheme, as well as the limits of
coverage, where applicable, just refer to the SDIC Website at: www.sdic.org.sg

6. BENEFIT PROVISIONS

6.1 The benefit provisions section details what the policy covers. Each benefit is
explained, indicating what will be paid, the conditions that establish the
insurer’s liability to make payment, the conditions under which payment will
be made, the nature and extent of benefits payable, and the applicable benefit
limitations.

6.2 Benefit provisions are written with utmost care. They must be clear and
precise, but at the same time broad enough to cover virtually any claim
situation that can conceivably arise.

6.3 Let us take a look at a few benefit provisions of a Medical Expense Insurance
policy.

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BENEFIT PROVISIONS

A. Hospital And Surgical Benefits

The Company will only pay reimbursement for reasonable expenses for
necessary medical treatment received by the life assured due to illness or
injury and depend on the terms and conditions in your policy, the limits
shown in the benefits schedule and the exclusions in your policy. Treatment
must be provided by a hospital or licensed medical centre or clinic.

1. Daily room, board and medical related services

Ward charges the insured has to pay for each day in a hospital including:
• meals;
• prescriptions;
• medical consultations;
• miscellaneous medical charges;
• specialist consultations;
• examinations;
• laboratory tests; and
• being admitted to a high-dependency ward or short-stay ward.

2. Intensive Care Unit

Charges for confinement as an Inpatient in the Intensive Care Unit of the
Hospital.

3. Surgical Benefits

Charges for surgery (including day surgery) by a surgeon in a hospital

including:
• surgeon’s fees;
• anaesthetist’s fees; and
• Operating theatre and facility fees.

7. EXCLUSIONS

7.1 Exclusions refer to the circumstances under which the insurer will not pay. In
this section, we will highlight some important exclusions commonly found in
a Health Insurance policy.

7.2 No benefits will be paid for charges which are in excess of the reasonable
charges. Illness contracted within the waiting period, pre-existing conditions
and the following categories will also not be covered by the policy:

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(a) Surgical Procedures Or Examinations

(i) routine physical, pre-employment or premarital examination,
immunisation or circumcision;
(ii) refraction, eyeglasses or contact lenses, including fittings and
examinations, or surgical correction of near-sightedness (such as,
but not limited to, radial keratotomy and keratectomy);
(iii) examination, treatment or surgery of the teeth, gums or direct
supporting structure, except as necessitated by an injury to sound
natural teeth occurring while the cover for the insured person
under this contract is in force;
(iv) aesthetic or cosmetic surgery, except for charges for treatment
resulting from an injury which occurs while the cover for the
insured person under the contract is in force. Such treatment must
take place within 12 months of the injury, and while the cover for
the insured person under this contract is in force;
(v) pregnancy, childbirth (including surgical delivery), abortion or
miscarriage (except as a result of an injury) and pre-natal or post-
natal care;
(vi) prosthesis, corrective devices or medical appliances which are not
medically necessary; and
(vii) gender changes.

(b) Treatments
(i) test or treatment related to impotence, infertility, contraception or
sterilisation;
(ii) treatment of any diagnosed emotional, mental or nervous
disability, including any condition caused by or resulting from such
disability;
(iii) treatment which is in any way related to sexually transmitted
disease, Acquired Immune Deficiency Syndrome (AIDS), or any
infection from a human immunodeficiency virus (HIV), as well as
their related complications;
(iv) treatment resulting from suicide, attempted suicide, self-inflicted
injury, narcotic or alcohol abuse, or participation in hazardous
pursuit;
(v) treatment of a disability that results from participation in any
assault, criminal or unlawful act, strike, civil disorder or riot;
(vi) treatment directly or indirectly associated with invasion, act of
foreign enemy, hostility or any act of war, whether or not declared,
civil war, rebellion, revolution, insurrection or military or usurped
power, or full-time service in any of the armed forces, except for
peacetime reservist training or mobilisation exercise in accordance
with the Enlistment Act 1970;
(vii) treatment of a disability resulting from the use of nuclear weapon
or from contact with nuclear material;
(viii) treatment of morbid obesity or related conditions; and
(ix) treatment arising from the insured person’s failure to act on proper
medical advice.

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(c) Confinement
(i) services, supplies or confinement periods, which are not medically
necessary;
(ii) period of confinement resulting from a disability not requiring
surgery, unless the period of confinement is more than a specified
period of time (e.g. 12 or 18 hours); and
(iii) palliative care, rest cures, hospice care, rehabilitation or similar
treatment.

(d) Other Services

(i) service performed by a person who ordinarily resides in the
insured person’s home or is a close relative;
(ii) transportation or, ambulance transfer; and
(iii) ancillary expenses, such as (but not limited to) television,
telephone, video, newspaper and family accommodation charges.

7.3 The list of exclusions changes from time to time, as new technologies surface
which in turn affect medical cost.

8. CLAIM CONDITIONS

8.1 In this section, we highlight some important claim conditions commonly

found in a Health Insurance policy.

A. Notification Of Claim Condition

8.2 A Health Insurance policy includes provisions that define the insured’s
obligation to provide timely notification of loss to the insurer.

B. Submission Of Claim

8.3 The policy owner must (at his own expense) submit all certificates, forms,
original bills, receipts, information and evidence as required by the insurer to
support his claim. Such evidence and documents may also be electronically
submitted on behalf of the insured person by a hospital or medical clinic or
other medical establishment through the electronic submission system,
MediClaim.

C. Right To Examine

8.4 This provision gives the insurer the right to have the insured person examined
by a doctor appointed by the insurer whenever it may reasonably want to
before paying any claims. The insurer also has the right to ask for a post-
mortem where it is not forbidden by law.

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D. Mediation/Arbitration & Legal Action Provision

8.5 An individual Health Insurance policy will usually include a Dispute Resolution
Clause. Any dispute or matter arising under the policy should first be referred
to the Financial Industry Disputes Resolution Centre Ltd (FIDReC) to be dealt
with accordingly. The policy owner should refer such disputes or matters to
FIDReC within six months from the date of failure to reach an agreement with
the insurer.

8.6 If the dispute cannot be referred to or dealt with by FIDReC, the dispute will be
referred to and decided using arbitration. This will be according to the
Arbitration Rules of the Singapore International Arbitration Centre applicable
at that point of time. The policy also states that the insurer will not be legally
responsible under the policy, unless the policy owner has first received an
award under arbitration.

8.7 Where both mediation and arbitration fail to settle the dispute, the policy
owner may seek legal action against the insurer. The Legal Action Provision
limits the time during which the policy owner who disagrees with the insurer’s
claim decision has the right to sue the insurer, in order to collect the amount
which he believes is owed under the policy. The policy may state that no
action in law or equity will be brought under the policy until after the
expiration of 60 days from the date a satisfactory proof of claim has been
furnished to the insurance company in accordance with the terms and
conditions of the policy.

8.8 A policy issued by an insurer in Singapore will be construed according to and

governed by the laws of the Republic of Singapore. These laws will apply in
the event of any conflict or dispute under the policy, and the parties to the
conflict or dispute must agree to submit themselves to the exclusive venue
and jurisdiction of the Courts of the Republic of Singapore for the resolution of
any conflict or dispute.

9. ENDORSEMENTS

9.1 An endorsement is a separate document that modifies the policy to which it is

attached. There are several types of endorsements concerning the policy
wording, benefits or exclusions, etc.

9.2 Endorsements can be passed to amend or include additional terms to the

policy, so that the policy conforms to the legislative requirements.

9.3 Endorsements can also serve as supplementary agreements that provide

optional benefits not previously contained in the basic policy. Such benefits
require a separate additional premium. Examples of such supplementary
benefits are maternity benefits for attachment to a Hospital & Surgical
Insurance policy. Endorsements pertaining to supplementary benefits may be
attached to the policy, when they are issued or they may be added at a later
date. When added, they become part of the policy.

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9.4 Endorsements on exclusions restrict the scope of coverage, by excluding a

specific pre-existing condition or certain activities or avocations. The insurer
may require this form of endorsement as a pre-condition for issuing a policy.
This is one type of counter-offer. If the insured signs the endorsement and
accepts the policy as offered, there is a binding contract. A copy of the signed
endorsement remains attached to the policy.

10. CONCLUSION

10.1 As an insurance representative, you should help your prospective clients to

understand the standard policy provisions and terms, as well as to explain to
them the endorsements attached to their policies.

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APPENDIX 10A

POLICY SCHEDULE

ABC Insurance Company (Singapore) Limited

21 Any Street, ABC Centre, Singapore 654321

Tel: (65) 6789 8181 Fax: (65) 6789 8282

Policy Issue Date: POLICY SCHEDULE

THIS SCHEDULE REFLECTS THE TERMS, CONDITIONS AND COVERAGE OF YOUR INSURANCE POLICY,
SUBJECT OTHERWISE TO THE STANDARD POLICY WORDING AND/OR ANY OTHER AMENDMENTS AS
SPECIFIED IN THIS SCHEDULE.

NAME OF INSURED PERSON:

NAME OF POLICY OWNER:
NRIC OF INSURED PERSON:
NRIC OF POLICY OWNER:
ADDRESS:
ADDRESS:

TERRITORIAL : Anywhere in the Republic of Singapore, and

elsewhere in the world for the purpose of
LIMITS travel, but not for any intended or booked
medical treatment overseas by the Insured
Person.

DETAILS OF POLICY
Policy Number:
Type Of Plan:
Sum insured/ Benefits:
Policy Commencement Date:
Policy Expiry Date:
Premium: S$
Endorsements: Nil

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10
COMMON POLICY PROVISIONS

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Sections of a Health • Policy Schedule.
Insurance policy contract • Insuring Clause & Definitions.
• General Conditions.
• Benefit Provisions.
• Exclusions.
• Claim Conditions.
• Endorsements.
Information contained in The policy schedule gives the specific details of the policy contract.
a Health Insurance policy • Policy number;
schedule • Effective date of cover;
• Expiry date of cover;
• Date at which the policy is issued;
• Contract currency;
• Name and identity number of the policy owner;
• Name, age, gender and identity number of the insured person;
• Name of insurance plan;
• Types of riders and the coverage limits (if any);
• Premiums for the insurance plan and riders;
• Coverage details on benefits limits or sum insured; and
• Special provisions/endorsements indicating the types of endorsements
attached to the policy.
Insuring clause The insuring clause also known as the operative clause states the purpose of the
policy and outlines the conditions under which the policy will pay. The insuring
clause serves to:
• Describe the general scope of coverage;
• Provide any definitions required; and
• Set forth the conditions under which the benefits are payable.

Common terms under a Health Insurance policy

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Insured/insured person The insured is the person covered by the insurance.

For coverage that allows inclusion of child(ren) in the same policy (such as Travel
Insurance), the insured is regarded as an insured child if he is below 21 years old or
younger, or up to 25 years old if still studying full-time in a recognised institute of
higher learning.
Accident • An incident caused by accidental, violent, external and visible means. Note that
some insurers may not have the “violent” requirement in their definition of
“accident”
Hospital • Any lawfully operating institution which has 24-hour a day nursing services by
registered graduate nurses, one or more physicians available at all times and
organised facilities for diagnosis and major surgery.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Covered charges • Charges incurred by the insured person, while the policy is in force, for a
service, supply or period of confinement, which has been ordered or prescribed
by a physician.
Day of hospital • Refers to a full 24 hours during a period of hospital confinement.
confinement

Registered medical • Qualified medical practitioner registered with the Singapore Medical Council to
practitioner/physician render medical and surgical services. It excludes a physician who is the policy
owner, insured person himself or his spouse or any of his lineal relatives.
Medically necessary A service, supply or day of hospital confinement, which is ordered by a physician
service, supply or day of and which is:
hospital confinement • Provided for the diagnosis or direct treatment of a disability;
• Appropriate and consistent with the symptoms and findings or diagnosis and
treatment of the insured person’s disability;
• Provided in accordance with generally accepted medical practices on a national
basis;
• Most appropriate supply or level of service which can be provided on a cost
effective basis; and
• Not of an experimental or investigative nature, or research purposes.
Period of hospital • Continual period of time where an insured person is confined to a hospital as a
confinement registered inpatient.
• Two or more periods of hospital confinement resulting from the same or
related causes, are considered as the same period of hospital confinement,
unless the break between the date of discharge of the earlier period of hospital
confinement and the date of admission of the following period of hospital
confinement is more than a specified number of days (e.g. 45 days).
Pre-existing condition It is usually defined as a condition which has existed and:
• For which the insured person received treatment or medical advice;
• In respect of which the insured person showed symptoms;
• Of which the insured person was aware;
• Of which the insured person should reasonably have been aware; and
• would have led a reasonable and sensible person to get medical advice or
treatment before the date of policy issue or the date that the cover was
reinstated.
Policyholder/policy owner • The policy owner owns the policy and is responsible for the payment of
premiums and receipt of claims and benefits under the policy. He has the right
to make changes to the contract and receive all payments due under the policy.
Reasonable Expenses It means the expenses which are appropriate and consistent with the diagnosis and
according to accepted medical standards. The expenses are those, if avoided, would
have a negative impact on the insured’s medical condition. The expenses:
i. must be within the general level of charges made by other medical provider for
the services and supplies; and
ii. must be within the current range of fee guidelines published by the Singapore
government, Ministry of Health or official bodies.
Waiting period • For Medical Expense Insurance, it refers to the period of time starting from
the date of policy issue or reinstatement date, where the insured person's
medical expenses are not covered by the policy. Waiting period differs from
insurer to insurer and applies only to medical expenses arising from an illness,
not from an accident.
• For Disability Income Insurance, it refers to a specified period of time,
beginning with the onset of the disability, where benefits are not payable. The
waiting period in a Disability Income Insurance policy is sometimes called the
“elimination period” or the “probationary period”.
• For Long-Term Care (LTC) Insurance, it refers to a period of time beginning
from the first day the insured person is unable to perform the specified
Activities of Daily Living (ADLs), during which no LTC Insurance benefit will be
payable. For LTC Insurance, this may also be known as the deferred period.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Illness • Illness refers to a physical condition marked by a pathological deviation from
the normal healthy state.
Pre-hospitalisation • Refers to the diagnostic X-ray, laboratory tests and specialist consultation for
benefits an illness or injury which occurred within a specified number of days prior to
hospitalisation. The insurer will pay only for such outpatient treatments if they
lead to hospitalisation or surgical operation, within the time frame as specified
in the policy.
Per policy year limit • Maximum amount that a Medical Expense Insurance (MEI) policy will pay for all
the eligible medical expenses that an insured person incurs within each policy
year.
Lifetime limit • Maximum amount that a MEI policy will pay for all the eligible medical expenses
that an insured person incurs under the policy.
Deductible and co- • Deductible is a flat amount of covered medical expenses that an insured person
insurance must first incur, before the insurer will make any benefit payment under a MEI
policy. This amount will have to be borne by the insured person.
• Co-insurance is a percentage of all eligible medical expenses, in excess of the
deductible, that the insured person must personally pay under a MEI policy.
Pro-ration factor • Percentage that the insurer will use to pro-rate the hospital bills before it
computes the claim payout, if the insured person is admitted to a ward/hospital
higher than what he is entitled to under the policy.

General conditions sections that outline the

rights of the policy owner and the insurer

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Entire contract clause • This clause states that the present contract, together with any specified
attachments/endorsements, make up the entire contract, and no other
documents form another part of the contract.
Effective date of cover • The effective date of cover is established in the policy by agreement between
the insurer and the policy owner. It is the date on which the insured person
begins to be covered under the Health Insurance policy.
Premium clauses • Individual Health Insurance Policies Issued By Life Insurers - When the
policy is first incepted, the premiums must be paid before inception of cover.
When the policy is renewed during the second year onwards, it is subject to a
Grace Period whereby the premium must be paid within 30 days from inception
of cover.
• Group Health Insurance Policies Issued By Life Insurers – Grace Period
provision within such policies which states that the premium has to be paid
within 30 days from the commencement date or renewal date (whichever is
applicable); or the date of the insurer’s premium tax invoice, whichever is later.
• Health Insurance Policies Issued By General Insurers – Subject to the
Payment Before Cover Warranty which states that the policy shall not be in
force, unless the premium is paid to the insurer or intermediary on or before
the date of inception of the policy.
• Group Health Insurance Policies Issued By General Insurers – Subject to the
Premium Payment Warranty which states that if the period of insurance is
more than 60 days, the policyholder is required to pay the premium due under
the policy in full, within 60 days from the date of inception of the policy.
Free-look period • Period of time after delivery of the policy document during which the policy
owner may review the policy and return it for a refund of the premium paid to
the insurer (less any medical fees incurred)
Actively at work • Group Insurance - It provides that an employee is not eligible for coverage, if
he is absent from work because of an illness, injury and other reasons on the
effective date of his coverage.
• Disability Income Insurance - It provides that the cover will automatically
terminate, when the person is not working owing to illness or termination of
service.

44
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Termination of cover • When the insured person dies;
• When the policy owner fails to pay the renewal premium at the end of the grace
period;
• When the total amount of claims paid by the insurer has reached the limit of
indemnity; or
• When the insured person reaches the specified maximum age during which the
insurer is not willing to offer cover.
Overseas Treatment Insurers may cover one or both types of overseas treatments – emergency overseas
treatment and planned overseas treatment.

• Emergency overseas treatment.

If hospitalisation is required from an emergency while overseas, the insurer will pay
either the actual hospital expenses or reasonable expenses that would have been
paid under your plan for equivalent medical treatment in a Singapore hospital,
whichever of the two is lower.

• Planned overseas treatment

If this is covered under the policy, an insured who chooses to seek treatment
overseas may claim for planned inpatient treatment or day surgery at an overseas
hospital that has an approved working arrangement with a Medisave-accredited
institution/referral centre in Singapore. The insurer will pay either the actual
hospital expenses or reasonable expenses that would have been paid under your
plan for equivalent medical treatment in a Singapore hospital, whichever is lower.
Renewal The Renewal Provision describes:
• Circumstances under which the insurer has the right to refuse to renew or the
right to cancel the coverage; and
• Insurer’s right to increase the amount of premium payable on the policy
Mis-statement of age or • Provision specifies that, in the case of an insured person mis-stating his age
gender or gender, the insurer will adjust the premium based on his correct age and
gender.
• Any excess premium paid will be refunded by the insurer, and any shortfall in
premium will have to be made up by the policy owner.
Grace period • Allows the policy owner to pay a renewal premium, within a stated grace period,
following the premium due date.
Reinstatement • If certain conditions are met, the insurer will reinstate a policy that has lapsed
for non-payment of premiums. The policy owner must pay any overdue
premium (with or without interest as determined by the insurer) and the
insured person must complete a reinstatement application/health warranty.
Incontestability • The Incontestability provision makes Life Insurance policies indisputable after
they have been in force for a certain minimum period (usually one year), with
the exception of fraud.
Change of occupation • A Change Of Occupation provision that permits the insurer to adjust the
premium rate or the amount of benefits payable under the policy if the insured
person changes occupation.
Co-ordination of benefits • This provision states that the benefits payable under the policy will be reduced
if the insured person is eligible for reimbursement from other sources.
Cancellation • A provision that allows the policy owner to cancel the policy by giving written
notice to the insurer within a certain period of time (e.g. seven days).
Change of plan • A provision to allow the insured person to upgrade or downgrade the coverage
plan. Any upgrading of plan is subject to satisfactory evidence of insurability at
the policy owner’s expense.
Currency • Where payment of claims is on reimbursement basis, the policy will state the
currency for the benefits payable.
• Generally, payment of all claims and benefits will be made in Singapore
currency.

45
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Last payer status • Appears in the MediShield Life and Private Integrated Shield Plans.
• If the insured person has any other Medical Insurance, including medical
benefits (such as from Work Injury Compensation Insurance) under any
employment contract, which makes provision for reimbursement of medical
expenses, the insurer shall be the last payer reimbursing the claim.
Nomination of The insured who is the policyowner can make a nomination as long as he has
beneficiaries attained the age of 18 years. Two options of nomination as briefly described below
are available:
• Trust or Irrevocable Nomination (Section 132 of the Act) – The insured loses
all rights to the ownership of the policy. To revoke this trust nomination, the
insured needs the written consent of all the nominees.
• Revocable Nomination (Section 133 of the Act) – The insured retains the
ownership of the policy and is free to change, add or remove nominees, without
their consent.
Policy Owners’ Protection • Policy Owners’ Protection Scheme (PPF Scheme) has been set up to protect the
Scheme policy owners in the event of failure of a life or general insurer which is a PPF
Scheme member.
• The PPF Scheme is administered by the Singapore Deposit Insurance
Corporation (SDIC). Coverage under the PPF Scheme is automatic, and no
further action is required from the policy owners.

Various bases upon which Health Insurance policies can be issued

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Cancellable • The Renewal Provision included in a cancellable policy (e.g. some Medical
Expense Insurance policies) grants the insurer the right to terminate the policy
at any time, for any reason, simply by notifying the policy owner in writing that
the policy is cancelled, and by refunding any advance premium that has been
paid for the policy.
Optionally renewable • The insurer has the right to refuse to renew an optionally renewable policy on
certain dates as specified in the policy, usually either on the policy anniversary
date or on any premium due date.
• The insurer is also allowed to increase its premium rate and to add coverage
limitations, such as eliminating coverage for injuries to certain parts of the body,
or limiting the extent of coverage for certain occurrences.
Conditionally renewable • The insurer may elect not to renew only under conditions as specified in the
policy.
• These conditions cannot be related to the insured person’s health.
Guaranteed renewable In some policies, the insurer relinquishes the rights to cancel the policy at any time,
as well as to refuse renewal at a premium due date. This type of policy is said to be
guaranteed renewable, and it includes several important features, such as:
• Renewal is guaranteed, as long as the policy owner pays the premium;
• The insurer may not cancel the policy, unless the policy owner fails to pay the
premium;
• Premiums may be increased on the basis of an entire classification, such as
occupation or sub-plan; and
• Guaranteed policy renewal until the specified age, such as 60, 65, 70 or 75 years,
depending on the insurer’s policy.
Non-renewable In some situations, an individual may need Health Insurance for a fixed, limited
period of time. When it expires, the insured person must purchase another policy.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Benefit Provisions The benefit provisions section details what the policy covers. Each benefit is
explained, indicating what will be paid, the conditions that establish the insurer’s
liability to make payment, the conditions under which payment will be made, the
nature and extent of benefits payable, and the applicable benefit limitations.

Benefit provisions are written with utmost care. They must be clear and precise,
but at the same time broad enough to cover virtually any claim situation that can
conceivably arise.
Common exclusions Surgical Procedures Or Examinations
that are found in Health • Routine physical, pre-employment or premarital examination, immunisation or
Insurance policies circumcision;
• Refraction, eye glasses or contact lenses, including fittings and examinations,
or surgical correction of near-sightedness (such as, but not limited to, radial
keratotomy and keratectomy);
• Examination, treatment or surgery of the teeth, gums or direct supporting
structure, except as necessitated by an injury to sound natural teeth occurring
while the cover for the insured person under this contract is in force;
• Aesthetic or cosmetic surgery, except for charges for treatment resulting
from an injury which occurs while the cover for the insured person under the
contract is in force. Such treatment must take place within 12 months of the
injury, and while the cover for the insured person under this contract is in force;
• Pregnancy, childbirth (including surgical delivery), abortion or miscarriage
(except as a result of an injury) and pre-natal or post-natal care;
• Prosthesis, corrective devices or medical appliances which are not medically
necessary;
• Donation of any body organ by the insured person; and
• Gender changes.
Common exclusions Treatments
that are found in Health • Test or treatment related to impotence, infertility, contraception or sterilisation;
Insurance policies • Treatment owing to birth defect, hereditary or congenital condition;
• Treatment of any diagnosed emotional, mental or nervous disability, including
any condition caused by or resulting from such disability;
• Treatment which is in any way related to sexually transmitted disease,
Acquired Immune Deficiency Syndrome (AIDS), or any infection from a human
immunodeficiency virus (HIV), as well as their related complications;
• Treatment resulting from suicide, attempted suicide, self-inflicted injury,
narcotic or alcohol abuse, or participation in hazardous pursuit;
• Treatment of a disability that results from participation in any assault, criminal
or unlawful act, strike, civil disorder or riot;
• Treatment directly or indirectly associated with invasion, act of foreign
enemy, hostility or any act of war, whether or not declared, civil war, rebellion,
revolution, insurrection or military or usurped power, or full-time service in any
of the armed forces, except for peacetime reservist training or mobilisation
exercise in accordance with the Enlistment Act 1970;
• Treatment of a disability resulting from the use of nuclear weapon or from
contact with nuclear material;
• Treatment of morbid obesity or related conditions; and
• Treatment arising from the insured person’s failure to act on proper medical
advice.
Confinement
• Services, supplies or confinement days, which are not medically necessary;
• Period of confinement resulting from a disability not requiring surgery, unless
the period of confinement is more than a specified period of time (e.g.12 or 18
hours); and
• Convalescent care, rest care, hospice care, rehabilitation or similar treatment.
Other Services
• Service performed by a person who ordinarily resides in the insured person’s
home or is a close relative;
• Transportation, other than ambulance transfer in the event of a medical
emergency; and
• Ancillary expenses, such as (but not limited to) television, telephone, video,
newspaper and family accommodation charges.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Notification of claim A typical Health Insurance policy includes provisions that define the insured’s
condition obligation to provide timely notification of loss to the insurer.
Physical examination Right To Examine
provision
This provision gives the insurer the right to have the insured person examined by a
doctor appointed by the insurer whenever it may reasonably want to before paying
any claims. The insurer also has the right to ask for a post-mortem where it is not
forbidden by law.
Mediation/arbitration and An individual Health Insurance policy will usually include a Dispute Resolution
legal actions provision Clause.
• Referred to the Financial Industry Disputes Resolution Centre Ltd (FIDReC) to be
dealt with accordingly. The policy owner should refer such dispute or matter to
FIDReC within six months from the date of failure to reach an agreement with
the insurer.
• If the dispute cannot be referred to or dealt with by FIDReC, the dispute will
be referred to and decided using arbitration. This will be according to the
Arbitration Rules of the Singapore International Arbitration Centre applicable at
that point of time.
• Where both mediation and arbitration fail to settle the dispute, the policy owner
may seek legal action against the insurer.
Endorsement A separate document that modifies the policy to which it is attached.
• To amend or include additional terms to the policy
• Serve as supplementary agreements that provide optional benefits not
previously contained in the basic policy.
• Exclusions to restrict the scope of coverage.

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Health Insurance

CHAPTER 11
HEALTH INSURANCE PRICING

CHAPTER OUTLINE

1. Introduction
2. Key Factors Used In Premium Computation
3. Parameters For Premium Rating

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ explain the key factors used in the premium computation:
- morbidity rate
- investment income
- operating expenses
- medical inflation
- impact of epidemic/pandemic on general population
- scope of benefits covered
- insurer’s profit
- modes of premium payment
- extent of underwriting
▪ know the parameters for premium rating:
- age
- gender
- physical condition
- occupation
- persistency
- portfolio claims experience
- claims-based pricing
- group participation level

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Contents
CHAPTER OUTLINE ......................................................................................................... 236
LEARNING OUTCOMES .................................................................................................. 236
1. INTRODUCTION ..................................................................................................... 238
2. KEY FACTORS USED IN PREMIUM COMPUTATION ........................................... 238
A. Morbidity Rate ................................................................................................. 238
B. Investment Income.......................................................................................... 238
C. Operating Expenses ........................................................................................ 238
D. Medical Inflation .............................................................................................. 239
E. Impact Of Epidemic/Pandemic On General Population ................................ 239
F. Scope Of Benefits Covered ............................................................................. 239
G. Insurer’s Profit ................................................................................................. 239
H. Modes Of Premium Payment ......................................................................... 239
I. Extent Of Underwriting ................................................................................... 240
3. PARAMETERS FOR PREMIUM RATING ................................................................ 240
A. Age ................................................................................................................... 240
B. Gender ............................................................................................................. 240
C. Health Status ................................................................................................... 240
D. Lifestyle............................................................................................................ 240
E. Occupation....................................................................................................... 241
F. Persistency....................................................................................................... 241
G. Portfolio Claims Experience............................................................................ 241
H. Claims-based pricing ...................................................................................... 242
I. Group Participation Level ............................................................................... 242

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1. INTRODUCTION

This chapter explains how health insurance is priced, including the key factors
used in premium computation as well as how premiums can further differ
based on the specific metrics posed by the individual or group.

2. KEY FACTORS USED IN PREMIUM COMPUTATION

2.1 The key factors used to calculate Health Insurance premiums are:
(a) morbidity rate;
(b) investment income;
(c) operating expenses;
(d) medical inflation;
(e) scope of benefits covered;
(f) insurer’s profit;
(g) modes of premium payment; and
(h) extent of underwriting.

A. Morbidity Rate

2.2 Morbidity is the rate at which disease or illness occurs within a group of
people over a period of time. This is the primary consideration in health
insurance pricing. On average, the morbidity rate of women is higher than
men, which is why women pay higher premium rates than men for most
Health Insurance policies.

B. Investment Income

2.3 Investment income is the money that is earned when an insurer

invests the premiums which it receives from the policyholders.

2.4 Premiums are the main source of money for paying out claims.
However, not all the premiums that an insurer receives each year are needed
to pay claims for that year. These premiums are not left idle but are invested
to earn more money. As such, investment income can be perceived as an
additional source of funds for the insurer to meet its obligations.

2.5 Investment income helps to reduce the premiums that insurers have to charge
for their insurance.
Indivi

C. Operating Expenses

2.6 Operating expenses increase the price of insurance. Insurers collect premiums
not only to cover the costs of insurance, but also to cover the. costs of
operating the company, such as staff salaries, commissions for sellers, taxes,
office rent, advertising, computer systems, supplies, etc.

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 11. Health Insurance Pricing

D. Medical Inflation

2.7 Over the years, there has been a consistent upward trend in medical claim
costs experienced by both individual and group plans. Rising claims are
associated with increases in medical care charges, medical advancement and
higher utilisation of services, especially when there is a growing ageing
population in Singapore.

2.8 To meet claims obligations, insurers take into account the medical inflation
factor to ensure that premiums charged will be adequate to cover the rising
medical costs.

E. Impact Of Epidemic/Pandemic On General Population

2.9 Given that the world has recently witnessed the profound impact of Covid-19
and the consequences including new vaccination developments and
mandatory rules by government, insurers are beginning to take into
considerations the change in health of the general demographics and its
potential impact on health insurance claims when pricing health insurance.

F. Scope Of Benefits Covered

2.10 Premiums are higher for plans with richer and higher benefit limits, smaller
deductible and smaller co-insurance.

2.11 For H&S Insurance policies such as the Integrated Shield Plans, coverage for
private hospital treatments is more expensive than coverage for public
hospital treatments.

G. Insurer’s Profit

2.12 Insurers enter the market with the primary objective to profit from the
business. When pricing a product, insurers add their profit margin into the
premium. This loading depends on the insurer’s profit target and strategy, as
well as the nature of the business. For example, an insurer who is going for
market share may settle for a thinner profit margin.

H. Modes Of Premium Payment

2.13 This means the frequency with which the premiums are payable. Payments
may be made:
Annual, Bi-annual,
(a) annually – once a year; Quarterly or
Monthly
(b) bi-annually – twice a year;
(c) quarterly – once every three months; or Mode of Payment =
Frequency of
(d) monthly – once a month. Premium Payment

2.14 The premium increases slightly as the payment frequency increases. The
increases allow the insurer to recoup:
(a) the additional billing and handling costs; and

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Health Insurance

(b) the lost investment income that the insurer could have earned if the full
annual premium was invested all at once.

2.15 Thus, a monthly premium is slightly higher than a sixth of a semi-annual

premium; and a semi-annual premium that is slightly higher than half of an
annual premium.

I. Extent Of Underwriting

2.16 The time and effort required to gather medical information from the insured
person during policy application can be lengthy and tedious. Some insurers
choose to do minimal risk assessment, by reducing the number of health
declarations on the proposal form. To do so, they will charge a higher
premium.

3. PARAMETERS FOR PREMIUM RATING

3.1 Let us look at how premiums can differ by age, gender, health status, lifestyle,
occupation, claims experience, moral hazard, etc., and see how each of them
has an effect on the level of premiums to be charged.

A. Age

3.2 Age is a key parameter in arriving at the

premium rates, regardless of whether it is an
individual or group plan. Among different age groups, there are differences in
claim frequency and claim severity. For example, a 50-year-old person is more
likely to need a longer recovery period than a 30-year-old person.

B. Gender

3.3 Statistics show that women in general made more medical claims than men.
That is why a female pays a higher premium for Health Insurance such as
Long-Term Care and Critical Illness as compared to a male of the same age.
For simplicity, not all health insurance premiums are gender differentiated.
For example, premiums for Medishield Life and Integrated Shield plans do not
depend on gender but age.

C. Health Status

3.4 The health status of the proposed insured person is a major consideration in
the policy pricing. An individual with a pre-existing medical condition can
expect his proposal to attract special underwriting terms and conditions, or
even be declined.

D. Lifestyle

3.5 The lifestyle of the proposed insured can also influence the premium charge.
Participation in a hazardous sport which exposes him to a higher risk of
injuries (e.g. recreational flying, mountaineering or scuba-diving) will require
extra premiums or coverage exclusions of the activities.

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 11. Health Insurance Pricing

3.6 The most important lifestyle factor for determining premium rate is smoking.
A non-smoker can expect to pay a lower premium than a smoker.

E. Occupation

3.7 A proposed insured’s occupation can have a strong influence on the risk that
he presents. Some occupations may pose a higher risk of injuries or illnesses.

3.8 Insurers group occupations into various classes according to the risk of
accident or illness and use it to establish premium rates based upon the
occupational hazard. For example, a high-rise construction worker could be
more likely to suffer an injury by reason of occupation than would an office
administrator.

3.9 Not every occupation can be found on the occupation risk class list but most
jobs can be broadly classified.

3.10 As you would expect, the higher the risk of injury or illness resulting from an
occupation, the higher the insurance premium is likely to be.

F. Persistency

3.11 Persistency, which measures how long the customers renew their policies, is a
parameter in pricing both Individual and Group Health Insurance. Persistency
usually improves as the policies age.

3.12 Persistency also varies by age groups. A group of younger insureds (e.g. ages
of 20 to 29 years) may have poorer persistency than a group of older insureds
(e.g. ages of 50 to 59 years). The older insureds will tend to see the policy as
more valuable, because they may have more difficulty satisfying the
underwriting requirements associated with buying a new policy.

3.13 If the persistency rate of a type of coverage is expected to be high, then the
insurer will reduce the amount of premium charged.

G. Portfolio Claims Experience

3.14 Claims experience of the health insurance portfolio has great influence on its
premiums. An actuary has to ensure that, above all other expenses, the
collected premiums must be sufficient to pay expected claims.

3.15 Total claims of the portfolio comprise of (i) paid claims; (ii) pending claims; (iii)
Incurred but not reported claims (IBNR).

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3.16 IBNR are potential claims that have occurred but have not yet been reported to
the insurer by the policy owner, such as due to delay reporting. Insurers have
to accurately estimate the IBNR claims and set up a reserve to ensure they
have sufficient funds to cover these potential future liabilities.

3.17 For group plans, claims experience of the group is a key factor affecting the
premium rate charged. For example, for group outpatient plans, claims
experience demonstrates the general health condition of the group and the
propensity of the group members to file claims. The importance of the claims
experience data in pricing becomes greater as the group size gets bigger, and
more years of data are available.

H. Claims-based pricing

3.18 Some insurers use claims-based pricing to adjust individual’s

health insurance premiums based on his claims on the policy. CLAIM
FORMS
For example, a renewal discount may be given if no claims
are made on the policy or if a claim is made, the insured is not
penalised if they had attempted to keep claims cost low by
electing to receive treatment at a public hospital.

I. Group Participation Level

3.19 For voluntary group plans, the extent of participation by employees in the plan
is an important parameter in the development of premium rates. If the
participation is low, there is a greater chance that a higher-than-normal
proportion of individuals with health issues will seek coverage. This is called
anti-selection. If the participation level is high, there will likely be a good mix
of healthy lives to compensate for anti-selection risk. Thus, many insurers vary
premium rates based on the participation level.

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CHAPTER
11
HEALTH INSURANCE PRICING

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Morbidity Rate Morbidity is the rate at which disease or illness occurs within a group of people over
a period of time.
Investment income Investment income is the money that is earned, when an insurer invests the
premiums which it receives from many insureds (policyowners or policyholders).
Operating expenses Operating expenses increase the price of insurance. Insurers collect premiums
not only to cover the costs of insurance, but also to cover the. costs of operating
the company, such as staff salaries, commissions for sellers, taxes, office rent,
advertising, computer systems, supplies, etc.
Medical inflation • Consistent upward trend in medical care claim costs experienced by both
individual and group plans.
• Rising costs of claims are associated with increases in medical care charges and
higher utilisation of services.
Impact Of Epidemic/ Given that the world has recently witnessed the profound impact of Covid-19 and
Pandemic On General the consequences including new vaccination developments and mandatory rules by
Population government, insurers are beginning to take into considerations the change in health
of the general demographics and its potential impact on health insurance claims
when pricing health insurance.
Scope of benefits covered Providing several types of benefits under one policy is another way of producing a
product that is appealing to customers. However, this strategy comes with a price
– additions of each benefit actually increase the final premium that the insurer
charges.
Insurer’s profit Insurers enter the market with the primary objective to profit from the business.
When pricing a product, insurers add their profit margin into the premium.
Modes of premium Frequency with which the premiums are payable.
payment • Annually – once a year;
• Bi-annually – twice a year;
• Quarterly – once every three months; or
• Monthly – once a month.
Extent of underwriting Time and effort required to gather medical declaration from the insured person at
the point of policy application.
Parameters for premium • Age.
rating • Gender.
• Health status.
• Lifestyle.
• Occupation.
• Persistency.
• Portfolio claims experience.
• Claims-based pricing.
• Group participation level.
Please refer to the study text for more details on how premiums can differ based
on the parameters stated above

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 12. Health Insurance Underwriting

CHAPTER 12
HEALTH INSURANCE UNDERWRITING

CHAPTER OUTLINE

1. Introduction
2. What Is Underwriting?
3. Factors That Affect Risk
4. Sources Of Underwriting Information
5. How An Insurance Representative Can Help In The Underwriting Process
6. Final Underwriting Decision
7. Commencement Of Risk
8. Conclusion
Appendix 12A – Sample Supplementary Lifestyle Questionnaire
Appendix 12B – Sample Individual Health Insurance Proposal Form
Appendix 12C – Sample Group Hospital & Surgical Insurance Proposal And Health
Declaration Form

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ explain what underwriting is
▪ explain the underwriting factors that affect a risk:
- medical factors
- non-medical factors
▪ know the underwriting factors that are specifically important for each type of Health
Insurance
▪ know the types of underwriting methods for Medical Expense Insurance
▪ know the various underwriting factors for Group Insurance
▪ identify the sources of underwriting information
▪ know how an insurance representative can help in the underwriting process
▪ understand the various terms of acceptance for Health Insurance proposals
▪ know when the risk commences

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Contents
CHAPTER OUTLINE ......................................................................................................... 243
LEARNING OUTCOMES .................................................................................................. 243
1. INTRODUCTION ..................................................................................................... 246
2. WHAT IS UNDERWRITING?................................................................................... 246
3. FACTORS THAT AFFECT RISK .............................................................................. 246
A. Medical Factors ................................................................................................. 246
A1. Medical History .......................................................................................... 246
A2. Current Physical Conditions ...................................................................... 247
B. Non-medical Factors ......................................................................................... 247
B1. Financial Factor .......................................................................................... 247
B2. Occupational Factor ................................................................................... 248
B3. Age Factor .................................................................................................. 248
B4. Residency Factor ........................................................................................ 248
B5. Additional Underwriting Considerations .................................................. 248
C. Factors That Are More Important For Different Health Insurance .................. 249
C1. Medical Expense Insurance....................................................................... 249
C2. Disability Income Insurance ...................................................................... 249
C3. Long-Term Care Insurance ........................................................................ 249
C4. Critical Illness Insurance ............................................................................ 249
C5. Managed Healthcare.................................................................................. 250
D. Types Of Underwriting Methods For Health Insurance .................................. 250
D1. Full Medical Underwriting ......................................................................... 250
D2. Moratorium Underwriting (Used for Medical Expense Insurance) ......... 250
D3. Simplified Issuance Offer (SIO) ................................................................. 252
D4. Guaranteed Issuance Offer (GIO) .............................................................. 252
E. Group Underwriting.......................................................................................... 252
E1. Reason For Existence ................................................................................ 252
E2. Group Stability ........................................................................................... 253
E3. Group Size.................................................................................................. 253
E4. Company‘s Nature Of Business ................................................................ 253
E5. Employee Classes ...................................................................................... 253
E6. Level Of Participation ................................................................................ 254
E7. Age & Gender of The Group ..................................................................... 254
E8. Expected Persistency ................................................................................. 254
E9. Past Claims Experience ............................................................................. 255
E10.Medical Inflation ........................................................................................ 255
E11.Medical Utilisation Rate & Trend .............................................................. 255

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4. SOURCES OF UNDERWRITING INFORMATION .................................................. 255

A. Proposal Form ................................................................................................... 256
A1. Sections Of A Proposal Form .................................................................... 256
B. The Agent’s Statement ..................................................................................... 257
C. Medical Examinations/Tests ............................................................................. 258
D. Attending Physician’s Statement (APS) ........................................................... 258
E. Supplementary Questionnaires ....................................................................... 258
5. HOW AN INSURANCE REPRESENTATIVE CAN HELP IN THE UNDERWRITING
PROCESS ................................................................................................................ 258
6. FINAL UNDERWRITING DECISION ....................................................................... 259
A. Standard Risks .................................................................................................. 259
B. Sub-standard Risks ........................................................................................... 259
B1. Modifications Of Cover .............................................................................. 259
B2. Postponement ............................................................................................ 260
B3. Decline ........................................................................................................ 260
7. COMMENCEMENT OF RISK .................................................................................. 261
8. CONCLUSION ......................................................................................................... 261
APPENDIX 12A ................................................................................................................ 262
APPENDIX 12B ................................................................................................................ 263
APPENDIX 12C ................................................................................................................ 267

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1. INTRODUCTION

1.1 This chapter explains what underwriters look for when assessing Health
Insurance proposals.

2. WHAT IS UNDERWRITING?

2.1 Underwriting is the process, whereby an insurer assesses the risk and
determines whether or not to accept an application and, if so, on what terms.
Underwriting ensures that the premiums charged correspond closely with the
risk that each proposer represents. While Life Insurance underwriting is
concerned with mortality (i.e. the incidence of death within a given
population), Health Insurance underwriting is concerned with morbidity which
is the rate at which disease or illness occurs within a group of people over a
period of time.

3. FACTORS THAT AFFECT RISK

3.1 The factors that affect a risk can be classified into:

(a) medical; and
(b) non-medical.

3.2 While underwriters always assess risk factors of the life insured, they may
also examine risk factors of the payer for third party policy.

A. Medical Factors

3.3 This includes past medical history and current physical conditions of the life
insured. Underwriters consider the probable influence of current impairments
and previous medical histories on future claims. For example, signs of
cognitive (psychological) impairments may indicate that the life insured is a
high or uninsurable risk for Long-Term Care Insurance.

A1. Medical History

3.4 The proposal form asked questions on the medical history of the life insured.
An underwriter may require more information on the declared medical
conditions. For example, if the proposer states that he is receiving treatment
for high blood pressure, the underwriter may ask for an attending physician’s
statement detailing the blood pressure readings, medication prescribed and
the degree of control achieved. The underwriter may also ask for a current
blood pressure reading.

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3.5 Insurers review past medical history to determine the:

(a) possibility of recurrence;
(b) effect on the proposer’s general health;
(c) possibilities of later complications ; and/or
(d) normal progression of any impairment.

3.6 Many acute disorders may be disregarded if recovery has been prompt and
complete, and without evidence of any residual impairment. Examples include
simple bone fractures or an appendectomy.

3.7 Latent complications, or the deterioration of an existing impairment is

possible with many conditions. For example, overweight, tiredness and
elevated blood pressure, while normally not high risk on its own, are
considered indicators of a higher future incidence of cardiovascular
impairment or an undetected diabetes where the proposer is already at a pre-
diabetic level.

A2. Current Physical Conditions

3.8 The life insured’s statements on a proposal form and medical examination
results are the first indicators of present physical conditions. Additional tests
and studies, e.g. urinalysis, blood studies, fasting glucose, cognitive
assessments and electrocardiograms (ECGs), may be required, depending on
the age of the life insured and the amount of insurance coverage applied for.

B. Non-medical Factors

3.9 Non-medical factors can also have varying effects on the different classes of
Health Insurance.

B1. Financial Factor

3.10 In considering an application, the financial information (ie income, assets and
debts) allows the underwriter to gauge if the life insured has over-insured
himself or if he has the ability to continue paying for the premium and keeping
the policy throughout the term.

3.11 Financial information is important in underwriting Disability Income

Insurance. The underwriter must ensure that the benefit amount applied for is
reasonable and not higher than 75% of the life insured’s current income.

3.12 To determine whether the Disability Income benefit is justifiable, the

underwriter must consider the life insured’s income, both earned and
unearned (e.g. from investments), as well as the net worth. A high net worth is
significant, even if the proposer’s assets are not producing substantial
investment income at the time of underwriting. Assets can be shifted to
income generating investments if the insured becomes disabled, and the
resulting income combined with disability insurance benefits can lessen the
insured’s incentive to return to work.

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B2. Occupational Factor

3.13 The life insured’s occupation can have a strong influence on the risk that he
presents. Occupational hazards can either be accidents or health hazards.

3.14 Some occupations, such as painters engaged to paint the exterior of tall
buildings, or persons working with heavy machinery in manufacturing plants
have higher risks of accidental injuries, thereby increasing the probability of
disability or hospitalisation. Occupations involving the handling of asbestos
products have a higher risk of health hazard over time, as it can lead to
asbestosis. 1

B3. Age Factor

3.15 Medical problems tend to increase with age. Hence, the underwriting
guidelines call for more requirements on medical examinations/tests and
attending physicians’ statements for older proposers. The underwriter may
also be investigating the medical histories of older life insureds more
thoroughly, because of the increased possibility of related problems that may
not be reflected in their proposal forms.

B4. Residency Factor

3.16 Past, current and future residency can be important risk factors. The
underwriter looks out for applicants who may travel to war zones, areas with
health-related risks or even politically unstable regions as part of the
underwriting consideration.

B5. Additional Underwriting Considerations

(a) Avocation And Lifestyle Risks

Avocation and lifestyle risks are those which are associated with higher
probabilities of contracting accidents or illnesses.

Engagements in the following activities are considered to be lifestyle risks:

(i) drug abuse;
(ii) multiple sexual partners;
(iii) navigational recreational activity;
(iv) hazardous occupations; and
(v) hazardous sports, such as motor racing, mountaineering,
parachuting and scuba diving.

Insurers may require the completion of specially designed questionnaires,

such as a supplementary lifestyle questionnaire for underwriting (see
Appendix 12A).

1
Asbestosis is a disease caused by the inhalation of asbestos fibres and dust which can lead to
respiratory failure and other complications. The incidence of carcinoma (cancer) of the lung is also
higher for people exposed to asbestos dust.

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(b) Habits
Smoking, alcohol and drug use by the proposer represent serious risks.
Either activity can result in significant health problems or cause serious
accidents while driving or engaging in leisure activities. This is also known
as the Proximate Cause.

C. Factors That Are More Important For Different Health Insurance

3.17 Certain factors tend to be more important than others in the underwriting of
each type of Health Insurance.

C1. Medical Expense Insurance

3.18 When assessing Medical Expense Insurance, the medical history and the
current physical condition of the life insured are the basic indicators of the
probability of future health problems that may result in medical expenses for
hospitalisation and treatment. Those with pre-existing conditions will usually
have the condition excluded from coverage by the insurer. For example, the
insurer will exclude all conditions relating to the heart for any proposer with
hypertension (or high blood pressure).

C2. Disability Income Insurance

3.19 The size and stability of the life insured’s earnings and his overall
financial situation are important factors for underwriting Disability Income
Insurance. A minor accident or illness may result in a disability for some
people because of the nature of their work. For example, a throat infection
may result in a singer having to cancel his show, and thus, disrupting his flow
of earnings. To evaluate the occupational risks more accurately, insurers use
occupational risk classifications to determine occupational risks and loadings.
Details of the various types of occupational risk classifications can be found in
Chapter 4 of this Study Text.

C3. Long-Term Care Insurance

3.20 The two key factors for underwriting Long-Term Care Insurance (LTC) are the
detection of any early cognitive impairment and morbidity risk. Cognitive
impairment can prolong LTC claims. This is why some insurers require the life
insured to undergo cognitive assessment during the underwriting stage. The
second factor is assessing the morbidity risk of an individual. This means the
chance of a person suffering any physical disability which will affect the
individual’s ability to perform his activities of daily living. Some conditions
which may not be significant in the assessment of a mortality risk will be
critical for a LTC risk. For example, any musculoskeletal condition will be a
potential risk for LTC coverage.

C4. Critical Illness Insurance

3.21 For Critical Illness Insurance underwriting, besides medical history and current
physical conditions, smoking habit and family history are also important.

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3.22 Smoking can increase the incidence of a person suffering from cardiovascular
and cerebrovascular diseases, and cancer. Some diseases like diabetes
mellitus, and breast and colon cancers have high prevalence among family
members.

C5. Managed Healthcare

3.23 The key considerations for the underwriting of Managed Healthcare (MHC) are
similar to those for Medical Expense Insurance cover.

3.24 However, when MHC covers are issued to groups, the age and gender of the
group are strong factors in assessing the risk in the group. Older groups are
associated with higher morbidity, while groups with a large proportion of
females of child-bearing age tend to have higher costs due to healthcare
expenses associated with pregnancies and deliveries.

D. Types Of Underwriting Methods For Health Insurance

3.25 There are four underwriting methods for Health Insurance:

(a) Full Medical Underwriting.
(b) Moratorium Underwriting also known as Point-of-Claim Underwriting.
(c) Simplified Issuance Offer (SIO).
(d) Guaranteed Issuance Offer (GIO).

D1. Full Medical Underwriting

3.26 This is where the life insured completes a lengthy health declaration when he
applies for insurance to let the insurer know about his health and medical
history. The insurer will review the health declarations and decide whether to
accept his application. The insurer may also ask for an attending physician
report or a medical examination for further assessment where necessary.

3.27 If the life insured has a pre-existing condition that may need treatment in the
future, it will usually be excluded from cover, along with any conditions
related to it.

3.28 The insurer will provide a written offer of specific medical conditions that are
excluded, if any. The life insured may, in the future, request the insurer to
review the exclusions should he wish to do so.

3.29 Advantage Of Full Medical Underwriting - Although this method involves

more time to complete the proposal form, it provides the insured, the certainty
as to what is covered right at the start of the insurance cover, rather than at
the time of making a claim.

D2. Moratorium Underwriting (Used for Medical Expense Insurance)

3.30 The life insured does not need to fill in a health declaration in his application,
nor undergo a medical examination for this method. Instead, the insurer will
declare a waiting period (usually two to five years). During this waiting period,

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any pre-existing conditions for which he has received treatment and/or

medication, or has been asked advice on, or has symptoms of (whether or not
diagnosed) will be excluded immediately before the commencement date of
the Medical Expense Insurance cover.

3.31 If the life insured does not have any symptom, treatment, medication, or
advice for those pre-existing conditions, and any directly related conditions
during the waiting period, he will be covered for these pre-existing conditions,
subject to the terms and conditions of the policy, once the waiting period
ends.

3.32 It is important to understand that long-term medical conditions (such as

stroke, kidney failure, heart bypass and dementia), which are likely to need
continuous regular treatment, medication or medical advice, will never be
covered by the policy, even after a moratorium(waiting period), has passed,
as it is unlikely they will meet the moratorium conditions. Additionally, even if
the proposer declares these conditions under a full medical underwriting
method, these declared conditions will also be permanently excluded by the
insurer.

3.33 The life insured should not delay seeking medical advice or treatment for a
pre-existing condition simply to obtain cover under the policy.

3.34 Advantage Of Moratorium Underwriting - This method allows a policy to be

issued quickly as the life insured will only be asked to provide basic
information about himself. He will not be asked to disclose details of his
medical history. He has to understand that, if he has any pre-existing medical
condition, it will be excluded. However, if he can satisfy the moratorium
criteria (two to five years as outlined in the above section) for a pre-existing
condition, then treatment for that condition will automatically be covered if it
recurs later, subject to the policy terms and conditions.

3.35 Full medical underwriting should always be the starting point, and insurance
advisers should never use the moratorium underwriting for their own
convenience. Moratorium underwriting should only be used where it affords a
genuine advantage for the clients.

Example 12.1

The life insured has suffered from kidney stones recently. Will he be
covered for any further treatment after the commencement date of his
policy?

Under Full Medical Underwriting: No, he has to declare this information

under his full medical declaration, and a personal medical exclusion will be
applied to his policy. This means that he will not be covered for future
problems associated with his kidney stones and any related conditions.

Under Moratorium Underwriting: No, as he has suffered from this condition

before the commencement date of his policy, this condition will not be
covered. He will be eligible for cover only if he does not have any symptom,

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treatment, medication or advice over a continuous period of time (two to

five years, depending on the policy conditions) after the commencement
date of his policy.

D3. Simplified Issuance Offer (SIO)

3.36 In Simplified Issuance Offer, the life insured is asked only a few questions, and
the answers to those questions will determine whether the application is
approved or not. The life insured will not be sent for medical examination.

3.37 SIO is more common in policies where insurers market it via direct or online
channel.

3.38 Pros and Cons of SIO – This method allows applicants to get coverage quickly
as compared to days or weeks with Full Medical Underwriting method.
However, premium is higher due to the greater risk the insurer will take.

D4. Guaranteed Issuance Offer (GIO)

3.39 Guaranteed Issuance Offer requires no medical questions nor medical

examination. The insurer guarantees to issue the policy so long as the
applicant is eligible for cover and this is usually an age requirement. Eg GIO is
only offered to someone below age 60. To minimise risk of anti-selection,
policies issued on GIO have smaller coverage with pre-existing conditions
excluded permanently.

3.40 GIO is used in Hospital Income Plan or Single Critical Illness Plan where the
products are sold via direct or online channel.

3.41 Pros and Cons of GIO – This method guarantees applicants immediate
coverage regardless of health, but they must be prepared to pay a higher
premium for the convenience of getting cover.

E. Group Underwriting

3.42 The underwriting process for Group Insurance differs from that for individual
policies. Group is underwritten as a whole, before considering the risks
imposed by the individual members in the group, generally considered as
sub-standard lives in among the group. Underwriters select the eligibility of a
group based on a number of factors which include:

E1. Reason For Existence

3.43 The underwriter needs to ensure that the reason for the formation of the
group is for a purpose (e.g. operating a business as in the case of employers)
other than only for purchasing the insurance. This is to reduce any anti-
selection from the group.

3.44 Group members must be actively at work on a full-time regular basis and have
predictable incomes.

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3.45 Examples of groups eligible for Group Insurance include:

(a) employer-employee groups;
(b) multiple-employer groups, such as trade associations
and labour unions;
(c) members of professional associations or affinity
groups, such as leisure clubs; and
(d) creditor-debtor groups which generally consist of credit granting
institutions, such as banks and their debtors.

E2. Group Stability

3.46 Group stability is an important consideration. An unusually high turnover rate

in the group can result in high administrative costs for insurers, as they need
to add new members and delete leaving members from the programme. On
the other hand, a group that has a stable membership over a long period of
time can also be riskier. The members in the group become older, without any
new and presumably younger members being added to the group, and hence,
the group becomes a greater underwriting risk at each renewal because of
higher average age.

3.47 An ideal group for insurers is one in which there is a steady flow of new
members to replace those who leave the group, but not a massive influx or
outflow of members.

E3. Group Size

3.48 Size of the group determines if it can provide a better spread and
diversification of the risk. A bigger group size allows for more efficient
administration and lower costs. The gender distribution, age profile and the
sum assured of each insured member will also directly affect premiums.

E4. Company‘s Nature Of Business

3.49 Certain lines of business tend to be riskier than others. A group from the oil
rigging or timber logging industry is an example of a high-risk group. The
economic prospects of the industry in which the business operates and the
strength and financial condition of the business itself are also important
factors, as they will affect the sustainability and growth potential of the group.

E5. Employee Classes

3.50 Employee classes are often based on conditions of employment, such as job
title, salary amount or length of service. It has effects of over-representation.
For example, over-representation by a highly paid class can result in higher-
than-average medical claims, since people with higher incomes tend to have
wider insurance coverages and use more expensive medical services (e.g.
private clinics and private hospitals) than people with lower incomes. Over-
representation by a class in which the employees earn low incomes can result
in a higher-than-desired rate of turnover.

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E6. Level Of Participation

3.51 Underwriters are particularly concerned about the level of participation in a

contributory plan as members’ participation in such a plan is on a voluntary
basis. Insurers normally specify a minimum participation level requirement
(e.g. between 70% and 90%) of eligible group members. This is to guard
against anti-selection by spreading of risk, as well as to reduce administrative
costs, across a wide range of expected mortality within such a group.

E7. Age & Gender of The Group

3.52 Age is an important factor in underwriting, as it increases the mortality of the

group to be insured. Gender in the form of the ratio of males to females is also
an important consideration, as females have lower mortality rates (but higher
morbidity rates) than males.

3.53 The underwriting requirements are very dependent on the group size and the
type of insurance applied. For example, a group of 20 members applying for a
Group Medical Expense Insurance policy may not be required to complete
individual Health Declaration forms. However, if this group applies for a
Disability Income policy, the underwriter will need every member to complete
a Health Declaration form. For those whose sum assureds exceed the free
cover limit 2, the underwriter will need them to do medical examinations
and/or other tests in accordance with the underwriting guidelines.

GROUP COVERAGE

All Employees V Some Employees

E8. Expected Persistency

3.54 New business acquisition cost can be substantial (e.g. underwriting the
proposal) to the insurer when acquiring a new group. The insurer will spread
the acquisition expenses over a period of three to five years, so that the first-
year premium will be more competitive. For this reason, the insurer wants
some assurance that the new business will remain in their books to recover
these expenses so they will avoid businesses that may be short-lived (e.g.
special project group).

2
Free cover limit is the maximum coverage that an insurer is willing to provide to each member of a
group without asking for declaration of health. Excess sum assured above the free cover limit will be
underwritten before such coverage is granted.

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E9. Past Claims Experience

3.55 Past claims experience is an important factor in group underwriting and

pricing. It can be a good indicator of future claims experience. For a large
group with an average S$100,000 past claims per year, an insurer can
reasonably expect similar claims utilisation if the group’s composition
remains.

E10. Medical Inflation

3.56 Medical inflation is the increase in costs of medical services over a period of
time. It may vary based on the types of services.

3.57 Medical inflation will affect claims experience and is an important factor in
group underwriting. It is measured by comparing historical data to more
current cost data, over a period of time (e.g. 12 months).

E11. Medical Utilisation Rate & Trend

3.58 When a group policy has been in force for some time, the average age may
rise, thus increasing the frequency and amount of claims in the group. Medical
advancement, such as the use of new drugs, can also affect the cost of a plan.
Hence, medical utilisation rate and trend are important factors that
underwriters will consider when assessing risks posed by the group.

4. SOURCES OF UNDERWRITING INFORMATION

4.1 The underwriter relies on information obtained from various sources to make
decision. These include:
(a) Proposal Form;
(b) Agent’s Statement;
(c) Medical Examinations/Tests;
(d) Attending Physician’s Statement (APS); and
(e) Supplementary Questionnaires.

4.2 Other than the proposal form, what other information the underwriter will ask
from the life insured depends on the type and size of the policy applied for.
More information will be required for older life insured as well as for policy
with higher benefits and longer coverage. For example, a proposal from a 50-
year-old person for a Disability Income Insurance policy for S$10,000 a month,
with benefits to the age of 65 years, will require more information for
underwriting.

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A. Proposal Form

4.3 The proposal (application) form is the primary source of underwriting

information for the insurer. It provides the basic information for the
underwriter to make a decision, to provide the requisite coverage, or to
modify it, to try to obtain more information, or to reject the proposal entirely.

4.4 After the policy is issued, the proposal will form a part of the insurance
contract and is used as the basis when a claim is filed. If an insurer determines
before the end of the contestable period that there has been a false statement
or incomplete disclosure of material information on the proposal form, the
insurer may reject the claim and rescind the contract. As such, every proposal
form is required by the Insurance Act 1966, to include a warning statement,
such as the following, to ensure that the duty of good faith is kept by the
insured:

“Pursuant to Section 23(5) of the Insurance Act 1966, you are to disclose
in this proposal form fully and faithfully, all the facts which you know or
ought to know, otherwise nothing may be payable under the policy.”

A1. Sections Of A Proposal Form

4.5 Although the proposal form can vary for each of the Health
Insurance products, it generally contains the information as
described below:

(i) Identities Of The Contract Parties

The insurance contract is between the insurer and the proposer.

The header of the proposal form has the name of the insurer, its
principal place of business and contact details, so the proposer knows to
which insurer he is applying for an insurance policy. The questions
contained in the “Particulars of Life To Be Insured (the proposed insured)
and Particulars of Proposer” sections serve two purposes:

 They distinguish the proposer from the proposed insured. Although

the proposed insured and the proposer are normally the same
person, in the case of a third-party insurance (for example, a mother
applying for insurance for a child), they are not the same person.

 They provide relevant information to the underwriting department to

assess the risk factors, such as occupation, age and gender. The
information determines the eligibility of the person applying for
coverage, as well as the correct premium to be charged.

(ii) Particulars Of Policy Applied For

This section indicates the details of the policy that the proposer is
applying for, such as the type of plan and sum insured.

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(iii) Information On Past Applications & Existing Policies

This section is meant for the proposer to state the types of policies that
he already has or has applied for, but was postponed or rejected. The
proposer also needs to indicate whether he is purchasing this policy to
replace an existing policy.

(iv) Personal Health Details & Habits Of The Proposed Insured

This section provides a detailed description of the
proposed insured’s medical history, current physical
condition, habits in terms of drug taking, alcohol drinking,
as well as family history.

(v) Declaration
The signatures of the proposer and proposed insured are very important,
as they serve a number of purposes as follows:
 that the proposer/proposed insured has disclosed all material facts
truthfully and faithfully in the proposal form;
 that the proposer/proposed insured has not withheld any material
facts;
 that the proposer/proposed insured is aware that the benefits may be
lost if material facts are not disclosed; and
 that the proposer/proposed insured agrees and authorises the
insurer to release to any medical source or insurance office and vice
versa, any information concerning him at any time, regardless of
whether the proposal is eventually taken up.

4.6 The format of the proposal form and the depth of its questions vary among
the insurers, depending on the types of products. Sample copies of the
Individual Health Insurance proposal form and Group Insurance proposal form
are in Appendices 12B and 12C respectively.

4.7 The proposer and proposed insured must personally sign the proposal form
and countersign on any changes made to the proposal form, as the
responsibility of proper disclosure of material facts in the proposal form lies
with the proposer and proposed insured.

B. The Agent’s Statement

4.8 Most insurers provide separate forms for confidential remarks by agents to
indicate knowledge of any information on the proposer that is not included in
the proposal form, but is important for risk assessment.

4.9 An insurance representative who lets the underwriter know of special

circumstances of the application, or a special problem (could be medical or
financial or other relevant information that assist the underwriter in decision
making) not otherwise identified will gain the underwriter’s confidence. Often
the insurance representative’s remarks may clarify a situation that is
questionable or unclear.

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C. Medical Examinations/Tests

4.10 Insurers may require medical examinations/tests for Disability Income

Insurance, Critical Illness Insurance and Long-Term Care Insurance. A
physician appointed by the insurer completes these examinations and medical
questions and let the proposer sign the medical examination form.

4.11 The examination provides information on the height and weight, pulse, blood
pressure, and other important clinical/medical findings.

4.12 Other common tests that an insurer may request include:

(a) Electrocardiogram (ECG) test;
(b) Chest X-ray;
(c) Micro-urinalysis;
(d) Blood profile analysis;
(e) Human immunodeficiency virus (HIV) Antibody test; and
(f) Cognitive assessment for Long-Term Care Insurance.

4.13 Cost of the medical examination during insurance application is borne by the
insurer, unless the policy is subsequently not taken up.

D. Attending Physician’s Statement (APS)

4.14 An APS is a standard pre-printed form for the attending physician to complete
according to his personal knowledge of the proposer, based on the proposer’s
medical records. This report is usually required, when the underwriter needs
to have a better insight into the proposer’s medical history which is not
available from the medical examination.

E. Supplementary Questionnaires

4.15 The proposed insured may have to complete special questionnaires for the
insurer to gather additional information to classify a risk. The forms usually
deal with medical histories, financial information and special hazards.

4.16 Examples of such medical questionnaires are for conditions like blood
pressure, asthma, ulcers or diabetes. There is also a financial questionnaire
which attempts to elicit information about net worth and unearned (passive)
income, or develop information on an insurable interest in a special type of
business insurance situation. Supplementary questionnaires are also used to
obtain information on participation in hazardous activities, such as aviation,
scuba diving, and various forms of racing.

5. HOW AN INSURANCE REPRESENTATIVE CAN HELP IN THE UNDERWRITING

PROCESS

5.1 As the insurance representative has personal contact with the client, he is in
the best position to select the client. In fact, he is considered as the field
underwriter.

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5.2 He can help by establishing his client’s motivation and needs to purchase the
policy. He should go through the questions in the proposal form, informing
his client to declare all the information truthfully and faithfully, and to the best
of his knowledge and belief.

5.3 If any of the answers in the proposal form is “Yes”, he should extract as much
details as possible from his client based on the additional questions on the
proposal form.

5.4 By obtaining all such information, the insurance representative can help the
underwriter to decide whether there is a need to call for an APS, or a
completion of a questionnaire on diabetes. If, on the other hand, his client
answered “Yes” without giving detailed information, the underwriter will
request for further information and delay the approval process.

5.5 By ensuring that all questions in the proposal form are duly completed and
signed by the proposer in the presence of the insurance representative, it
enables the proposal form to be processed expeditiously. Knowing the
underwriting guidelines, such as when medical examinations/tests and
supplementary questionnaires are required, will also help to expedite the
underwriting process.

6. FINAL UNDERWRITING DECISION

6.1 The underwriter may accept a Health Insurance proposal on any one of the
terms of acceptance as described below:

A. Standard Risks

6.2 When a proposal is accepted as a standard risk, the policy is issued based on
the premium rate stated in the rate book or brochure. The policy will then be
issued once the premium has been fully paid. Usually, 80% to 90% of all
proposals received by the insurer are accepted at standard rates.

B. Sub-standard Risks

6.3 Sub-standard risks are people with medical or non-medical impairments

which make them higher risks to the insurer. The insurer deals with a sub-
standard risk by modifying the cover that the proposer has applied for.

B1. Modifications Of Cover

6.4 Coverage modification may be an exclusion, an extra premium charge, a

change in benefits, reducing the benefit-paying period, increasing the deferred
period, or a combination of some of these approaches.

(i) Specific Exclusions

Exclusions are used as a means of issuing coverage to persons who
would otherwise be declined. When an exclusion is imposed, an
endorsement is issued to state that the insurer will not pay for any claim
arising out of the particular excluded risk, such as from a particular

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medical problem, e.g. back disorder or an unusually hazardous activity

(e.g. motor car racing). The endorsement may be worded to exclude
coverage for only a specific disorder, such as “hernia”, or it may exclude
an entire system or bodily area, such as “disease or disorder of the
stomach or intestines.” The actual wording is determined by the nature
and severity of the person’s medical history or impairment, as well as by
the insurer’s underwriting philosophy. Specific exclusions are commonly
used in Medical Expense Insurance.

(ii) Extra Premiums

Insurers may charge extra premiums to cover the life insured and this is
commonly used in the underwriting of Disability Income Insurance and
Critical Illness Insurance. However, it is rarely used in Medical Expense
Insurance.

(iii) Modification Of Benefits Offered

Another method of modification is to change the benefits to something
other than what the proposer has requested. These include a reduction
in the amount of monthly benefit, a longer deferred period, or shorter
benefit period on a Disability Income Insurance policy. Sometimes,
modifications are used in conjunction with impositions of extra
premiums or exclusions.

In fact, some insurers will automatically limit the benefit period on a

Disability Income proposer who requires a large extra premium. For
instance, an insurer may not issue a benefit period of more than five
years to any risk requiring an extra premium of over 50%.

Benefits may also be reduced, or expense participation (deductible and

co-insurance) increased, to counteract the possible over-utilisation of
Medical Expense Insurance policies.

B2. Postponement

6.5 At times, a proposed insured may have just undergone a surgical operation or
is going for a surgery. For such a case, the underwriter will normally postpone
the proposal for a specified period of time (e.g. six months after the surgical
operation). That is, the underwriter is not able to offer any terms at that point
in time, but is prepared to reconsider the case at a later date.

B3. Decline

6.6 The most drastic underwriting action is to decline a proposal. This choice is
used only for serious medical reasons, or when the proposed insured is
clearly outside a particular insurer’s parameters of acceptable risks for
occupational or financial reasons. Most insurers have declination rates below
10%.

6.7 Hence, it is important for the insurance representative to inform his

prospective client that he should apply for Health Insurance when he is
healthy, to avoid the risk of being declined later when his health deteriorates

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or fails. Furthermore, Health Insurance premiums typically increase with age

as one gets older.

7. COMMENCEMENT OF RISK

7.1 For substandard risk, the insurer will communicate the terms of acceptance to
the proposer before issuing the policy. If the proposer agrees to the terms as
stated in the letter of acceptance and pays the premium, the cover will be
effected, and a policy will be issued to him. For standard risk, the policy will be
issued upon premium payment.

8. CONCLUSION

8.1 Underwriting is an important process that helps to filter out undesirable risks
and ensures that premiums charged correspond with the risks involved.
Underwriters are considered as gatekeepers helping to protect the insurer
against anti-selection risk. Insurance representatives need to understand the
underwriting process and what to look out for to smoothen the customer
experience.

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APPENDIX 12A

SAMPLE SUPPLEMENTARY LIFESTYLE QUESTIONNAIRE

Name of Life Insured Proposal for Life Insurance Number

Name of Proposer (if other than Life Insured)

PURSUANT TO SECTION 23(5) OF THE INSURANCE ACT 1966 AND ANY REPLACEMENT THEREOF, YOU ARE TO DISCLOSE IN THIS
SUPPLEMENTARY QUESTIONNAIRE, FULLY AND FAITHFULLY, ALL FACTS WHICH YOU KNOW OR OUGHT TO KNOW, OTHERWISE THE
POLICY ISSUED HEREUNDER MAY BE VOID.

Acquired Immune Deficiency Syndrome (AIDS) is a new but significant risk for life insurance, particularly as there is now no known cure.
As with dangerous sports, occupations and fatal diseases, life insurers are concerned to identify those individuals who are at risk of
contracting AIDS. This is to ensure equity for all new proposers and to protect the funds and bonuses of all existing policy owners. To
date, AIDS has mainly affected certain groups of people, although not exclusively. The life insurance industry, therefore, needs to identify
members of these risk groups to ensure that established life selection principles are maintained. (This does not mean that all members of
such high risk groups will be refused cover).

This questionnaire will also be given to those who purchase large sum assured.

In order to fulfil this aim, we must, therefore ask you to complete this form and return it to us in the envelope provided. Your answers will
be treated confidentially. When completing this form, please ensure that you answer each question fully and to the best of your
knowledge.

We would ask you to read carefully the declaration at the bottom of this form. Failure to disclose facts pertinent to these questions could
affect payment of benefits. If you have any doubts whether to disclose any information, you are strongly advised to do so.

1. Do you belong to, or have you ever belonged to, any of the following AIDS high-risk groups?
If yes, please indicate accordingly.
a. homosexuals
b. bisexuals
c. intravenous drug users
d. haemophiliacs
e. prostitutes

2. Have you ever had sexual relationships with any of the AIDS high risk groups indicated in
Question (1)? If so, indicate which and when was the most recent encounter.

3. Have you ever been tested, received medical advice, counselling or treatment in connection
with AIDS or an AIDS-related condition or on suspicion that you may have AIDS, or an AIDS-
related condition or are carrying the Human immunodeficiency virus (HIV)? Please give
details of the circumstances in which the test or advice was sought.
(Routine testing for blood donation purposes may be ignored).

4. Have you ever been tested, received medical advice or treatment in connection with any
sexually transmitted disease including hepatitis? If yes:

a. indicate the type of sexually transmitted disease which you have contracted in the past.

b. state the number of occasions and dates exposed to sexually transmitted diseases.

c. give name and address of doctors who attended to you on these occasions.

5. Have you ever been rejected as a blood or organ donor? If yes, when, by whom and for what
reasons?

I/We declare that the answers I/we have given are, to the best of my knowledge, true and complete and that I have not withheld any
material information that may influence the assessment or acceptance of this proposal.

I/We consent to the Company seeking information from any doctor who has attended to me, including any named in my answers to the
questions above.

I/We agree that this form will constitute part of my/our Proposal for Life Insurance and that failure to disclose any material fact known to
me/us may invalidate the contract.

Signature of Life Insured Signature of Proposer (if other than Life Insured)

Date: Date:

ABC Life Limited 21 Any Street, ABC Centre, Singapore 654321 Tel: (65) 6789 8181 Fax: (65) 6789 8282

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APPENDIX 12B
ABC Life Limited 21 Any Street, ABC Centre, Singapore 654321 Tel: (65) 6789 8181 Fax: (65) 6789 8282

SAMPLE INDIVIDUAL HOSPITAL & SURGICAL INSURANCE PROPOSAL FORM

Agent’s Code: Policy No:

Agent’s Name: ____________________________________________________

WARNING:
PURSUANT TO SECTION 23(5) OF THE INSURANCE ACT 1966, YOU ARE TO DISCLOSE IN THIS PROPOSAL FORM, FULLY AND FAITHFULLY,
ALL THE FACTS WHICH YOU KNOW OR OUGHT TO KNOW, OTHERWISE NOTHING MAY BE PAYABLE UNDER THE POLICY. IF YOU ARE NOT
ABLE TO ANSWER ANY OF THE QUESTIONS IN THIS PROPOSAL BECAUSE YOU DO NOT HAVE THE ANSWERS AND ARE ALSO NOT ABLE
TO OBTAIN THE INFORMATION TO ANSWER THE QUESTION(S), PLEASE INDICATE ACCORDINGLY.

A. PARTICULARS OF PROPOSER (Proposer can be a company / firm / individual)

Full Name as shown on NRIC/Passport/BC*

Mr/Mrs/Mdm/Miss/Dr*

Sex: M F

Address:
Postal Code :

Tel. No. Home: Office: Ext:

Race: Chinese Malay Indian Caucasian Others :

Nationality: Place of Birth:

*NRIC/Passport No. Date of Birth: / /

Month Day Year
Age Next Birthday: Marital Status : Single Married Widowed Divorced

Present Employment Status: Employed Unemployed Self-employed

Name and Address of Company: __________________________________________________________________________________________________________

Position Held: _____________________________________________ Exact Nature of Duties involved: ____________________________________________

B. PLAN PROPOSED

PLAN: A B C D E

Period of Insurance: from to Total Premium: PP: GST:

(dd/mm/yyyy) (dd/mm/yyyy)

C. PARTICULARS OF PERSONS TO BE INSURED

*NRIC/B.C./Passport Weight
Full Name as in *NRIC/Passport/B.C. Sex Date of Birth ANB Height (m) Occupation Relationship to Proposer
No. (Kg)
1.

2.

3.

4.

D. ADDRESS OF PERSON(S) TO BE INSURED (To be completed if it differs from above)

*Please delete accordingly.

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E. HEALTH DECLARATION

If any of the above answers to question 3, 4 , 5 or 6 is “YES”, please furnish the details below, indicating the question number (You
may use a separate sheet of paper, if the space provided is insufficient).

Question Name of persons to be insured Details of medical condition Date treated / Types of treatment Name & address of
No. hospitalised attending doctor/hospital

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F. SOURCE OF WEALTH/FUNDS

G. PERSONAL DATA PROTECTION AND CONSENT

Data Protection
I / We expressly authorise and consent to ABC Life Ltd, its officers, employees and representatives disclosing, at their sole discretion, any and all information
relating to me / us, including my / our personal particulars, my / our transactions and dealings and my / our policies of insurance with ABC Life Ltd, to any of
the following persons, whether in Singapore or elsewhere:
(a) ABC Life Ltd’s holding companies, branches, representative officers, subsidiaries, related corporations or affiliates;
(b) any of ABC Life Ltd contractors or third party service providers or distribution partners or professional advisers or representative;
(c) any regulatory, supervisory or other authority, court of law, tribunal or person, in any jurisdiction, where such disclosure is required by law, regulation,
judgement or order of court or order of any tribunal or as a matter of practice;
(d) any actual or potential assignee(s) or transferee(s) of any rights and obligations of ABC Life Ltd under or relating to my / our policy or policies for any
purpose connected with the proposed assignment or transfer; and
(e) any credit bureau, insurer or representative, for such purpose(s) that ABC Life Ltd in its reasonable opinion considers appropriate including but not limited
to the purposes of underwriting, customer servicing, investigation of ABC Life Ltd’s representatives and monitoring undesirable sales practices.

Privacy Policy
I / We wish to receive information, including marketing materials from ABC Life Ltd. from the following communication channels
□ Phone Call □ SMS □ Direct Mail □ Email □ All

H. ELECTRONIC DOCUMENTS
All application, policy contract, policy correspondence and communications will be sent to you electronically. You may log in to ABC Life app to retrieve and
print the e-documents.

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I. DECLARATION

I/We declare that no material facts, that is, facts likely to influence the assessment and acceptance of this proposal have been withheld
and to the best of my/our knowledge and belief the information furnished herein is true and complete and in the case of a life of another
the information furnished herein shall be the basis of the contract of assurance. I/We authorise any medical source or insurance office to
release to ABC Life Limited and similarly ABC Life Limited to release to any medical source or insurance office, any relevant information
concerning me/us at any time, irrespective of whether the proposal is accepted by ABC Life Limited. A photographic copy of this
authorisation shall be as valid as the original. I/We understand that any payment made at the time of signing this proposal or thereafter
shall be held as a deposit placed with ABC Life Limited until acceptance of this proposal by ABC Life Limited subject to the terms and
conditions contained in the receipt issued in respect of the said payment.

I/We agree that should I decide to cancel the Policy issued in respect of this proposal within 14 days after receipt of the Policy
document, the amount refunded to me/us shall be the premium paid less expenses in underwriting the Policy.

However, should the proposal be declined, then I/we shall be entitled to a full refund of the amount paid as premium for this proposal.

I/We further understand that the assurance granted shall be subject to the conditions in and endorsed on the Policy issued.

If a material fact is not disclosed in this proposal, any policy issued may not be valid. If you are in doubt as to whether a fact is
material, you are advised to disclose it. This includes any information that you may have provided to the agent but was not included in
the proposal. Please check to ensure you are fully satisfied with the information declared in this proposal.

Signature of Proposer & Company’s Stamp (if applicable) Signature of Witness

Date: Name:

NRIC No.
Signature of Life Insured

Date: Date:

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APPENDIX 12C

ABC Life Limited 21 Any Street, ABC Centre, Singapore 654321 Tel: (65) 6789 8181 Fax: (65) 6789 8282

SAMPLE GROUP HOSPITAL & SURGICAL INSURANCE PROPOSAL AND

HEALTH DECLARATION FORM

PURSUANT TO SECTION 23(5) OF THE INSURANCE ACT 1966 AND ANY REPLACEMENT THEREOF, YOU ARE TO DISCLOSE IN
THIS PROPOSAL FORM, FULLY AND FAITHFULLY, ALL THE FACTS WHICH YOU KNOW OR OUGHT TO KNOW, OTHERWISE YOU
MAY RECEIVE NOTHING FROM THE POLICY

A. GENERAL INFORMATION
Name of Company Nature of Business

Postal Address:

Telephone No.: Fax No.: Agent or Broker

B. ELIGIBILITY
(i) How many people do your Company employ?
(ii) Is cover to be applied to all Employees? Yes No
(iii) If No, please define the class of employees for whom cover is applied, e.g. Management, Executives, Administration
Clerical staff.

C. PLAN TO BE INSURED (Please tick the plan applicable)

PLAN A PLAN B PLAN C

EFFECTIVE DATE (Subject to satisfactory health underwriting by the Company) :

OTHER OPTIONS

D. GROUP MAJOR MEDICAL – (OPTIONAL)

PLAN A PLAN B PLAN C

Overall limit per year SS$50,000 SS$75,000 SS$100,000

Co-insurance 20% 20% 20%

E. GROUP OUT-PATIENT CANCER TREATMENT AND KIDNEY DIALYSIS – (OPTIONAL)

PLAN A PLAN B PLAN C

Outpatient Cancer
Treatment per year SS$10,000 SS$20,000 SS$50,000

Outpatient Kidney
Dialysis per year SS$10,000 SS$20,000 SS$50,000

F. Name of Insured Employee: Spouse (if insured) Child(ren)***if insured

Sex:

Occupation:

Date of Birth:

Height (Cm) & Weight (Kg):

NRIC/Passport/BC No.:

Nationality*:

Martial Status:

Country of Residence**:
Notes:
* Foreign Nationalities – Please furnish proof of current work permit/employment pass.
** To be completed if you or any of the family members to be insured have any intention of residing outside Singapore for a period of
more than 90 days. Acceptance/Terms and Conditions are subject to the Company’s approval.
*** Proof of student status is required for insured child(ren) above 18 years old.

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G. HEALTH STATEMENT – To be completed by each insured employee Employee Spouse 1st Child 2nd Child 3rd Child
Yes/No Yes/No Yes/No Yes/No Yes/No

1. Have you or any of the family members to be insured ever had any life,
accident, hospitalisation or sickness insurance rejected or cancelled or
issued on special terms or declined on renewal?

2. Do you or any of the family members to be insured have life, accident

hospitalisation or sickness insurance with this or any other company?

3. Do you or any of the family members to be insured have any physical

defect, deformity, impairment of hearing or vision, or loss of hand, foot or
vision?

4. Have you or any of the family members to be insured:

(a) ever had a surgical operation?

(b) ever been advised to have a surgical operation which has not yet been
performed?

5. Are you or any of your family members to be insured currently under any
observation or receiving any treatment or medicine?

6. Have you or any of the family members to be insured ever had or been told
you had or been treated for the following disorder or disease:

(a) Chronic cough, spitting of blood, asthma, hay fever, pleurisy,

tuberculosis or any other disease of the respiratory system?
(b) High or low blood pressure, heart disease, chest pain, heart attack,
shortness of breath, palpitations or any heart disorder?
(c) Apoplexy, paralysis, epilepsy, fits, dizziness, mental or nervous
disorder?
(d) Diabetes, sugar or blood in urine, kidney disorder, kidney colic or stone
or hernia?
(e) Arthritis, sciatica, rheumatism, back, spine, bone, joint, muscle or skin
disorder?
(f) Ulcer or disorder of the stomach, intestines, haemorrhoids or rectal
disorder?
(g) Gall bladder stone or liver disease or any type of hepatitis?
(h) Cancer, tumour or growth of any organ system, thyroid disorder (such
as Goitre) or anaemia?
(i) Female reproductive system including lumps, but not limited to
fibroids or cysts.
(j) Sexually transmitted disease such as syphilis, gonorrhoea or herpes or
non-specific urethritis?
(k) Any illness or disease or injury not mentioned above?

7. What are the complete details of any questions under 1 to 6 above

answered “YES”?

Question Name of Person Details of Medical Date of First Duration Name & Address
No. Condition Consultation of Illness of Dr/Hospital

8. Name and address of your regular doctor (if any)?

9. Please state the type of policy and policy number to Question 2 (above) if your answer is “Yes”.

I hereby declare that the foregoing statement and particulars are true and complete and I have not withheld any information that
may influence the acceptance of this proposal, and I agree that this proposal and declaration shall be the basis of the contract
between me and the insurer.
I declare that I and all the named family members to be insured are Singapore citizens or permanent residents or work permit
holders or employment pass holders working in Singapore.
It is further understood and agreed that the proposal will be effective only if it has been accepted by the company and the
applicable premium has been paid.
I hereby authorise any hospital, surgeon, medical practitioner, clinic or other medical or medically related facilities, insurer or
other organisation or person to release to ABC Life Limited any such information with respect to any illness and to provide
earlier medical history concerning me/us.

Date Signature of Proposer

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CHAPTER
12
HEALTH INSURANCE UNDERWRITING

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

What is underwriting? • Underwriting is the process, whereby an insurer assesses the risk and
determines whether or not to accept an application and, if so, on what terms
that it will offer coverage to the applicant or proposer.
Medical factors • Medical history.
• Current physical condition.
Non-medical factors • Financial factor.
• Occupational factor.
• Age factor.
• Residency factor.
• Additional underwriting considerations.
Underwriting factors that • Medical background or history.
are specifically important • Current physical condition.
for Medical Expense
Insurance
Underwriting factors that • Size and stability of the proposer’s earnings.
are specifically important • Overall financial situation.
for Disability Income
Insurance
Underwriting factors that • Detection of any early cognitive impairment.
are specifically important • Morbidity risk.
for Long-Term Care
Insurance
Underwriting factors that • Smoking habit.
are specifically important • Family history.
for Critical Illness
Insurance
Underwriting factors that • Similar to those for Medical Expense Insurance cover.
are specifically important • Age and gender of the group are strong factors in assessing the risk in the
for Managed Healthcare group.
Types of underwriting • Full Medical Underwriting.
methods for Health • Moratorium Underwriting also known as Point-of-Claim Underwriting.
Insurance • Simplified Issuance Offer (SIO).
• Guaranteed Issuance Offer (GIO).
Various underwriting • Reasons for existence.
factors for Group • Group stability.
Insurance • Group size.
• Insured company’s nature of business.
• Employee classes.
• Level of participation.
• Age & gender within the group.
• Expected persistency.
• Past claims experience.
• Medical inflation.
• Medical utilisation rate and trend.
Sources of underwriting • Proposal form.
information • Agent’s Statement.
• Medical Examinations/Tests.
• Attending Physician’s Statement (APS).
• Supplementary Questionnaires.

50
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
How an insurance • “Field underwriter”.
representative can help in • By obtaining all required information, the insurance representative can help
the underwriting process? the underwriter to decide whether there is a need to call for an APS, or a
completion of a questionnaire on diabetes.
• By ensuring that all questions in the proposal form are duly completed and
signed by the proposer in the presence of the insurance representative, it
enables the proposal form to be processed expeditiously.
• Knowing the underwriting guidelines, such as when medical examinations/tests
and supplementary questionnaires are required, will also help to expedite the
underwriting process.
Various terms of • Standard risks.
acceptance for Health • Sub-standard risks.
Insurance proposals » Modifications of cover.
» Postponement.
» Decline.
When does the risk When the proposer agrees to the terms as stated in the letter of acceptance and
commences? pays the premium, the cover will be effected, and a policy will be issued to him.

51
 13. Notice No: MAS 120 – Disclosure and Advisory Process Requirements
for Accident and Health Insurance Products

CHAPTER 13
NOTICE NO: MAS 120 – DISCLOSURE AND
ADVISORY PROCESS REQUIREMENTS FOR
ACCIDENT AND HEALTH INSURANCE
PRODUCTS

CHAPTER OUTLINE

1. Introduction
2. Scope Of Notice No: MAS 120
3. Structure Of Notice No: MAS 120
Appendix 13A – Notice No: MAS 120

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ understand the objective of Notice No: MAS 120
▪ know the types of products covered by this Notice and their definitions
▪ understand and explain the mandatory requirements for:
- the disclosure requirements for sales of:
o A&H policies
o life policies that contain A&H benefits
- the advisory process requirements in respect of:
o know-your-client
o needs analysis
o documentation and record keeping
o switching
- the additional disclosure requirements being adhered to by direct insurers
 know about the non-mandatory best practice standards on information disclosure,
provision of advice, and monitoring of switching for long-term A&H policies under this
Notice

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Contents
CHAPTER OUTLINE ................................................................................................. 269
LEARNING OUTCOMES .......................................................................................... 269
1. INTRODUCTION ............................................................................................... 271
2. SCOPE OF NOTICE NO: MAS 120 ..................................................................... 271
3. STRUCTURE OF NOTICE NO: MAS 120............................................................. 271
APPENDIX 13A........................................................................................................ 274

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 13. Notice No: MAS 120 – Disclosure and Advisory Process Requirements
for Accident and Health Insurance Products

1. INTRODUCTION

1.1 The Monetary Authority of Singapore (MAS) first issued Notice No: MAS 120 –
Disclosure And Advisory Process Requirements For Accident And Health (A&H)
Insurance Products on 30 January 2004. The last amendment to MAS 120 was
made on 1 June 2022.

2. SCOPE OF NOTICE NO: MAS 120

2.1 This Notice comprises both mandatory requirements and best practice
standards on the disclosure of information and provision of advice to policy
owners for A&H policies and life policies that provide A&H benefits. This Notice
is issued in accordance with Sections 67, 72 and 154(4) of the Insurance Act
1966.

2.2 Generally, this Notice applies to all direct insurers, licensed or exempt financial
advisers who provide advice and/or arranges A&H policies and life policies that
provide A&H benefits. This Notice does not apply where:
(a) such policies are in respect of reinsurance of liabilities under insurance
policies; and
(b) such policies provide that the A&H benefits are paid out only if the insured
becomes totally and permanently disabled, as defined under that policy.

3. STRUCTURE OF NOTICE NO: MAS 120

3.1 This Notice comprises the following:

Part I – Mandatory Requirements made up of:

Division 1: General Requirements For A&H Policies – No direct insurer should

use the word “Shield” when naming A&H policy, unless that policy is a
Medisave-approved policy.

Division 1A: Disclosure Requirements For A&H Policies – This covers the
following:
(a) General information about the A&H insurance intermediary (including its
business name under which it conducts its insurance business, its
business address and its telephone number) and status of an A&H
insurance representative (including his name, the A&H insurance
intermediary or intermediaries for which he acts);
(b) Remuneration of the A&H insurance intermediary;
(c) Conflict of interest;
(d) Disclosure when providing advice, including:
(i) nature and objective of the policy;
(ii) details of the insurer;
(iii) contractual rights and obligations;
(iv) benefits of the policy;

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(v) risks of the policy;

(vi) provision on free-look period of the policy;
(vii) claim on termination;
(viii) warnings, exclusions and disclaimers;
(e) Provisions and explanations of any benefit illustration, product summary, and
group policy under A&H policies;
(f) Marketing material; and
(g) Telemarking and direct marketing.

Division 2: Disclosure Requirements For Life Policies That Contain A&H Benefits –
This specifies the regulatory requirements by an A&H insurance intermediary and an
A&H insurance representative of a licensed or exempt financial adviser, when
providing advice and/or arrange life policies containing A&H benefits.

Division 3: Additional Disclosure Requirements For Direct Insurers – This covers:

(a) meeting the industry standards on the preparation of a benefit illustration or a
product summary in respect of a policy that the direct insurer underwrites;
(b) disclosure of relevant information in the respective documents for every
Integrated Shield Plan (IP) or non-IP;
(c) required font size (Times New Roman 10-point or larger) for product summary,
statement, conditional offer letter or termination letter with standardised
relevant statement of disclosures for any individual Medical Expense Insurance
policy, as well as any A&H policy not being Medisave-approved policy; and
(d) disclosing and explaining the policy terms, including any addition, amendment
or variation to be made in writing to the policy owner, at least 30 days before
taking effect.

Division 4: Requirements On Provision Of Advice Relating To A&H Policies – This

specifies that an A&H insurance intermediary who provides health policies to policy
owners must comply with the requirements relating to the following aspects:
(a) Reasonable basis for providing advice;
(b) “Know-Your-Client”;
(c) Needs analysis;
(d) Documentation and record keeping; and
(e) Switching of A&H Insurance policies.

This Division shall not apply:

(i) in circumstances where no recommendation is made, or where only factual
information is provided with respect to any health policy; or
(ii) to any advice provided in respect of any ElderShield policy.

Division 5: Requirements On Provision Of Advice Relating To Life Policies That Contain

A&H Benefits – This requires any A&H insurance intermediary or A&H insurance
representative who is licensed or exempt financial adviser to comply with
requirements relating to recommendations and provisions of advice as set out in the
Financial Advisers Act 2001 and its notices issued, including Notice No: MAS 120.

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 13. Notice No: MAS 120 – Disclosure and Advisory Process Requirements
for Accident and Health Insurance Products

Division 6: Offences Relating To This Part – This specifies that any person who fails to
comply with any requirement under any relevant paragraph of Notice No: MAS 120
shall be guilty of an offence punishable under Section 142(3) of the Insurance Act 1966.

Part II – Non-mandatory Best Practice Standards

(1) Information Disclosure & Provision Of Advice – This specifies that an A&H
insurance intermediary is expected to meet disclosures of all product and
marketing information given to policy owners.

(2) Monitoring Of Switching For Long-Term A&H Policies – This requires the A&H
insurance intermediary should ensure that the policy owner declares in writing
whether he had been advised by the A&H insurance representative to switch
policy.

3.2 For details of this Notice and its compliance requirements, refer to Appendix
13A which has been adapted in full from the MAS Website.

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APPENDIX 13A
Notice No : MAS 120
Issue Date : 30 January 2004

Last revised on 1 June 2022*

DISCLOSURE AND ADVISORY PROCESS REQUIREMENTS FOR ACCIDENT AND

HEALTH INSURANCE PRODUCTS

Introduction

1. This Notice is issued pursuant to sections 67, 72 and 154(4) of the Insurance Act
1966 [“the Act”] and comprises both mandatory requirements and best practice
standards on the disclosure of information and provision of advice to policy owners for
accident and health policies and life policies that provide accident and health benefits.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

2. This Notice applies to —

(a) any direct insurer licensed under the Act;

(b) any licensed financial adviser or exempt financial adviser which provides
any financial advisory service in respect of life policies;

(c) any representative of a licensed financial adviser or an exempt financial

adviser who provides any financial advisory service in respect of life
policies;

(d) any direct insurance broker or exempt direct insurance broker;

(e) any person acting for a direct insurance broker or an exempt direct
insurance broker;

(f) any insurance agent operating under written agreement pursuant to

section 64; or

(g) any insurance agent who is not required to comply with section 64

when he or she or it provides advice or arranges contracts of insurance or both, in

respect of accident and health policies and life policies that provides accident and health
benefits but does not apply where –

(i) such policies are in respect of reinsurance of liabilities under

insurance policies; and

(ii) such policies provide that the accident and health benefits are paid
out only if the insured becomes totally and permanently disabled, as
defined under that policy.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

3. This Notice sets out the following in two parts:

(a) Part I — Mandatory Requirements

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 13. Notice No: MAS 120 – Disclosure and Advisory Process Requirements
for Accident and Health Insurance Products

(i) Division 1: General requirements for accident and health policies

(ii) Division 1A: Disclosure requirements for accident and health policies;

(iii) Division 2: Disclosure requirements for life policies that contain

accident and health benefits;

(iv) Division 3: Additional disclosure requirements for direct insurers;

(v) Division 4: Requirements on provision of advice relating to accident

and health policies;

(vi) Division 5: Requirements on provision of advice relating to life

policies that contain accident and health benefits;

(vii) Division 6: Offences relating to this Part;

(b) Part II — Non-mandatory Best Practice Standards.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

4. This Notice shall come into effect on 1 April 2004.

Definition

5. For the purpose of this Notice:

“accident and health insurance intermediary (hereinafter referred to as A&H

insurance intermediary)” means—

(a) a direct insurer;

(b) a licensed financial adviser;

(c) an exempt financial adviser;

(d) a direct insurance broker; or

(e) an exempt direct insurance broker,

who provides advice on or arranges contracts of insurance or both, in respect of

accident and health policies and life policies that provides accident and health benefits
as an insurance intermediary;

“accident and health insurance representative (hereinafter referred to as A&H

insurance representative) ” means a person who is—

(a) employed by or who acts as an insurance agent for, a direct insurer;

(b) employed by or who acts for, a direct insurance broker or an exempt direct
insurance broker; or
(c) employed by or who acts as a representative of, a licensed financial adviser
or exempt financial adviser,

and provides advice on or arranges contracts of insurance or both, in respect

of accident and health policies and life policies that provides accident and

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health benefits as an insurance intermediary, but does not include a person

who is an A&H insurance intermediary;

“additional private insurance coverage” has the same meaning as in regulation

2 of the MediShield Life Scheme (Private Medical Insurance Scheme)
Regulations 2015;

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

[Deleted by MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“Central Provident Fund Board” means the Central Provident Fund Board
constituted under section 3 of the Central Provident Fund Act 1953;
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

[Deleted by MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

[Deleted by MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“exempt direct insurance broker” means a person exempt from registering as a

direct insurance broker under section 92(1)(a) to (f) of the Act who has notified
the Authority, in such manner as may be prescribed under section 154(1), of his
or her commencement of insurance broking business;

[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“health policy” means an accident and health policy that is not a personal
accident policy;

“individual medical expense policy” means an accident and health policy, other
than an integrated shield plan and a non-integrated shield plan—

(a) where the policy owner is an individual; and

(b) the main purpose of the policy is to reimburse an insured for the medical
costs incurred by him in seeking inpatient medical treatment;

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

“integrated shield plan” has the same meaning as in regulation 2 of the

MediShield Life Scheme (Private Medical Insurance Scheme) Regulations 2015;

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“insured” includes an intending insured;

“medisave account” has the same meaning as section 2 of the MediShield Life
Scheme Act 2015;

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“Medisave-approved policy” means any, integrated shield plan, non-integrated

shield plan or supplementary disability insurance policy;

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[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment No. 2) 2020, with effect from 1 October 2020]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“MediShield Life Component” has the same meaning as regulation 2 of the

MediShield Life Scheme (Private Medical Insurance Scheme) Regulations 2015;

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“MediShield Life Scheme” means the Scheme established under section 3 of the
MediShield Life Scheme Act 2015;

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“Medisave Withdrawal Limits” means the respective withdrawal limits specified

in regulation 5(1) of the MediShield Life Scheme (Private Medical Insurance
Scheme) Regulations 2015;

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“non-integrated shield plan” has the same meaning as in regulation 2 of the

MediShield Life Scheme (Private Medical Insurance Scheme) Regulations 2015;

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“personal accident policy” means an accident and health policy where accident
and health benefits are paid out only—

(a) in the event of an injury to, or disability of, the insured as a result of
accident;
(b) on the death by accident of the insured; or
(c) on the occurrence of a combination of (a) and (b);

“policy owner” includes an intending policy owner;

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

“representative” has the same meaning as in section 2 of the Financial Advisers

Act 2001[“the FA Act”];

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“selected A&H insurance representative client” means a client of the A&H

insurance intermediary who has purchased a Medisave-approved policy through
an A&H insurance representative who has been assigned a balanced scorecard
grade B or worse under the remuneration framework set out under section 47 of
the FA Act consecutively for two calendar quarters immediately preceding the
quarter in which the representative closed the sale of the relevant Medisave-
approved policy on behalf of the A&H insurance intermediary;

[MAS Notice 120 (Amendment) 2020, with effect from 13 April 2020]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

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“selected client” means any client who meets any two of the following criteria–
(a) is 62 years of age or older;
(b) is not proficient in spoken or written English;
(c) has below GCE ‘O’ level or ‘N’ level certifications, or equivalent academic
qualifications;

[MAS Notice 120 (Amendment) 2020, with effect from 13 April 2020]

“supplementary disability insurance policy” has the meaning given by regulation 2

of the CareShield Life and Long-Term Care (Supplement Scheme) Regulations 2020

[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

“switching” includes terminating a policy and replacing it with another policy, and
“switch” shall be construed accordingly;

“upgrading” means varying the terms of an existing policy or terminating an

existing policy to purchase a new policy with the same insurer for the purpose of
having better benefits than that under the existing policy, and “upgrade” shall be
construed accordingly.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

6. The expressions used in this Notice shall, except where expressly defined in this
Notice or where the context otherwise requires, have the same respective meanings as
in the Act.

Sections 67 and 72

7. For the purposes of section 67(1)(d) and (2)(e) of the Act, an A&H intermediary
must also disclose the material information set out in paragraphs 12 to 18, 20 to 22, and
27(a) to (d).

[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

8. For the purposes of section 72 of the Act, the standards to be maintained by an

insurance intermediary in the conduct of business relating to disclosure and advisory
process include those set out in paragraphs 19, 23 to 25, 27(e), 30, 34 to 46, and 48.

[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

Representative of A&H Insurance Intermediary

9. Unless otherwise specified, an A&H insurance intermediary shall ensure that all
its A&H insurance representatives comply with any mandatory requirement imposed
on an A&H insurance intermediary in this Notice when the A&H insurance
representatives are acting on behalf of the A&H insurance intermediary.

Application to Direct Insurers

10. Unless otherwise specified, this Notice applies to a direct insurer, when it
provides advice or arranges contracts of insurance in respect of accident and health
policies underwritten by it, as if it were an A&H insurance intermediary.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

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Part I – Mandatory Requirements

Division 1: General Requirements for Accident and Health Policies

10A. No direct insurer shall use the word “Shield” in the name, description or title of
any accident and health policy issued by it unless that policy is a Medisave-approved
policy.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

10B. Notwithstanding paragraph 10A, a direct insurer may, prior to 1 November 2017,
continue to use the word “Shield” in the name, description or title of any accident and
health policy issued by it prior to 1 November 2015.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Division 1A: Disclosure Requirements for Accident and Health Policies

11. This Division sets out the minimum standard on disclosure to policy owners by
A&H insurance intermediaries in relation to accident and health policies that are
mandatory.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

General information about the A&H insurance intermediary and status of an A&H
insurance representative

12. An A&H insurance intermediary shall disclose to the policy owner in writing its
business name under which it conducts its insurance business, its business address
and its telephone number.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

13. An A&H insurance representative shall disclose the following to the policy owner
in writing:
(a) his name;
(b) the A&H insurance intermediary (or intermediaries) for which he acts.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

14. Where there is a change to such information referred to in paragraphs 12 and

13, an A&H insurance intermediary or an A&H insurance representative, as the case
may be, shall inform a policy owner, in writing, of any change to such information in
the next dealing right after the change, with the policy owner.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

15. An A&H insurance intermediary shall disclose in writing to a policy owner all
remuneration, including any commission, fee and other benefit, that it has received or
will be receiving for providing advice on, or arranging insurance contracts or both, in
respect of any accident and health policy.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Conflict of Interest

16. An A&H insurance intermediary shall disclose, in writing, to its policy owners
any actual or potential conflict of interest arising from any connection to or association

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with any insurer, including any material information or facts that may compromise its
objectivity in advice provided by the A&H insurance intermediary.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Disclosure when Providing Advice

17. When dealing with a policy owner who is an individual in respect of any accident
and health insurance policy, an A&H insurance intermediary shall disclose the following
information to the policy owner:

(a) Nature and objective of the policy

The A&H insurance intermediary shall disclose and explain to the policy
owner the nature and objective of the policy, including:

(i) whether the policy is a health policy or a personal accident policy; and

(ii) whether the policy seeks to reimburse health services costs incurred
by the insured, provide continuous income during disability or
sickness, provide lump sum benefits on the occurrence of specified
events, or a combination of these.

(b) Details of the insurer

In addition to disclosing to the policy owner the insurer underwriting the

policy and its relationship with that insurer required under section 67(1)(a)
and (b) of the Act, an A&H insurance intermediary must disclose to the
policy owner the business address of the insurer.

[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

(c) Contractual rights and obligations

The A&H insurance intermediary shall disclose and explain to the policy
owner—

(i) the party against which the policy owner may take action to enforce
his rights with respect to the policy he has purchased;

(ii) that he is responsible for the accuracy and completeness of the

information given to the insurer when applying for the policy and
when making a claim under the policy;

(iii) that any mis-statement or non-disclosure of material facts may affect

the validity of the policy; and

(iv) the amount of, frequency with which, and period over which,
payment is to be made in respect of the policy, including whether the
premium rate is guaranteed or non-guaranteed.

(d) Benefits of the policy

The A&H insurance intermediary shall disclose and explain to the policy
owner the benefits of the policy, including—

(i) the conditions under which payment of policy moneys are made;

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(ii) the conditions under which payment of policy moneys will not be
made;

(iii) the amount and timing of the payment of policy moneys;

(iv) whether the payment of policy moneys are guaranteed or non-

guaranteed; and

(v) any lien on the policy.

(e) Risks of the policy

The A&H insurance intermediary shall disclose and explain to the policy
owner the risks to be borne by the insured or policy owner in the purchase
of the policy, including:

(i) whether the insurer may alter the terms of contract, and if so, what are the
terms that may be altered and under what conditions would alterations be
allowed; and
(ii) whether the insurer may decline to renew the policy or unilaterally
terminate the policy.

(f) Provision on free-look period of the policy

The A&H insurance intermediary shall disclose and explain to the policy
owner, where applicable —

(i) the time frame for the policy owner to reconsider his purchase of an
accident and health policy (“free-look provision”); and

(ii) the terms and procedures for exercising the policy owner’s rights
under the free-look provision.

(g) Claim or termination

The A&H insurance intermediary shall disclose and explain to the policy
owner the procedures for, and restrictions on, a claim under his accident
and health policy and the procedures and charges for, and restrictions on,
the termination of the policy.

(h) Warnings, exclusions and disclaimers

The A&H insurance intermediary shall disclose and explain to the policy
owner all warnings, exclusions and disclaimers in relation to the product it
has recommended to the policy owner.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

18. Where a benefit illustration or a product summary in respect of the accident and
health policy prepared by the insurer or the A&H insurance intermediary is given to the
policy owner, the A&H insurance intermediary shall furnish the policy owner with, and
explain to the policy owner the content of any such benefit illustration or product
summary.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

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19. Where the A&H insurance intermediary prepares a benefit illustration or a

product summary for a policy owner, it shall be prepared according to industry
standards, if any, set for insurers.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

20. In the case of a personal accident policy, the A&H insurance intermediary shall
ensure that the policy owner is aware that policy moneys shall be paid as a result of
accident only.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

21. When dealing with a person who is, or would be the policy owner of a group
policy, in respect of any accident and health policy, an A&H insurance intermediary
shall disclose the following information to the insured:

(a) information described in paragraph 17;

(b) duration of coverage; and

(c) whether premium paid under the policy qualifies for any special tax
treatment, and if so, the nature of such incentive.

22. For a group policy, where any person insured under the policy is liable to pay
any premium (whether in monetary form or otherwise), the A&H insurance
intermediary shall disclose to every person in the group information as if it is dealing
with them individually.

Marketing Material

23. An A&H insurance representative shall only use marketing materials which —

(a) with respect to an integrated shield plan, is approved by the insurer issuing
the policy; and

(b) with respect to an accident and health policy, is approved by the A&H
insurance intermediary for which an A&H insurance representative acts for.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Telemarketing and Direct Marketing

24. Where an A&H insurance intermediary engages in any marketing of accident and
health policies which are not Medisave-approved policies over the telephone in a
manner that is designed to solicit and close a sale, it shall—

(a) where no advice is provided, communicate to the call recipient a warning

that—

(i) the call recipient may wish to seek advice from an A&H insurance
intermediary before making a commitment to purchase the policy;
and
(ii) in the event that the call recipient chooses not to seek advice from an
A&H insurance intermediary, he should consider whether the policy
in question is suitable for him; and

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(b) maintain a record of all conversations made over the phone sufficient for
the purpose of conducting audit checks where necessary.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

24A. An A&H insurance intermediary shall not close a sale of any Medisave-approved
policy over the telephone where it has engaged in the marketing of the Medisave-
approved policy over the telephone. Where an A&H insurance intermediary engages in
the marketing of any Medisave-approved policy over the telephone in a manner that is
designed to solicit a sale, it shall—

(a) communicate clearly to the call recipient that it is calling only to provide
information and not to advise the call recipient on the Medisave-approved
policy or sell that policy over the telephone;

(b) follow the script approved by the insurer issuing the policy, in providing
any information relating to the policy; and

(c) maintain a record of all conversations made over the phone sufficient for
the purpose of conducting audit checks where necessary.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Temporary Exemption

24B. Paragraph 24A of this Notice does not apply for the period from 13 April 2020 to
30 September 2022 (both dates inclusive).

[MAS Notice 120 (Amendment) 2020, with effect from 13 April 2020]
[MAS Notice 120 (Amendment No. 2) 2020, with effect from 1 October 2020]
[MAS Notice 120 (Amendment) 2021, with effect from 1 October 2021]

24BA. Where an A&H insurance intermediary engages in any marketing of any

Medisave-approved policy over the telephone in a manner that is designed to solicit,
but not close a sale of the Medisave-approved policy over the telephone, whether
advice is provided on the Medisave-approved policy or not, during the period
mentioned in paragraph 24B, it shall –

(a) follow the script approved by the insurer issuing the policy, in providing any
information relating to the policy; and

(b) maintain a record of all conversations made over the phone sufficient for the
purpose of conducting audit checks where necessary.

[MAS Notice 120 (Amendment) 2020, with effect from 13 April 2020]

24BB. Where an A&H insurance intermediary engages in any marketing of any

Medisave-approved policy over the telephone in a manner that is designed to solicit
and close a sale of the Medisave-approved policy over the telephone, whether advice
is provided on the Medisave-approved policy or not, during the period mentioned in
paragraph 24B, it shall—

(a) where no advice is provided by the A&H insurance intermediary on the

policy, communicate clearly to the call recipient a warning that –

(i) the call recipient may wish to seek advice from an A&H insurance
intermediary before making a commitment to purchase the policy; and

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(ii) in the event that the call recipient chooses not to seek advice from an
A&H insurance intermediary, the call recipient should consider
whether the policy in question is suitable for him;

(b) follow the script approved by the insurer issuing the policy, in providing
any information relating to the policy;

(c) conduct client call-back with every selected client or selected A&H
insurance representative client whom the A&H insurance intermediary had
closed the sale of any Medisave-approved policy with, within the time
frame for the client to reconsider his purchase of that policy as set out in
the terms of the policy in accordance with regulation 8 of the Insurance
(General Provisions) Regulations; and

(d) maintain a record of all conversations made over the phone sufficient for
the purpose of conducting audit checks where necessary.
[MAS Notice 120 (Amendment) 2020, with effect from 13 April 2020]

25. Where an A&H insurance intermediary engages in the marketing of accident and
health policies using direct response advertising communications through any
medium, including mail, print, TV, radio and electronic media, that is designed to solicit
and close a sale, it shall include, in all its marketing materials, a prominent warning
that—

(a) the policy owner may wish to seek advice from an A&H insurance
intermediary before purchasing the policy;

(b) in the event that the policy owner chooses not to seek advice from an A&H
insurance intermediary, he should consider whether the type of policy in
question is suitable for him; and

(c) in the event that the policy owner decides that the policy is not suitable
after purchasing the policy, he may terminate the policy in accordance with
the free-look provision, if any, and the insurer may recover from the policy
owner any expense incurred by the insurer in underwriting the policy.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Division 2: Disclosure Requirements for Life Policies that Contain Accident and Health
Benefits

26. Any A&H insurance intermediary who is a licensed financial adviser or an

exempt financial adviser and any A&H insurance representative who is a representative
of such a licensed financial adviser or an exempt financial adviser, providing any
financial advisory service in respect of life policies is to comply with the disclosure
requirements set out in the FA Act.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

27. In addition to those requirements, an A&H insurance intermediary or an A&H

insurance representative must comply with the following paragraphs of this Notice
(with the necessary modifications) when it provides advice to or arranges contracts of
insurance or both, in respect of life policies that contain accident and health benefits:

(a) paragraph 17(a), (c)(iv), (d)(i), (d)(ii), (e), (f), (g) and (h);

(b) paragraph 20;

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(c) paragraph 21(b) and (c);

(d) paragraph 22; and

(e) paragraph 24.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

Division 3: Additional Disclosure Requirements for Direct Insurers

28. When a direct insurer prepares a benefit illustration or a product summary for
policies that it underwrites, it shall be prepared according to industry standards, if any.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

28A. For every integrated shield plan or non-integrated shield plan which a direct
insurer issues, where the direct insurer provides the policy owner with any of the
following documents, it shall disclose the following information in the respective
documents:

(a) the information specified in Part A-1 of Appendix A in any product

summary that the insurer issues for the policy;
(b) the information specified in Part A-2 of Appendix A in any proposal form
that the insurer issues for the policy;
(c) the information specified in PartA-3 of Appendix A, in any acceptance letter
that the insurer issues for the policy;
(d) the information specified in Part A-4 of Appendix A, in any conditional letter
of offer that the insurer issues for the policy;
(e) the information specified in Part A-5 of Appendix A, in any premium
notification letter that the insurer issues for the policy;
(f) the information specified in Part A-6 of Appendix A, in any termination
letter that the insurer issues for the policy; and
(g) the information specified in Part A-7 of Appendix A, in any claims
settlement letter that the insurer issues for the policy.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]
28B. Where a direct insurer provides the policy owner who is an individual who is a
citizen or permanent resident of Singapore with a conditional letter of offer or
termination letter for any individual medical expense policy it issues, it shall include, in
a font size Times New Roman 10-point or larger, in the conditional letter of offer or the
termination letter, as the case may be, the statements as set out in Appendix B.

[MAS Notice 120 (Amendment) 2015, with effect from 30 June 2016]

28C. Where a direct insurer provides the policy owner with a product summary of any
accident and health policy it issues which is not a Medisave-approved policy, it shall
include, in a font size Times New Roman 10-point or larger, in the product summary,
the statement as set out in Appendix C.

[MAS Notice 120 (Amendment) 2015, with effect from 30 June 2016]

28D. Where a direct insurer provides the policy owner with a product summary of any
renewable short term accident and health policy it issues, it shall include, in a font size
Times New Roman 10-point or larger, in the product summary, the statement as set out
in Appendix D.

[MAS Notice 120 (Amendment) 2015, with effect from 30 June 2016]

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29. Where the accident and health policy for a policy owner who is an individual
provides that the insurer may vary, amend, or add to the terms of the contract of
insurance in the duration of the contract, the direct insurer shall:

(a) disclose the existing terms of the contract;

(b) disclose and explain the new terms of the contract;

(c) disclose and explain the manner in which the policy owner may accept the
new terms or the circumstances under which the policy owner will be
deemed to have accepted the new terms; and

(d) furnish the information under (a), (b), and (c) to the policy owner in writing
at least 30 days before the variation, amendment or addition takes effect.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Division 4: Requirements on Provision of Advice Relating to Accident and Health

Policies

30. No A&H insurance intermediary shall provide any advice with respect to any
health insurance policy to a person who may reasonably be expected to rely on the
advice if the A&H insurance intermediary does not have a reasonable basis for
providing the advice to the person.

31. For the purposes of paragraph 30, an A&H insurance intermediary does not have
a reasonable basis for providing an advice to a person unless —

(a) he has, for the purposes of ascertaining that the advice is appropriate,
having regard to the information possessed by him concerning the
objectives, financial situation and particular needs of the person, given
such consideration to, and conducted such investigation of, the subject-
matter of the advice as is reasonable in all the circumstances; and

(b) the advice is based on the consideration and investigation referred to in

sub-paragraph (a).
32. In this Division, a reference to the provision of advice is a reference to the
provision of advice either expressly or by implication and the expression “providing
advice” shall be construed accordingly.

This Division does not apply –

33. in circumstances where no recommendation is made or where only factual

information is provided with respect to any health policy.

[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

34. An A&H insurance intermediary that is involved in providing advice on health

policies to policy owners shall comply with the requirements set out in this Division in
relation to the following aspects:

(a) “Know-Your-Client”;

(b) needs analysis; and

(c) documentation and record keeping.

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[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

“Know-Your-Client”

35. In order for an A&H insurance intermediary to provide an advice to an individual

that takes into account a policy owner’s investment objectives, financial situation and
particular needs, the A&H insurance intermediary shall collect and document the
following information from the policy owner:

(a) the objectives of the policy owner, including—

(i) the event, or events, which financial impact the insured is seeking
protection from; and
(ii) the nature of benefits payment that the policy owner is seeking,
whether it is a lump sum payment or in periodical payments, and
whether it relates to cost actually incurred by the policy owner or
insured; and
(iii) the class of hospital ward that the insured is seeking to stay in;

(b) the employment status of the policy owner;

(c) the financial situation of the policy owner, including assets, liabilities, cash
flow and income;

(d) the source and amount of the policy owner’s regular income;

(e) the financial commitments of the policy owner;

(f) any existing health policy of the insured, including any policy moneys
arising from any insurance scheme established and maintained by the
Central Provident Fund Board;

(g) any medical conditions that the insured may have; and

(h) for any recommendation made in respect of a health policy that intends to
include the policy owner’s dependants as the insureds, the information
listed in (a) to (e) for such dependants.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

36. In order for an A&H insurance intermediary to provide advice in relation to a

group insurance policy that takes into account a policy owner’s investment objectives,
financial situation and particular needs, the A&H insurance intermediary shall collect
and document the following information from the policy owner:

(a) the objectives of the policy owner, including

(i) the financial impact of any event for which the policy owner is seeking
protection for members of the group;

(ii) the mode of policy moneys payment that the insured is seeking,
whether it is a lump sum payment or in periodical payments, and
whether it relates to cost actually incurred by the policy owner or
insured; and

(iii) the class of hospital ward that the insured is seeking to stay in.

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(b) the size and composition of the group, including a breakdown by gender,
age, income, occupation;

(c) the claims history of the group; and

(d) any medical conditions that members of the group may have.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

37. An A&H insurance intermediary shall highlight the following in writing to its
policy owner:

(a) the information provided by the policy owner will be the basis on which
the advice will be made; and
(b) any inaccurate or incomplete information provided by the policy owner
may affect the suitability of the advice.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Needs Analysis

38. An A&H insurance intermediary shall analyse the information provided by the
policy owner and identify the type of policy that is suitable for the insured based on the
information obtained from the policy owner.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

39. Where the A&H insurance intermediary is unable to identify a suitable policy, it
shall inform the policy owner accordingly.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

40. An A&H insurance intermediary shall explain to its policy owner the basis for its
advice. The basis on which the A&H insurance intermediary is providing the advice to
the policy owner shall be documented.
[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

41. Where a policy owner does not want to:

(a) provide any information requested by the A&H insurance intermediary in

accordance with paragraph 35 or 36; or

(b) accept the advice of the A&H insurance intermediary and chooses to
purchase another health policy which is not advised by the A&H insurance
intermediary,

the A&H insurance intermediary may proceed with the policy owner's request, but it
shall document the decision of the policy owner and inform the policy owner that it is
the policy owner’s responsibility to ensure the suitability of the type of policy selected.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

42. Where a policy owner chooses not to receive any advice from an A&H insurance
intermediary, the A&H insurance intermediary shall properly document the policy
owner’s decision.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

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Documentation and Record Keeping

43. An A&H insurance intermediary shall furnish to its policy owner a document
containing the following when providing an advice in respect of a health policy to the
policy owner—

(a) a summary of the information gathered by the A&H insurance intermediary

pursuant to paragraph 35 or 36; and

(b) any advice provided to the policy owner by the A&H insurance
intermediary and the basis for the advice,

and, where applicable, a statement that the policy owner does not want to—

(i) provide any information requested by the A&H insurance

intermediary in accordance with paragraph 35 or 36;

(ii) accept the advice of the A&H insurance intermediary and has chosen
to purchase another health policy which is not that advised by the
A&H insurance intermediary ; or

(iii) receive any advice from the A&H insurance intermediary,

before the policy owner signs on the application form for the purchase of a health policy
or gives his consent for the withdrawal or surrender of a health policy.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Switching of Accident and Health Insurance Policies

44. An A&H insurance intermediary shall not provide advice to a policy owner who
is an individual to switch from one accident and health policy (referred to as “original
policy”) to another accident and health policy (referred to as “replacement policy”) in
a manner that would be detrimental to the insured. In considering whether a switch is
detrimental, the Authority shall have regard to a number of factors, including—
(a) whether the policy owner suffers any penalty for terminating the original
policy;

(b) whether the policy owner will incur any transaction cost without gaining
any real benefit from such a switch;

(c) whether the replacement policy confers a lower level of benefit at a higher
cost or same cost to the insured, or the same level of benefit at a higher
cost; and

(d) whether the replacement policy is less suitable for the insured.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

45. An A&H insurance intermediary that provides an advice to a policy owner to

switch from one accident and health policy to another shall comply with the
requirements in relation to provision of advice set out in this Division.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

46. An A&H insurance intermediary shall disclose, in writing, to a policy owner —

(a) any fee or charge the policy owner would have to bear; and

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(b) the changes in level of benefits,

if he were to switch from one accident and health policy to another, in order to ensure
that the policy owner is able to make an informed decision on whether to switch.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Division 5: Requirements on Provision of Advice Relating to Life Policies that Contain

Accident and Health Benefits

47. Any A&H insurance intermediary who is a licensed financial adviser or an

exempt financial adviser and any A&H insurance representative who is a representative
of such a licensed financial adviser or an exempt financial adviser, providing any
financial advisory service in respect of life policies is to comply with requirements
relating to recommendations and provision of advice set out in the FA Act and Notices
issued thereunder.

48. In addition to these requirements, an A&H insurance intermediary or A&H

insurance representative shall comply (with necessary modifications) with paragraphs
35(a), (f), (g), (h), 36 and 43 of this Notice when it provides advice in respect of life
policies that contain accident and health benefits.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

Division 6: Offences relating to this Part

49. [Deleted by MAS Notice 120 (Amendment) 2015, with effect from 1 November
2015]

50. [Deleted by MAS Notice 120 (Amendment) 2015, with effect from 1 November
2015]

51. Any person who fails to comply with any requirement under any paragraph in
Part I of this Notice shall be guilty of an offence punishable under section 142(3) of the
Act.

[MAS Notice 120 (Amendment) 2022, with effect from 1 June 2022]

Part II – Non-mandatory Best Practice Standards

Information Disclosure and Provision of Advice

52. The best practice standards which an A&H insurance intermediary is expected
to meet in all product information disclosures and information (including marketing
materials) given to policy owners are as follows.
(a) Information disclosed to policy owners in any advertisement or publicity
material in any media should be presented in plain language, and in a
manner that is easy for the policy owner to understand.

(b) Jargon or technical terms used should be clearly explained to policy

owners.

(c) Information disclosed to policy owners should not be limited to seeking

compliance with requirements the Act and this Notice, but should accord
with industry best practices. In addition, the information provided should
be sufficient to help policy owners make an informed decision.

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(d) Warning and important information such as the nature and objective of the
product, risks of the product, fees and charges, and contractual
rights and obligations of policy owners and the insurer, should be
prominently presented and clearly explained.

(e) Information disclosed to policy owners should not be ambiguous in

language or presentation.

(f) Information relating to accident and health insurance products should be

disclosed in an objective and unbiased manner.

(g) Where an opinion is expressed, there should be a reasonable basis for

expressing the opinion and it should be unambiguously stated that it is a
statement of opinion.

(h) Documents to be given to policy owners should be kept up-to-date.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

53. Where an A&H insurance intermediary provides an advice on or arranges

contracts of insurance in respect of accident and health policy, it is expected to comply
with any industry standard and/or guideline on needs-based sales process.

Monitoring of switching for long-term accident and health policies

54. To facilitate the monitoring of switching for long-term accident and health
policies that may be detrimental to an insured’s interests by an A&H insurance
representative, the A&H insurance intermediary should ensure that the policy owner
declares in writing whether he had been advised by the A&H insurance representative
to switch policy. For the avoidance of doubt, such a declaration should also be made in
the following situations:

(a) the switch is to another accident and health policy with different accident
and health benefits as the policy that was terminated; and
(b) the policy that was terminated was purchased from another A&H insurance
intermediary.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

55. If the policy owner declares that he had been advised by an A&H insurance
representative to switch, the A&H insurance intermediary should ensure that the policy
owner makes a declaration on –

(a) whether the representative has drawn his attention to the costs and
possible disadvantages associated with the switch; and

(b) whether he wishes to proceed with the switch notwithstanding that the
fees, charges or disadvantages that may arise from the switch could
outweigh any potential benefits.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

56. Where the policy owner declares that the A&H insurance representative has
recommended a switch, the A&H insurance intermediary should ensure that the
supervisor of the A&H insurance representative reviews the switching
recommendation, and indicates in writing, whether he agrees with the recommendation
made and if not, the actions that have been taken to rectify the situation. In considering

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whether a switch is appropriate, the supervisor should take into account the factors
stated in paragraph 44.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

57. An A&H insurance intermediary should institute controls, processes and

procedures to effectively monitor and track the switching of long-term accident and
health plans, including but not limited to the following –

(a) tracking the volume of switches so as to identify any A&H insurance

representatives with an unusually high volume of switching transactions;

(b) putting in place procedures to ensure that each switch recommended by

an A&H insurance representative is reviewed by a supervisor from the A&H
insurance intermediary for appropriateness; and

(c) implementing procedures and controls to identify any unusual trends in

switching transactions.
[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

58. Where an A&H insurance intermediary detects a switch that is not declared by
the policy owner, the A&H insurance intermediary should ensure that the supervisor of
the A&H insurance representative reviews the switch and indicates in writing whether
he agrees with the recommendation made, if any, and if not, the actions that have been
taken to rectify the situation. In considering whether a recommended switch is
appropriate, the supervisor should take into account the factors stated in paragraph 44.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

59. An A&H insurance intermediary should ensure that the back-end controls,
processes and procedures implemented are commensurate with the A&H insurance
intermediary’s nature of business and risks.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

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APPENDIX A: Information to be included in the respective documents for integrated

shield plans and non-integrated shield plans

A-1: Information to be disclosed in the product summary

Comparison of Benefits
1. The insurer shall –

(a) disclose that an integrated shield plan comprises a MediShield Life

Component and the additional private insurance coverage;

(b) disclose that the final payout, in the event of hospitalisation or medical
treatment, will comprise both the MediShield Life Component payout and
the integrated shield plan payout, where applicable; and

(c) provide a comparison of the benefits provided by the MediShield Life

Scheme and the integrated shield plan.

Breakdown of standard premium rates

2. The insurer shall provide a breakdown of the premiums payable for all age bands
on the basis that the insured does not have any pre-existing condition at the time that
the product summary is prepared in respect of --

(a) a citizen or permanent resident of Singapore insured under an integrated

shield plan; and

(b) a foreigner insured under a non-integrated shield plan.

The insurer shall also include information on the applicable Medisave Withdrawal Limits
and cash outlay. Where the plan is an integrated shield plan, the insurer shall ensure that
the breakdown of premiums payable shows separately the premiums payable for the
MediShield Life Component and the additional private insurance coverage.

Risks and limitations of switching or upgrading

3. The insurer shall highlight the risks and limitations of—

(a) switching the integrated shield plan issued by the insurer to that issued by
another insurer; and

(b) upgrading the integrated shield plan.

Option to downgrade an existing integrated shield plan

4. The insurer shall highlight that, where the policy owner has concerns on
affordability, the policy owner has the option to switch to another integrated shield plan
with a lower coverage but more affordable plan or, terminate his integrated shield plan.
Where the insured is a citizen or permanent resident of Singapore, the insurer shall
inform the policy owner that the insured will continue to be covered by the MediShield
Life Scheme, even if the policy owner terminates the insured’s existing integrated shield
plan.

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A-2: Information to be disclosed in the proposal form

Monies in Medisave account
5. The insurer shall ensure that the policy owner declares, before he purchases any
integrated shield plan issued by the insurer, that he has received advice from his A&H
insurance representative to consider the policy owner’s long-term financial commitment
to pay the premiums for an integrated shield plan and, that the policy owner should have
sufficient monies in his Medisave account or sufficient means to pay the MediShield Life
Scheme premiums on an ongoing basis.

Risks and limitations of switching or upgrading

6. Where the policy owner has indicated to the insurer that he intends to switch or
upgrade the policy owner’s existing integrated shield plan, the insurer shall ensure that
the policy owner declares that the policy owner’s A&H insurance representative has
highlighted to the policy owner the risks and limitations of —

(a) switching the integrated shield plan issued by the insurer to that issued by
another insurer; or

(b) upgrading the integrated shield plan.

A-3: Information to be disclosed in the acceptance letter

Risks and limitations of switching or upgrading

7. Where the policy owner has indicated to the insurer that he intends to switch or
upgrade the policy owner’s existing integrated shield plan, the insurer shall highlight to
the policy owner the risks and limitations of—

(a) switching the integrated shield plan issued by the insurer to that issued by
another insurer; or

(b) upgrading the integrated shield plan.

Start of policy coverage

8. Where the inception date of the policy is after the issuance of the acceptance letter,
the insurer shall state that –

(a) the policy commences on the inception date of the policy and not on the date
of the acceptance letter;

(b) the policy inception date will be reflected in the policy schedule, which will
be sent to the policy owner after the issuance of the policy; and

(c) where the inception date of the policy is dependent on the successful
deduction of monies from the policy owner’s medisave account, the insurer
shall also state that the policy schedule will be sent to the policy owner upon
the successful deduction of monies from the policy owner’s medisave
account.

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A-4: Information to be disclosed in the conditional letter of offer

Breakdown of premiums payable for insured

9. The insurer shall, in respect of any integrated shield plan--

(a) provide a breakdown of the premiums payable for the MediShield Life
Component and the additional private insurance coverage;

(b) a further breakdown of the premiums payable for the MediShield Life
Component to reflect any applicable government subsidy, any premium
rebate and any additional premiums for serious pre-existing conditions;

(c) provide a further breakdown of the premiums for additional private

insurance coverage to reflect any rebates or any loading imposed by the
insurer; and

(d) indicate the respective amounts payable from the policy owner’s medisave
account and cash outlay, where applicable.

10. The insurer shall, in respect of any non-integrated shield plan, provide a
breakdown of the premiums payable to reflect any rebates or any loading imposed by
the insurer. The insurer shall indicate the respective amounts payable from the policy
owner’s medisave account and cash outlay, where applicable.

Medisave Withdrawal Limits

11. The insurer shall provide information on the Medisave Withdrawal Limits
applicable for –

(a) the MediShield Life Component of an integrated shield plan;

(b) the additional private insurance coverage of an integrated shield plan, in the
case where the insured is a citizen or permanent resident of Singapore; or

(c) the non-integrated shield plan, in the case where the insured is a foreigner.

Risk-loading factor and standard premium rates

12. Where an insurer offers a policy which provides benefits for any medical
conditions that would otherwise be excluded, for additional premiums, the insurer shall
indicate the risk-loading factor to be applied to the premiums on the basis that the policy
owner does not have any pre-existing condition.

13. The insurer shall provide a breakdown of the premiums payable for all age bands
on the basis that the policy owner does not have any pre-existing condition at the time
that the product summary is prepared in respect of –

(a) a citizen or permanent resident of Singapore insured under an integrated

shield plan; and

(b) a foreigner insured under a non-integrated shield plan.

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The insurer shall also include information on the applicable Medisave Withdrawal Limits
and cash outlay. Where the plan is an integrated shield plan, the insurer shall ensure that
the breakdown of premiums payable shows separately the premiums payable for the
MediShield Life Component and the additional private insurance coverage.

Risks and limitations of switching or upgrading

14. Where the policy owner has indicated to the insurer that he intends to switch or
upgrade the policy owner’s existing integrated shield plan, the insurer shall highlight to
the policy owner the risks and limitations of—

(a) switching the integrated shield plan issued by the insurer to that issued by
another insurer; or

(b) upgrading the integrated shield plan.

MediShield Life coverage

15. Where the insured is a citizen or permanent resident of Singapore, the insurer
shall disclose that –

(a) the integrated shield plan comprises a MediShield Life Component; and

(b) if the policy owner does not purchase the integrated shield plan, the
MediShield Life Scheme will continue to provide lifetime cover to the
insured, without excluding any existing medical condition.

Start of policy coverage

16. Where the inception date of the policy is after the issuance of the acceptance letter,
the insurer shall state that –

(a) the policy commences on the inception date of the policy and not on the date
of the acceptance letter;

(b) the policy inception date will be reflected in the policy schedule, which will
be sent to the policy owner after the issuance of the policy; and

(c) where the inception date of the policy is dependent on the successful
deduction of monies from the policy owner’s medisave account, the insurer
shall also state that the policy schedule will be sent to the policy owner upon
the successful deduction of monies from the policy owner’s medisave
account.

A-5: Information to be disclosed in the premium notification letter

MediShield Life coverage
17. Where the insured is a citizen or permanent resident of Singapore, the insurer
shall disclose that –

(a) the integrated shield plan comprises a MediShield Life Component; and
(b) if the policy owner does not purchase the integrated shield plan, the
MediShield Life Scheme will continue to provide lifetime cover to the
insured, without excluding any existing medical conditions.

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Option to downgrade an existing integrated shield plan

18. The insurer shall highlight that, where the policy owner has concerns on
affordability, the policy owner has the option to switch to another integrated shield plan
with a lower coverage but more affordable plan or, terminate his integrated shield plan.
Where the insured is a citizen or permanent resident of Singapore, the insurer shall
inform the policy owner that the insured will continue to be covered by the MediShield
Life Scheme, even if the policy owner terminates the insured’s existing integrated shield
plan.

List of policies due for renewal

19. The premium notification letter shall include a list of the policies issued by the
insurer that are purchased by the policy owner, at least one month before the date of
renewal of each policy. The insurer shall, in respect of any integrated shield plan –

(a) provide a breakdown of the premiums payable for the MediShield Life
Component and the additional private insurance coverage;

(b) provide a further breakdown of the premiums payable for the MediShield
Life Component to reflect any applicable government subsidy;

(c) indicate where there are exclusions imposed on the insured in the policy;
and

(d) indicate the respective amounts payable from the policy owner’s medisave
account and cash outlay, where applicable.

The insurer shall, in respect of any non-integrated shield plan –

(a) indicate where there are exclusions imposed on the insured in the policy;
and

(b) indicate the respective amounts payable from the policy owner’s medisave
account and cash outlay, where applicable.

Breakdown of premiums payable for insured

20. The insurer shall, in respect of any integrated shield plan—

(a) provide a breakdown of the premiums payable for the MediShield Life
Component and the additional private insurance coverage;

(b) a further breakdown of the premiums payable for the MediShield Life
Component to reflect any applicable government subsidy, any premium
rebate and any additional premiums for serious pre-existing conditions;

(c) provide a further breakdown of the premiums for additional private

insurance coverage to reflect any rebates or any loading imposed by the
insurer; and

(d) indicate the respective amounts payable from the policy owner’s medisave
account and cash outlay, where applicable.

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21. The insurer shall, in respect of any non-integrated shield plan, provide a
breakdown of the premiums payable to reflect any rebates or any loading imposed by
the insurer. The insurer shall indicate the respective amounts payable from the policy
owner’s medisave account and cash outlay, where applicable.

Medisave Withdrawal Limits

22. The insurer shall provide information on the Medisave Withdrawal Limits
applicable for-

(a) the MediShield Life Component of an integrated shield plan;

(b) the additional private insurance coverage of an integrated shield plan, in the
case where the insured is a citizen or permanent resident of Singapore; or

(c) the non-integrated shield plan, in the case where the insured is a foreigner.

Breakdown of standard premium rates

23. The insurer shall provide a breakdown of the premiums payable for all age bands
on the basis that the policy owner does not have any pre-existing condition at the time
that the product summary is prepared in respect of –

(a) a citizen or permanent resident of Singapore insured under an integrated

shield plan; and

(b) a foreigner insured under a non-integrated shield plan.

The insurer shall also include information on the applicable Medisave Withdrawal Limits
and cash outlay. Where the plan is an integrated shield plan, the insurer shall ensure that
the breakdown of premiums payable shows separately the premiums payable for the
MediShield Life Component and the additional private insurance coverage.

A-6: Information to be disclosed in the termination letter

Risks and limitations of switching or upgrading

24. The insurer shall highlight the risks and limitations of—

(a) switching the integrated shield plan issued by the insurer to that issued by
another insurer; or

(b) upgrading the integrated shield plan.

MediShield Life coverage

25. Where the insured is a citizen or permanent resident of Singapore and is not
terminating this policy in order to switch to another integrated shield plan, the
insurer shall inform the policy owner that the insured will continue to be covered
by the MediShield Life Scheme, without excluding any existing medical condition,
even if the policy owner terminates the insured’s existing integrated shield plan.

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Reinstatement period
26. For cases where a policy owner terminates a policy with the intention to switch,
the insurer shall highlight to the policy owner that the policy owner may reinstate the
policy within 30 days of the date of notice of termination without the need for the insured
to provide a health declaration.

A-7: Information to be disclosed in the claims settlement letter

Breakdown of claims paid out

27. In the event of a claims payment, the insurer shall provide the policy owner with
a breakdown of the claims to be paid out under each of the following, where applicable
–

(a) the MediShield Life Component;

(b) the additional private insurance coverage; and

(c) integrated shield plan rider, if any.

[MAS Notice 120 (Amendment) 2015, with effect from 1 November 2015]

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APPENDIX B: Standardised Disclosures for all Individual Medical Expense Policies

Statement to be included in the Conditional Letter of Offer for the policy

If you are a citizen or permanent resident of Singapore, you are covered by

MediShield Life for life, for treatments in Singapore, regardless of pre-existing
medical conditions or other circumstances that you face. For more details on your
coverage, please visit www.medishieldlife.sg.

Statement to be included in the Termination Letter for the policy

If you are a citizen or permanent resident of Singapore, you are covered by

MediShield Life for life, for treatments in Singapore even though you have
terminated the policy. The cover is provided regardless of pre-existing medical
conditions or other circumstances that you face. For more details on your
coverage, please visit www.medishieldlife.sg.

[MAS Notice 120 (Amendment) 2015, with effect from 30 June 2016]

APPENDIX C: Standardised Disclosures for all accident and health policies which
are not Medisave-approved policies

Statement to be included in the product summary of the policy

This policy is not a Medisave-approved policy and you may not use Medisave to
pay the premium for this policy.

[MAS Notice 120 (Amendment) 2015, with effect from 30 June 2016]

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APPENDIX D: Standardised Disclosures for renewable Short-term Accident and

Health Policies

Statement to be included in the product summary of the policy

This is a short-term accident and health policy1 and the insurer is not required to
renew this policy. The insurer may terminate this policy by giving you ____2 notice
in writing.
*If you have any existing medical condition at the policy renewal date, you may
not be covered under the renewed policy for such a medical condition. If such a
medical condition is covered under the renewed policy, you may need to pay
additional premiums.

1
The insurer shall use in the above statement the same term that is used in the
product summary to refer to the short-term accident and health policy.
2
The insurer shall set out the relevant notice period, whether in days, weeks or
months.
* The insurer shall include this statement only if it imposes exclusions or require
additional premiums to cover existing medical conditions under the short-term
accident and health policy at renewal.

[MAS Notice 120 (Amendment) 2015, with effect from 30 June 2016]

*Endnotes of History of Amendments

1. MAS Notice 120 (Amendment) 2015, dated 30 October 2015 with effect from 1
November 2015, except paragraphs 2(z) and 4 which are effective from 30 June
2016.
2. MAS Notice 120 (Amendment) 2020 with effect from 13 April 2020.
3. MAS Notice 120 (Amendment No. 2) 2020 with effect from 1 October 2020.
4. MAS Notice 120 (Amendment) 2021 with effect from 1 October 2021.
5. MAS Notice 120 (Amendment) 2022 with effect from 1 June 2022.

Source: MAS Website

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CHAPTER
13
NOTICE NO: MAS 120 – DISCLOSURE AND
ADVISORY PROCESS REQUIREMENTS FOR
ACCIDENT AND HEALTH INSURANCE PRODUCTS

Please refer to the full notice for more details as not all information is detailed here.

• Except for the Notices which were extracted in full from the MAS website, amendments were only made to the title of the
Acts in the relevant paragraphs of the study text.
• As the respective notices are still pending release from MAS, they will be updated once MAS has published them.

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Objective of Notice No: • Comprises both mandatory requirements and best practice standards on the
MAS 120 disclosure of information and provision of advice to policy owners for A&H
policies and life policies that provide A&H benefits.
General Requirements For • No direct insurer should use the word “Shield” when naming A&H policy, unless
A&H Policies that policy is a Medisave-approved policy.
Types of products covered • “ElderShield policy” means a policy purchased under the ElderShield Scheme
by this Notice and their as defined in regulation 2 of the Central Provident Fund (Withdrawals for
definitions ElderShield Scheme) Regulations.
• “ElderShield Supplement policy” means a policy purchased under the
ElderShield Supplement Scheme as defined under regulation 2 of the Central
Provident Fund (Withdrawals for ElderShield Scheme) Regulations.
• “Health policy” means an accident and health policy that is not a personal
accident policy.
• “Individual medical expense policy” means an accident and health policy, other
than an integrated shield plan and a non-integrated shield plan.
• “Medisave-approved policy” means any CareShield Life Supplement policy,
ElderShield policy, ElderShield Supplement policy, integrated shield plan or non-
integrated shield plan.
• “MediShield Life Component” has the same meaning as regulation 2 of the
MediShield Life Scheme (Private Medical Insurance Scheme) Regulations.
• “MediShield Life Scheme” means the Scheme established under section 3 of the
MediShield Life Scheme Act 2015 (No. 4 of 2015).
• “Non-integrated shield plan” has the same meaning as in regulation 2 of the
MediShield Life Scheme (Private Medical Insurance Scheme) Regulations.
• “Personal accident policy” means an accident and health policy where accident
and health benefits are paid out only—
a. in the event of an injury to, or disability of, the insured as a result of
accident;
b. on the death by accident of the insured; or
c. on the occurrence of a combination of (a) and (b).

52
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Disclosure requirements • General information about the A&H insurance intermediary (including its
for sales of: business name under which it conducts its insurance business, its business
• A&H policies address and its telephone number) and status of an A&H insurance
representative (including his name, the A&H insurance intermediary or
intermediaries for which he acts).
• Remuneration of the A&H insurance intermediary.
• Conflict of interest.
• Disclosure when providing advice, including:
» Nature and objective of the policy;
» Details of the insurer;
» Contractual rights and obligations.
» Benefits of the policy.
» Risks of the policy.
» Provision on free-look period of the policy.
» Claim on termination.
» Warnings, exclusions and disclaimers.
» Provisions and explanations of any benefit illustration, product summary,
and group policy under A&H policies.
• Marketing material.
• Telemarking and direct marketing.
Disclosure requirements • Regulatory requirements by an A&H insurance intermediary and an A&H
for sales of: insurance representative of a licensed or exempt financial adviser, when
• Life policies that providing advice and/or arrange life policies containing A&H benefits.
contain A&H benefits • Please refer to the respective paragraphs of the Notice:
» Paragraph 17(a), (c)(iv), (d)(i), (d)(ii), (e), (f), (g) and (h);
» Paragraph 20;
» Paragraph 21(b) and (c);
» Paragraph 22; and
» Paragraph 24.
Advisory process • Objectives of the policy owner, including—
requirements in respect » the event, or events, which financial impact the insured is seeking
of: protection from; and
• Know-your-client » the nature of benefits payment that the policy owner is seeking, whether it
(Individual) is a lump sum payment or in periodical payments, and whether it relates to
cost actually incurred by the policy owner or insured; and
» the class of hospital ward that the insured is seeking to stay in;
• Employment status of the policy owner;
• Financial situation of the policy owner, including assets, liabilities, cash flow and
income;
• Source and amount of the policy owner’s regular income;
• Financial commitments of the policy owner;
• Any existing health policy of the insured, including any policy moneys arising
from any insurance scheme established and maintained by the Central
Provident Fund Board;
• Any medical conditions that the insured may have; and
• For any recommendation made in respect of a health policy that intends
to include the policy owner’s dependants as the insureds and the required
information for such dependants.
Advisory process • Objectives of the policy owner, including
requirements in respect » the financial impact of any event for which the policy owner is seeking
of: protection for members of the group;
• Know-your-client » the mode of policy moneys payment that the insured is seeking, whether it
(Group) is a lump sum payment or in periodical payments, and whether it relates to
cost actually incurred by the policy owner or insured; and
» the class of hospital ward that the insured is seeking to stay in.
• Size and composition of the group, including a breakdown by gender, age,
income, occupation;
• Claims history of the group; and
• Any medical conditions that members of the group may have.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Advisory process • Analyse the information provided by the policy owner and identify the type of
requirements in respect policy that is suitable for the insured based on the information obtained from
of: the policy owner.
• Needs analysis • If unable to identify a suitable policy, it shall inform the policy owner
accordingly.
• Explain to its policy owner the basis for its advice and the basis shall be
documented.
• Where a policy owner does not want to provide any information or accept the
advice of the A&H insurance intermediary and chooses to purchase another
health policy which is not advised by the A&H insurance intermediary,
» A&H insurance intermediary may proceed with the policy owner's request,
but it shall document the decision of the policy owner and inform the policy
owner that it is the policy owner’s responsibility to ensure the suitability of
the type of policy selected.
Advisory process • Furnish the policy owner a document containing the following when providing
requirements in respect an advice in respect of a health policy to the policy owner
of: » Know-your-client (Individual); or
• Documentation and » Know-your-client (Group).
record keeping • Any advice provided to the policy owner by the A&H insurance intermediary and
the basis for the advice.
• Where applicable, a statement that the policy owner does not want to:
» Provide any information requested by the A&H insurance intermediary
under Know-your-client;
» Accept the advice of the A&H insurance intermediary and has chosen
to purchase another health policy which is not that advised by the A&H
insurance intermediary; or
» Receive any advice from the A&H insurance intermediary
Advisory process • An A&H insurance intermediary shall not provide advice to a policy owner
requirements in respect who is an individual to switch from one accident and health policy (referred
of: to as “original policy”) to another accident and health policy (referred to as
• Switching “replacement policy”) in a manner that would be detrimental to the insured. In
considering whether a switch is detrimental, the Authority shall have regard to a
number of factors, including—
» Whether the policy owner suffers any penalty for terminating the original
policy;
» Whether the policy owner will incur any transaction cost without gaining
any real benefit from such a switch;
» Whether the replacement policy confers a lower level of benefit at a higher
cost or same cost to the insured, or the same level of benefit at a higher
cost; and
» Whether the replacement policy is less suitable for the insured.
• An A&H insurance intermediary shall disclose, in writing, to a policy owner:
» Any fee or charge the policy owner would have to bear; and
» The changes in level of benefits.
Additional disclosure • Meeting the industry standards on the preparation of a benefit illustration or a
requirements being product summary in respect of a policy that the direct insurer underwrites.
adhered to by direct • Disclosure of relevant information in the respective documents for every
insurers Integrated Shield Plan (IP) or non-IP.
• Required font size (Times New Roman 10-point or larger) for product summary,
statement, conditional offer letter or termination letter with standardised
relevant statement of disclosures for any individual Medical Expense Insurance
policy, as well as any A&H policy not being Medisave-approved policy.
• Disclosing and explaining the policy terms, including any addition, amendment
or variation to be made in writing to the policy owner, at least 30 days before
taking effect.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Non-mandatory best • Information disclosed to policy owners in any advertisement or publicity
practice standards on material in any media should be presented in plain language, and in a manner
information disclosure, that is easy for the policy owner to understand.
provision of advice • Jargon or technical terms used should be clearly explained to policy owners.
• Information disclosed to policy owners should not be limited to seeking
compliance with requirements the Act and this Notice, but should accord
with industry best practices. In addition, the information provided should be
sufficient to help policy owners make an informed decision.
• Warning and important information such as the nature and objective of the
product, risks of the product, fees and charges, and contractual rights and
obligations of policy owners and the insurer, should be prominently presented
and clearly explained.
• Information disclosed to policy owners should not be ambiguous in language or
presentation.
• Information relating to accident and health insurance products should be
disclosed in an objective and unbiased manner.
• Where an opinion is expressed, there should be a reasonable basis for
expressing the opinion and it should be unambiguously stated that it is a
statement of opinion.
• Documents to be given to policy owners should be kept up-to-date.
Non-mandatory best • An A&H insurance intermediary should institute controls, processes and
practice standards on procedures to effectively monitor and track the switching of long-term accident
monitoring of switching and health plans, including but not limited to the following –
for long-term A&H policies » Tracking the volume of switches so as to identify any A&H insurance
representatives with an unusually high volume of switching transactions;
» Putting in place procedures to ensure that each switch recommended by
an A&H insurance representative is reviewed by a supervisor from the A&H
insurance intermediary for appropriateness; and
» Implementing procedures and controls to identify any unusual trends in
switching transactions.

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Health Insurance

CHAPTER 14
FINANCIAL NEEDS ANALYSIS

CHAPTER OUTLINE

1. Introduction
2. Needs Selling Versus Product Selling
3. What Is Fact-Finding?
4. Identifying & Quantifying Needs
5. Product Recommendations
6. Presenting Your Recommendations
7. Periodic Client Review

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ know how needs selling differs from product selling
▪ explain what fact-finding is
▪ understand the purposes served by the various sections of the Fact-Find Document
▪ know the answers to the quantification of needs questions which must be taken into
consideration, when going through the prospective client’s Fact-Find Document to
identify client’s needs
▪ understand the importance of an emergency fund
▪ know at which stage of the prospective client’s life cycle when the need to protect
one’s earnings against disability and ill health, is critical
▪ know what to do if the prospective client has the following existing policies:
- Disability Income Insurance
- Life Insurance with Total & Permanent Disability Benefit
- Medical Expense Insurance
- Critical Illness Insurance
- Personal Accident Insurance
- Long-Term Care Insurance
- Managed Healthcare Insurance
- Hospital Cash Insurance
- Life Insurance Policy & Work Injury Compensation Insurance
▪ know how to quantify the following:
- disability income protection needs
- medical and ancillary costs
- hospital cash income needs

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 14. Financial Needs Analysis

- Critical Illness Insurance

▪ list the three basic principles that you should be aware of, before making any product
recommendation
▪ know the types of product knowledge that you must possess
▪ understand why is affordability an important factor when you are selecting a suitable
product to recommend to the prospective client
▪ know the important points that you must note on policy selection
▪ know the systematic process of explaining your recommendations to the prospective
client
▪ know when the reviews for prospective client are necessary

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Contents
CHAPTER OUTLINE ......................................................................................................... 302
LEARNING OUTCOMES .................................................................................................. 302
1. INTRODUCTION ..................................................................................................... 305
2. NEEDS SELLING VERSUS PRODUCT SELLING ................................................... 305
3. WHAT IS FACT-FINDING? ...................................................................................... 306
A. Common Sections Of The Fact-Find Document ............................................ 306
4. IDENTIFYING & QUANTIFYING NEEDS ................................................................ 311
A. Identifying Needs ............................................................................................ 311
A1. Emergency Fund....................................................................................... 311
A2. Employment Status & Occupation .......................................................... 311
A3. Life Stages ................................................................................................ 311
A4. Dependants ............................................................................................... 312
A5. Existing Insurance Policies ...................................................................... 312
A6. Need For Health Insurance ...................................................................... 314
B. Quantifying Needs .......................................................................................... 315
B1. Disability Income Protection Needs ........................................................ 315
B2. Medical Costs ........................................................................................... 317
B3. Hospital Cash Insurance........................................................................... 318
B4. Critical Illness Insurance .......................................................................... 318
5. PRODUCT RECOMMENDATIONS ......................................................................... 319
A. Product Suitability ........................................................................................... 319
A1. Good Product Knowledge ........................................................................ 319
B. Affordability ..................................................................................................... 320
C. Important Points To Note On Policy Selection .............................................. 321
6. PRESENTING YOUR RECOMMENDATIONS ........................................................ 322
7. PERIODIC CLIENT REVIEW .................................................................................... 322

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1. INTRODUCTION

1.1 In this chapter, we will bring you through the needs analysis process, namely
fact-finding, identifying and quantifying needs, product recommendations,
presenting the recommendations and review. You are reminded to keep
yourself abreast of the LIA and GIA Guidelines On Disclosure Requirements
and Needs-Based Sales Process for A&H Insurance Products. Let us begin by
looking at the differences between needs selling and product selling.

2. NEEDS SELLING VERSUS PRODUCT SELLING

2.1 Needs selling differs from product selling in the following ways:

TYPES NEEDS SELLING PRODUCT SELLING

(a) Service You help to discover the You assume that the
Orientation prospective client’s needs prospective client needs
and advise on the most your product and that
suitable product, and how you go straight into it.
much to buy. You spend However, making such
more time on the assumptions can give the
prospective client’s prospective client the
situation than you do on impression that your
your product. You are not main concern is just to
pushing a product, you are sell your product and
providing a service through close a sale.
a proper needs-based
advisory process.
(b) Pressure To You help the prospective You create pressure to
Buy client to uncover his needs buy and the prospective
and recommend suitable client may not know why
solutions for him. His he needs the product.
concerns are already there People will resist
before your arrival, and will pressure, even if they like
remain after you go, unless your product.
the prospective client takes
action. You are not there to
pressure him to buy your
products, but to offer
solutions to his needs.

(c) Long-Term The focus is on the Your relationship with the

Relationships prospective client’s prospective client
situation, rather than the depends on how well he
product. You show that: likes your product. Just
▪ you care about his as you would like to shop
particular situation, around before deciding
rather than about selling on a purchase, so would
your products; the prospective client.
▪ you have the knowledge The prospective client

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TYPES NEEDS SELLING PRODUCT SELLING

to help him to identify his may become product
needs and can be trusted conscious, and expect
to help him find relevant you to always provide the
solutions. best-priced solution. Even
if you make the sale, the
Based on your next sale to this new
understanding of the client is not necessarily
prospective client, you going to be easier than
propose solutions that meet the first one.
his budget and needs.

You return to review his

needs periodically, hence,
establishing an ongoing
relationship with him.

2.2 In short, needs selling is more desirable than product selling because it is:
(a) service-oriented;
(b) not pressure selling; but
(c) relationship based.

2.3 In order to carry out needs selling, you need to know the prospective client (a
requirement under the Notice No: MAS 120). This can be achieved by way of
completing a fact-find using a Fact-Find Document. There is also Group Fact
Find, but we will not be touching on the details in this chapter.

3. WHAT IS FACT-FINDING?

3.1 Fact-finding is the process of obtaining answers to a series of questions about

a prospective client’s personal circumstances, finance and ambitions, etc. for
the future. This information will help you gain a better understanding of the
prospective client’s objectives, needs and personal profile which will then
enable you to have a proper basis to recommend suitable Accident and Health
(A&H) or any Insurance products to the prospective client.

A. Common Sections Of The Fact-Find Document

3.2 You should note that the format of the Fact-Find Document may vary from one
insurer to another.

3.3 Each section of the Fact-Find Document serves a different purpose.

(a) Important Notice to Client

This section provides general information on the financial adviser and
representative and serves two purposes:

(i) Firstly, it gives the prospective client some information on the

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 14. Financial Needs Analysis

insurance representative - who he is, which insurers he represents

and what product classes he can provide advice on.

(ii) Secondly, it highlights to the prospective client the importance of

providing accurate information on the Fact-Find Document to ensure
an appropriate product recommendation.

(b) Application Type

The prospective client can tick one of three types of disclosure and sign
off as follows:
(i) I/We have disclosed relevant information for comprehensive
planning.
For full completion of fact find where client wishes to receive
representative’s recommendation on product suitability. Fact find
form is to be completed and client has to acknowledge Application
Type.

(ii) I/We have disclosed relevant information for specific need(s)

planning.
For partial completion of fact find where client wishes to receive
representative’s recommendation on product suitability. Fact find
form is to be completed. Client has to acknowledge Application Type.

(iii) I/We did not undergo any needs analysis in this review and it is
my/our responsibility to ensure that the Product I/we have selected
is suitable.
It is mandatory to explain product features, fees and charges to the
client. Client has to acknowledge Application Type.
Minimum requirements for each Application Type:
Minimum requirements Application Type
(1) (2) (3)
Personal information √ √ √
Dependant √ (w.a) o n.a
Existing health policies √ o n.a
Personal priorities √ (w.a) √ (w.a) n.a
Health conditions √ √ n.a
Replacement of policy √ √ n.a
Needs analysis √ (> 1 need) √ (1 or > needs) n.a
Recommendation √ √ n.a
Client’s choice of App. √ √ √
Type
Acknowledgement by √ √ √
client

√ compulsory w.a where applicable

o good to have n.a not applicable

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(c) Personal Information:

Information on personal details like the name, salutation, identity
card/passport number, date of birth, marital status and gender, serves
the following purposes:
(i) it is essential for administrative purposes on the part of the company;
(ii) it provides you with a preliminary assessment of the types of
products that will likely be needed. For example, if the prospective
client is a single working individual, he may need a Disability Income
Insurance policy to protect his earnings in the event of his disability;
and
(iii) information pertaining to age is essential for underwriting and
premium determination.

(d) Information on Employment Details

This gathers information about the prospective client’s current
occupation, as well as the monthly income range. The prospective
client’s current occupation will provide you with the following
information:
(i) whether the prospective client is eligible for Disability Income
Insurance (DII). DII is not issued to any unemployed person, nor
anyone who does not have a stable job (e.g. an odd job labourer);
(ii) enables you to determine the deferred period for a DII policy. A self-
employed person will need the insurance cover as soon as possible,
while an employee may afford a longer deferred period, as he may
continue to receive his pay from his company for a period of time
(e.g. six months) while he is disabled; and
(iii) enables you to know whether the prospective client is exposed to
any occupational hazards (e.g. radiographers may be exposed to
ionising radiation) and accidents (e.g. construction workers have a
high chance of getting injured at the worksite). If so, you have to ask
for more information to assist the underwriter in assessing the risk.

The monthly income range will enable you to know roughly whether the
prospective client can afford to pay and renew the recommended
insurance policy.

If the prospective client cannot afford to purchase any policy at that time,
emphasise the importance of being financially protected and point out
the needs that you have uncovered for him. Inform him that you can
meet up with him again when his financial situation improves.

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(e) Information on details of spouse and dependants serves the following

purposes:
(i) Identify any protection gap that the insured or
the dependants may have and check if they can
be covered under the recommended policy; and
(ii) Check if they have other dependants such as
aged parents or handicapped siblings to take care of, as these
dependants may have an impact on the prospective client’s
insurance needs.

Though not compulsory information, understanding more about the

prospective client can help you analyse his needs in order to provide
more accurate advice.

The Fact-Find Document may also ask for additional information about
the prospective client’s language proficiency, educational level and
accompaniment. The information is useful to establish if the prospective
client is considered vulnerable. For example, a prospective client who is
not proficient in written and spoken English and/or possess primary
school education may be considered as vulnerable, and the supervisor of
the insurance representative will make a call-back to the prospective
client, to ensure that he has understood the recommendations and
products for which he has applied for.

(f) Existing Health Insurance Policies/Existing Insurance Portfolio:

This information will indicate if the prospective client’s existing plan(s) is
sufficient to meet his financial needs in the event of illness or disability.
It serves as a reference point for any further A&H Insurance
recommendations.

Note that the policy or policies that you are recommending should
complement those that the prospective client already has. You should
avoid asking the prospective client to replace his existing policies with
new ones or cause him to be over-insured, especially for those A&H
policies (e.g. Medical Expense Insurance) that are subject to the Co-
ordination of Benefit Clause.

As most prospective clients may not know what policies they have
purchased, it is good that you ask for the policy documents to extract the
information that you need.

(g) Personal Priorities and Objectives: This information will enable you to
tell what the prospective client’s priorities are so as to determine the
type of A&H policies he may need. As a professional insurance
representative, you should consider the overall profile of the client and
help him to re-prioritise the needs as necessary.

(h) Health Condition: If this information is required to be completed in the

Fact-Find Document, it will help to determine whether the prospective
client is insurable.

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Health Insurance

If the prospective client answered “Yes” to this question, find out the
following information from him, so that you can help expedite the
underwriting process:
(i) the medical term of the illness (if the client knows. If not, ask him to
give a description of it).
(ii) the date of onset of the medical condition.
(iii) the type of medical treatment received.
(iv) is he still undergoing medical treatment?
(v) is there any hospitalisation? If so, to find out when the
hospitalisation was, and the type of medical treatment received.
(vi) is there any recurrence?
(vii) whether he has fully recovered and if so, when?
(viii) does he have any medical report on his condition? If so, you must
obtain a copy from him for submission to the underwriter. You will
need to inform the prospective client that the information will form
part of the insurer’s risk assessment process. Note that you must
not keep any copy of the report, and that you must treat the
information with strict confidentiality.

(i) Replacement of Policy: If the prospective client’s answer is “Yes”, you

have to:
(i) explain to the prospective client the consequences of replacing
policies, by highlighting the following disadvantages to him:
 that he may not be insurable at standard terms, if there is any
deterioration in his health, or if he has changed to a risky
occupation, etc.;
 that he may have to pay a higher premium; and
 that the terms and conditions may be less advantageous or
beneficial, especially if there are any changes to his health.

(j) Medical Insurance for Migrant Workers: If the prospective client is

purchasing the plan for a migrant worker holding a S-pass/ Work Permit,
find out if they are intending to comply with Ministry of Manpower’s
enhanced Medical Insurance requirement. If “Yes”, you can point him to
the requirements as stated in Chapter 3 of this textbook.

(k) Customer’s Financials: The Life Insurance Fact-Find Document has a

section to gather information, such as customer’s investment profile,
cash flow and budget, as well as assets and liabilities. Information
gathered here serves to ascertain the affordability of the
recommendation and plans, and facilitates the planning of financial
needs.

(l) Advisor’s Declaration: Before you sign this section, assure the
prospective client that you will treat the information given with strict
confidentiality, and that you will use it only for the purpose of
determining suitable insurance products for him, bearing the

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requirements under the Personal Data Protection Act 2012. This will help
to establish trust between you and the prospective client.

3.4 Having completed the Fact-Find Document, you will then move on to the next
step to help the prospective client identify and quantify his needs.

4. IDENTIFYING & QUANTIFYING NEEDS

A. Identifying Needs

4.1 You begin by analysing the information which you have gathered during the
fact-find stage. You should ask yourself the following questions as you go
through the Fact-Find Document:
(a) Does he have an emergency fund in place?
(b) What is his employment status and occupation?
(c) Which life stage is he in?
(d) Does he have any dependants?
(e) Does he or his dependants (if any) have any Individual Life or Health
Insurance, or Group Medical Insurance (such as Group Critical Illness
Insurance, Group Hospital & Surgical Insurance) in place?
(f) Does he or his dependants have a need for Life or Health Insurance?
(g) Can he afford to purchase any insurance policy that you are going to
propose to him?
(h) Has he stated his priorities correctly?

A1. Emergency Fund

4.2 An emergency fund is useful to guard against the breadwinner’s loss of a job
or a short-term disability that interrupts the financial flow of income to the
family. It also provides for certain expenses not covered by insurance, such as
the costs of a child’s tuition.

4.3 If the prospective client does not have an emergency fund in place, it may
affect his ability to service any policies that he may purchase from you.

A2. Employment Status & Occupation

4.4 See information on employment details under Section 3.3(d) of this chapter.

A3. Life Stages

4.5 Most people will go through the following life stages:

(a) childhood;
(b) fresh entrant to workforce / young unmarried;
(c) young married / young married with children;

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(d) married with older children;

(e) supporting aged parents;
(f) pre-retirement; and
(g) retirement.

4.6 During his active employment years, it is crucial to ensure that one protects
his earnings against disability resulting from injury or long-term sickness.

4.7 The need for protection against ill health applies to everyone at any stage in
his life. For older people, they will have a greater need for Critical Illness
Insurance, Medical Expense Insurance and Long-Term Care Insurance, as
there is a higher chance of them falling sick or getting injured.

A4. Dependants

4.8 If the prospective client has dependants, provision should be made for their
medical expenses to avoid any financial burden, in case any of the dependants
contracts a major illness or becomes disabled.

A5. Existing Insurance Policies

4.9 If the prospective client and his dependants have any Life and Health
Insurance, you need to compare the benefits under his existing policy with his
current needs, to see if the prospective client is sufficiently covered. Let us
look at how this can be done.

(a) Disability Income Insurance

For a prospective client who already has a Disability Income Insurance
policy, compare the level of cover with his current income level to see if
the cover is sufficient. Check if the policy covers up to the target
retirement age, the length of the deferred period, and whether the
prospective client’s employer provides him with any disability income
benefit. Remind the prospective client not to over-insure because of the
Limitation Clause under the Disability Income Insurance policy.

(b) Life Insurance with Total & Permanent Disability Benefit

The prospective client (or his spouse) who may not be actively employed
(e.g. housewife) can consider to get protection for disability with the TPD
benefits under Life Insurance. You can check for any TPD benefits that
the prospective client already has by reviewing the existing life
insurance policies.

(c) Medical Expense Insurance

If the prospective client has a Medical Expense Insurance policy,
including the Medisave-approved Integrated Plan, you need to find out
the exact coverage, such as the hospital and ward entitlement of the
plan, the annual and lifetime limits, and the policy co-insurance and
deductible, if any. Also look at the expiry age and the renewability
condition. You must ensure that the prospective client will be adequately
covered in his preferred hospital and ward type in the event of

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hospitalisation, and that he will enjoy the coverage for as long as

possible and will not risk losing his coverage at a time when he needs it
most.

In addition, you also need to keep in mind the Co-ordination of Benefit

Clause. Example 14.1 gives an illustration of how this Clause works.
Example 14.1: Illustration Of The Working Of The Co-ordination Of
Benefit Clause

Allison has been recently hospitalised for eight (8) days for an operation
to remove her womb. Her total hospital bill comes out to be S$22,400.
She has received S$11,000 reimbursement under her company’s Group
Medical Expense Insurance policy and is now waiting for the
reimbursement from her own Private Medical Insurance (PMI).

Details of her hospital bills and PMI (no deductible nor co-insurance) are
as follows:

Description Hospital Bills Limits Under Amount

PMI Covered Under
PMI
Room & Board S$300 x 8 = S$250 per day S$250 x 8 =
S$2,400 S$2,000
Surgery S$20,000 S$10,000 S$10,000
Total S$22,400 S$12,000

Applying the Co-ordination of Benefit Clause, since the Group Medical

Expense Insurance policy has already paid her S$11,000, the amount
which she can claim from her PMI will be the minimum of the:
▪ balance bill i.e. S$22,400 - S$11,000 = S$11,400 or
▪ amount covered under PMI i.e. S$12,000

In this instance, she will claim S$11,400 from her PMI, even though the
above table shows a slightly higher amount. Hence, the total amount
which she will receive from all her health policies is S$22,400 which
does not exceed the actual hospital expenses incurred.

With the illustration in Example 14.1, you will appreciate the importance
of knowing the prospective client’s current insurance benefits, his
personal expectation of the types of medical care, and his ability to pay
the premiums. Over-purchase of Medical Insurance is not necessary, but
under-insurance risk is disastrous.

(d) Critical Illness Insurance

For Critical Illness Insurance, review whether it is a stand-alone policy or
a rider attached to an Investment-Linked Plan, Term, Endowment or
Whole Life Insurance policy. If the prospective client has an Endowment
type of Critical Illness Insurance policy, his Critical Illness Insurance

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Health Insurance

cover will terminate once the policy matures. Usually, this will happen at
a time when he needs the cover most. Also find out the percentage of
the sum insured that will be payable in the event that your client suffers
a critical illness.

For Critical Illness with less than 100% Acceleration, you may wish to
recommend that he adds the Critical Illness Waiver of Premium rider to
the policy. For clients with life policies, they may wish to consider adding
the Critical Illness Waiver of Premium rider. In doing so, future
premiums can be waived in the event of a critical illness, so that any
premium payable for the balance coverage will be waived and the
coverage can continue should he be diagnosed to be suffering from a
critical illness.

You should also take note of the maximum aggregate sum assured that
each client is entitled to if the insurer that you represent has such a
practice.

(e) Personal Accident Insurance

For this class of policy, you need to find out the extent of its coverage,
including the details of its exclusions and limitations. This will enable
you to assess whether the prospective client is adequately covered.

(f) Long-Term Care Insurance

Review the benefits that are payable and the benefit trigger point, the
definitions used for the Activities of Daily Living (ADLs) and the number
of ADLs needed before the benefits are payable. In addition, you need to
find out if it is a reimbursement type of benefit, where the
payment is based on the actual amount of expenses incurred.

(g) Hospital Cash Insurance

Hospital Cash Insurance pays on top of all other Health Insurance plans.
You need to find out the daily benefit and the maximum number of days
that the benefit is payable.

(h) Life Insurance & Employee Benefits

Find out if the prospective client is covered under his company’s
insurance and whether he has any Life Insurance policy.

Payment from employee benefits will affect how the other policies (with
Co-ordination of Benefit Clause) pay. The total and permanent disability
benefit under the Life Insurance policy can be used to help the
prospective client, to overcome his financial difficulties in the event that
he is totally and permanently disabled.

A6. Need For Health Insurance

4.10 With the Fact-Find information, you can tell whether the prospective client has
a need for Health Insurance and, if so, whether he can afford it. If the client
does not have any need for more Health Insurance coverage, you should not
persuade him to purchase any such policy. Instead, you should do a review

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 14. Financial Needs Analysis

with him when his circumstances change (e.g. having a newborn child). On
the other hand, if the prospective client does have a need for Health Insurance,
and he has the means to pay for it, the next step that you have to carry out is
to quantify the prospective client’s Health Insurance needs.

B. Quantifying Needs

4.11 Needs quantification is not mandatory, but an industry “best practice”.

B1. Disability Income Protection Needs

4.12 Disability Income Protection Needs is also known as Maintenance Costs. This
is the amount that is required to meet the ongoing maintenance of the
prospective client and his dependants, i.e. their daily living expenses.

4.13 There are commonly three methods (as described below) to quantify this.

Method 1
Using the monthly salary, 75% of it is his income protection need in the event
of his disability.

Disability Income Protection = 75% x monthly income : S$X

Less
Existing disability benefit per month : (S$X)
Estimated level of disability income protection needed : S$XX

Method 2
This method uses monthly expenses instead of income to determine the
coverage needed.

Total monthly expenses : S$X

Less
Existing disability benefit per month : (S$X)
Estimated level of income protection needed : S$XX

Monthly expenses should include the amount that the prospective client
spends on himself, as well as on his family. This is because when a person is
disabled, the usual expenses will continue, and on top of that, the prospective
client also has to take care of his medical expenses. This method provides the
minimum amount that is required to sustain the prospective client’s living
expenses in the event of a disability. Example 14.2 shows you how to compute
the amount of income protection needed in the event of a disability using
Method 2.

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Example 14.2: Computing The Amount Of Disability Income Protection

Needs

Ben, aged 35 years, has indicated in his Fact-Find Document that his family’s
living expenses (inclusive of that of his own) is S$3,000 per month. He has
also indicated that he wishes to have an income in the event that he is
disabled and is not able to work. So far, he does not have any insurance
coverage other than the Central Provident Fund (CPF) Board’s Dependants’
Protection Scheme (DPS) 1, Home Protection Scheme and IncomeShield Plan
MA, as well as his employer’s Group Term Life Insurance of S$100,000 sum
assured, and Hospital and Surgical Insurance coverage of up to S$50,000
without any sub-limits. The amount of disability income protection that he
needs is:

Total monthly expenses : S$3,000

Less
Existing disability benefit per month : S$ 0
Existing hospital cash benefit per month : S$ 0
________

Estimated level of income protection needed : S$3,000

Method 3
There may be circumstances under which the prospective client may not want,
is not able to afford a Disability Income Insurance (DII) policy or simply does
not have an income to be eligible for a DII policy. For such a prospective client,
you can help to provide him with total and permanent disability benefits
usually incorporated into a Life Insurance policy.

This method provides a lump sum benefit should a person become totally and
permanently disabled.

Example 14.3 illustrates how you can compute the amount of total and
permanent disability benefits which the prospective client will need.

Example 14.3: Computing The Amount Of Total And Permanent Disability

(TPD) Benefit

Following Example 14.2, the amount of TPD benefit that Ben needs per year
is as follows:

Yearly income needed = family’s average living expenses x 12

= S$3,000 x 12
= S$36,000

Assuming that the annual inflation rate is 2% and expected rate of return

1
DPS is an affordable term life insurance that provides insured members and their families with some money
should the insured members pass away, suffer from Terminal Illness or Total Permanent Disability. It covers
them for a benefit of S$70,000 up to 60 years old. From age 60 age to age 65 years, the coverage is S$55,000.

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 14. Financial Needs Analysis

from investments remains constant at 4%, the expected rate of return from
funds (adjusted for inflation) = 4% - 2% =2%

If the number of years that the income is needed is 25 (to be determined by

the client), then the estimated funds required to provide income is:
=S$36,000 x 19.9139 (refer to Table A2 at the end of this Study Text)
=S$716,900
Less
Funds available + Existing Insurance*
= S$(46,000 + 100,000)
= S$146,000

Additional amount of total and permanent disability benefit required

= S$(716,900 – 146,000)
= S$570,900

*Only consider those existing insurance policies which have a TPD benefit.
Group Term Life and DPS both have TPD benefits.

4.14 Having learnt how to determine the maintenance cost, let us now learn how to
determine the medical costs.

B2. Medical Costs

4.15 Medical costs refer to the immediate hospital and medical expenses
associated with an injury or illness resulting in the prospective client being
hospitalized for treatment or surgery.

4.16 To quantify medical cost needs, it is important to discuss these with the
prospective client:
(a) The hospital type and ward the client would opt for in the event of
hospitalisation;
(b) his premium affordability to insure part of the compulsory co-payments
or if he can accept to self-insure the co-payments; and
(c) The continuous affordability of medical insurance premiums when he is
no longer working.

4.17 It could also help for the client to know the costs of specific medical
procedures. Data on fee benchmarks are available on the Ministry of Health
(MOH) Website.

In addition, highlight and remind the prospective client that his Group
Insurance (if any) is not portable, and he may lose his Group Insurance
coverage when he leaves the organisation later.

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B3. Hospital Cash Insurance

4.18 The way to compute the amount of Hospital Cash Insurance required is as
follows:

Total monthly expenses S$ X

Less
Existing hospital cash benefit per month (S$ X)
Estimated level of income protection needed S$XX
Assuming Eugene’s monthly expenses is S$3,600; the amount of Hospital
Cash Income required is as follows:

Monthly expenses S$ 3,600

Less
Existing hospital cash benefit per month (S$ 0)
Estimated level of income protection needed S$ 3,600

Therefore, the amount of Hospital Cash income required is:

= S$$3,600÷ 30 days
= S$120 per day

B4. Critical Illness Insurance

4.19 Besides taking care of hospitalisation expenses and disability income, the
prospective client may also want a lump sum payment for his rehabilitation
expenses, to defray expenses not covered by other Health Insurance policies,
and to maintain his family living expenses, as well as to handle any
emergency expenses, if he contracts a dread disease or critical illness. A
Critical Illness Insurance policy is suitable for these purposes. You will need to
calculate the amount of Critical Illness Insurance cover that is required.

4.20 The calculation is really more of an art than a science, since there are many
uncertainties. Some factors to consider for the prospective client are described
below:
(a) Which dread disease is he most susceptible to? His family medical
history may shed some light on this answer. Therefore, medical costs
can be approximated.

(b) His family’s needs and expenses.

(c) His family’s level of dependence on him.

(d) Does he already have sufficient Medical Expense Insurance and/or

Disability Income Insurance?

(e) His desired level of medical treatment, e.g. private or public hospital.

(f) Whether he wants to buy an Additional Benefit Type or Acceleration

Benefit Type of CI Insurance. If he decides on the Additional Benefit Type,
then he must be informed that the coverage will normally cease at the
age of 65 years, unlike the Acceleration Benefit Type. Since the

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 14. Financial Needs Analysis

Acceleration Benefit Type is usually attached to a Whole Life Insurance

policy, this type of benefit will last the whole of life.

(g) Does he want a benefit on early diagnosis of a critical illness, the ability
to make multiple critical illness claims, or coverage for other conditions
such as diabetes or mental illness?

(h) His preference and comfort level. Some prospective clients will require
only S$100,000 CI Insurance cover, while others will feel that even a
S$500,000 cover is insufficient.
4.21 After an agreement has been reached with him as to the CI Insurance cover
required, you will be able to calculate the shortfall in cover by deducting away
the current CI Insurance cover that he already has.

4.22 Having seen how a prospective client’s needs for Health Insurance are
quantified, we now move on to see how to go about recommending the most
suitable products to meet the prospective client’s needs.

5. PRODUCT RECOMMENDATIONS

5.1 There are three basic principles that you should be aware of before making
any product recommendations to the prospective client. They are:
(a) recommend products only if he needs them;
(b) recommend products which are only the most suitable for him, given his
existing circumstances; and
(c) if he needs a product that the company you represent does not carry, let
him know, so that he can find alternatives.

A. Product Suitability

5.2 In order for the insurance representative to determine if a product is

suitable for the prospective client, he needs to have a good
understanding of the available products.

A1. Good Product Knowledge

5.3 The insurance representative should be familiar with the following aspects of
your company’s products:
(a) What is the product range?
(b) What does the product serve to do? For example, reimbursement of
expenses or replacement of income?
(c) What are the eligibility criteria for making a claim under the policy?
(d) Does the policy have any waiting period? If so, find out the duration and
effective date of the waiting period.
(e) Is the policy guaranteed renewable, optionally renewable, conditionally
renewable or cancellable?

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(f) What are the exclusions and limitations under the policy?
(g) Does the policy have any special features, such as the survival period
under a Critical Illness Insurance policy, and the requirement to inform
the insurer of any change in occupation under a Disability Income
Insurance policy?
(h) Is the policy subject to any Co-ordination of Benefit Clause?
(i) Does the policy have any deductible or co-insurance feature?
(j) Is there any per day, per year or per lifetime limit under the policy? How
much are the limits?
(k) When and how are the benefits payable? For example, a Hospital Cash
(Income) policy pays a flat amount for each day of hospitalisation
capped at a certain number of days.
(l) What is the duration of cover under the policy?
(m) What are the premiums and the frequency modes for premium
payments, and are they subject to changes?
(n) Is there a grace period for the payment of premium and, if so, what is
the time frame?
(o) What is the implication of non-payment of premium?
(p) What are the medical and non-medical limits (i.e. the underwriting
guidelines on when a medical test is required for the assessment of an
application) of the products?
(q) Which types of policies have non-forfeiture options?
(r) Is there any geographical limit imposed on the policy?
(s) Is the policy available in multiple currencies for claim
payment (e.g. in case of overseas medical treatment
benefit)?

B. Affordability

5.4 Affordability is important when selecting the most suitable product to

recommend to the prospective client. Most policies require regular premiums
to be paid. Being able to afford the initial premium does not mean that he will
be able to sustain the regular payments. For policies paid with Medisave,
ensure that his Medisave is enough to support continuity of the policy, either
with his current balance or his future regular contributions to his Medisave
Account. A prospective client who cannot afford the premiums in the longer
term will allow his policy to lapse. The insurer, the insurance representative
and the prospective client do not benefit from early policy lapses. From the
prospective client’s standpoint, he loses the coverage. The insurance
representative loses the prospective client’s goodwill and the commission
payable under the policy. The insurer has to absorb the high initial cost of
underwriting the policy.

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C. Important Points To Note On Policy Selection

5.5 When deciding on which policy is most suitable for the prospective client, you
will have to consider all the factors which we have gone through in this
chapter. In addition, it is important that you should also consider the points as
listed in Table 14.1 below.

Table 14.1: Important Points To Note On Policy Selection

▪ Ensure that the new recommended policy provides cover only for his
coverage shortfall to minimise over-insurance.
▪ Ensure that the prospective client has the longest coverage possible, as
Health Insurance is needed most when one is old.
▪ Ensure that the prospective client can afford the premium in the long
term.
▪ Ensure that the prospective client is not over-insured.
▪ Ensure that the policy insures the right life (e.g. if the husband is the sole
breadwinner, then you should ensure that he is properly covered first,
before you recommend any products to his dependants).
▪ Ensure that the prospective client with dependants has sufficient death
protection in place.
▪ Recommend a rider if it can help to save premiums (provided that the
expiry age of the rider will not be shortened by the term of the basic
policy).
▪ For Critical Illness (CI) Insurance, take note of the two types of cover -
Additional Benefit Type and Acceleration Benefit Type. Discuss the
following with the client - expiry age, premium difference, whether he
should take up a CI rider if he has existing life policies.
▪ Consider attaching the CI Waiver of Premium rider for the client who has
other life insurance protection.
▪ For the prospective client who is covered under his employer-sponsored
Medical Expense Insurance (MEI) and has a need for additional MEI cover,
ensure that the proposed plan complements the one provided by the
employer. For example, most employer-sponsored MEI policies provide
cover from the first dollar onwards, but the coverage is low. In such a
case, you can propose a Major MEI to your client.
▪ Always check for alternative policies to the one that you are
recommending offering the prospective client more choices. This gives
the prospective client more flexibility in choosing the premiums and
benefits that meet his needs.

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6. PRESENTING YOUR RECOMMENDATIONS

6.1 To ensure that the prospective client understands the products recommended
and the reasons for your recommendations, you should explain the features
and benefits of the recommended products, and how these fit into his
situation.

6.2 Before meeting the prospective client to go through your recommendation,

plan how you would like to present to him. It is advisable that you follow a
systematic process.

6.3 An example below shows a systematic and sequential process to explain your
recommendations to the prospective client.

1. State the purpose of the product (i.e. the need which is actually being
met by this product).

2. Give a description of the nature of the product.

3. Brief the prospective client on the benefits and limitations of the

product.

4. Give a detailed explanation of the options within the product.

5. Give a summary of the reasons why the product is being

recommended.

6. Explain the benefit illustration and highlight the guaranteed and non-
guaranteed benefits (if applicable).

7. Disclose any distribution costs, charges and expenses under the

policy.

6.4 During the meeting, communicate clearly and simply. Avoid using technical
jargons. If the prospective client accepts your recommendations, you have to
ensure that all relevant forms required by your principal (insurer) are properly
completed. In the case where the prospective client decides not to take up any
of your recommendations, you may seek to clarify his reasons for not
accepting your recommendations. However, you should not insist if the
prospective client refuses to explain. Thank the prospective client for his time
before leaving.

7. PERIODIC CLIENT REVIEW

7.1 The process of identifying and satisfying your client’s needs does not stop
with the implementation of the initial recommendations. Your client’s
personal circumstances are likely to change and new needs may surface over
time. Such changes may affect the initial product recommendations, as they

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 14. Financial Needs Analysis

may no longer be adequate. Regular reviews will ensure that your existing
client continues to receive quality service from you, and also reinforces your
relationship with your existing client.

7.2 The question of when and how often the existing client’s position should be
reviewed depends, to some extent, on the initial advice provided by you, and
also on the existing client’s own wishes for a review. Generally, you should do
a review with your existing client under the following circumstances:
(a) a change in the client’s personal circumstances, such as the birth of a
child;
(b) external developments, such as changes in the CPF ruling which may
have an impact on the client’s financial position and/or the
appropriateness of products already held;
(c) the original products purchased by the client are not adequate to cover
all his needs; and
(d) the launching of new products in the financial services market.

7.3 Regular reviews benefit both you and your client. As a professional insurance
representative, you should ensure that the products recommended meet with
the client’s current needs. You should also seek to arrange regular meetings
with him to address his future needs.

7.4 The long-term needs of the client should be a principal concern, and your
relationship with him should also be an ongoing one.

Do not recommend any

further Health Insurance
policies to the prospective
client if he has adequate
medical cover, as he may
not be able to claim under
all the insurance policies.

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CHAPTER
14
FINANCIAL NEEDS ANALYSIS

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Needs selling versus Needs selling is more desirable than product selling because it is:
product selling • Service-oriented.
• Not pressure selling.
• Relationship based.
What is fact-finding? • Fact-finding is the process of obtaining answers to a series of questions about a
prospective client’s personal circumstances, finance and ambitions, etc. for the
future.
Purposes served by the • Important notice to client
various sections of the » Gives the prospective client information on who the insurance
Fact-Find Document representative is, which insurers he represents and what product classes he
can provide advice on.
» Highlights to the prospective client the importance of providing accurate
information on the Fact-Find Document.
• Application type
» Types of disclosure.
» Application type 1,2 or 3.
• Personal information
» Essential for administrative purposes on the part of the company.
» Preliminary assessment of the types of products that will likely be needed.
» Information pertaining to age is essential for underwriting and premium
determination.
• Information on employment details
» Eligibility for Disability Income Insurance (DII).
» Determine the deferred period for a DII policy.
» Know whether the prospective client is exposed to any occupational
hazards.
» Affordability.
• Information on details of spouse and dependants
» Identification in the event of a claim;
» Premium determination;
» Any occupational hazards (in respect of the spouse);
» Eligibility to be covered as a dependant (this is because A&H Insurance
policies that provide coverage for any dependant has an age limit to qualify
as a dependant); and
» Determine whether there is a need to provide A&H Insurance cover for the
dependants.
• Existing health insurance policies / existing insurance portfolio
» Indicate how far the prospective clients’ existing plan(s) will go towards
meeting their needs in the event of ill health or disability.
• Personal Priorities and Objectives
» Enable the representative to tell what the prospective client’s priorities are
with regard to the type of A&H policies that he may need.

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Purposes served by the • Health condition
various sections of the » Help to determine whether the prospective client is insurable and, if so, on
Fact-Find Document what terms.
• Medical Insurance for Migrant Workers
» If the prospective client is purchasing the plan for a migrant worker holding
a S-pass/ Work Permit, find out if they are intending to comply with Ministry
of Manpower’s enhanced Medical Insurance requirement.
• Replacement of policy
» If prospective client’s answer is “yes”, the representative is required to
explain to the prospective client the consequences of replacing policies.
• Customer’s financials
» Ascertain the affordability of the recommendation and plans, and facilitates
the planning of financial needs.
• Advisor's declaration
» Declaration on treating the information given in the Fact-Find Document
with strict confidentiality and use it only for the purpose of determining
suitable insurance products, and not for any other purposes, bearing in
mind the requirements under the Personal Data Protection Act 2012
» Establish trust between the representative and the prospective client.
Sample questions to be • Does he have an emergency fund in place?
taken into consideration • What is his employment status and occupation?
when going through the • Which life stage is he in?
prospective client’s Fact- • Does he have any dependants?
Find Document to identify • Does he or his dependants (if any) have any Individual Life or Health Insurance,
his needs or Group Medical Insurance (such as Group Critical Illness Insurance, Group
Hospital & Surgical Insurance) in place?
• Does he or his dependants have a need for Life or Health Insurance?
• Can he afford to purchase any insurance policy that you are going to propose to
him?
• Has he stated his priorities correctly?
Importance of an Guard against the breadwinner’s loss of a job or a short-term disability that
emergency fund interrupts the financial flow of income to the family.
Which stage of the • During active employment years, it is crucial to ensure that one protects his
prospective client’s life earnings against disability resulting from injury or long-term sickness.
cycle versus where the • Need for protection against ill health applies to everyone at any stage in his life.
need to protect one’s • For older people, they will have a greater need for Critical Illness Insurance,
earnings against disability Medical Expense Insurance and Long-Term Care Insurance, as there is a higher
and ill health, is critical chance of them falling sick or getting injured.
• If there are dependants, provision should be made for their medical expenses
to avoid any financial burden, in case any of the dependants contracts a major
illness or becomes disabled.
Know what to do if the • Compare the level of cover with his current income level to see if the cover is
prospective client has a: sufficient.
• Disability Income • Check if the policy covers up to the target retirement age, the length of the
Insurance deferred period, and whether the prospective client’s employer provides him
with any disability income benefit.
• Remind the prospective client not to over-insure because of the Limitation
Clause under the Disability Income Insurance policy.
Know what to do if the Check for any TPD benefits that the prospective client already has by reviewing the
prospective client has a: existing life insurance policies.
• Life Insurance with
Total & Permanent
Disability Benefit

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Know what to do if the • Find out the exact coverage, such as the hospital and ward entitlement of the
prospective client has a: plan, the annual and lifetime limits, and the policy co-insurance and deductible,
• Medical Expense if any.
Insurance • Look at the expiry age and the renewability condition.
• Ensure that the prospective client will be adequately covered in his preferred
hospital and ward type in the event of hospitalisation, and that he will enjoy the
coverage for as long as possible and will not risk losing his coverage at a time
when he needs it most.
• Keep in mind the Co-ordination of Benefit Clause.
Know what to do if the • Review whether it is a stand-alone policy or a rider attached to an ILP, Term,
prospective client has a: Endowment or Whole Life Insurance policy.
• Critical Illness • Take note of the maximum aggregate sum assured that each client is entitled
Insurance to, if the insurer has such a practice.
Know what to do if the Find out the extent of its coverage, including the details of its exclusions and
prospective client has a: limitations to assess whether the prospective client is adequately covered.
• Personal Accident
Insurance
Know what to do if the • Review the benefits that are payable and the benefit trigger point, the
prospective client has a:: definitions used for the Activities of Daily Living (ADLs) and the number of ADLs
• Long-Term Care needed before the benefits are payable.
Insurance • Find out if it is a reimbursement type of benefit, where the payment is based on
the actual amount of expenses incurred.
Know what to do if the Find out the daily benefit and the maximum number of days that the benefit is
prospective client has a: payable.
• Hospital Cash
Insurance
Know what to do if the Find out if the prospective client is covered under his company’s insurance and
prospective client has a: whether he has any Life Insurance policy.
• Life Insurance &
Employee Benefits
Quantify disability income • Method 1
protection needs » Using the monthly salary, 75% of it is his income protection need in the
event of his disability.
• Method 2
» This method uses monthly expenses instead of income to determine the
coverage needed.
• Method 3
» This method provides a lump sum benefit should a person become totally
and permanently disabled.
Quantify medical and To quantify medical cost needs, the representative needs to discuss and make
ancillary costs some assumptions with the prospective clients as follows:
• The most common conditions for a person to be hospitalised;
• The cost of treatment for any one particular illness, such as a heart condition;
• The hospital type and ward the client would opt for in the event of
hospitalisation;
• The need to provide coverage for medical cost from the first dollar or can he
accept a co-payment;
• The continuous affordability of medical insurance premiums when he is no
longer working.
Quantify hospital cash Estimated level of protection needed =
income needs Total monthly expense
Less
Existing hospital cash benefit per month

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IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Quantify Critical Illness Calculation is really more of an art than a science, since there are many
Insurance uncertainties. Some factors to consider for the prospective client are described
below:
• Which dread disease is he most susceptible to? His family medical history may
shed some light on this answer. Therefore, medical costs can be approximated.
• His family’s needs and expenses.
• His family’s level of dependence on him.
• Does he already have sufficient Medical Expense Insurance and/or Disability
Income Insurance?
• His desired level of medical treatment, e.g. private or public hospital.
• Whether he wants to buy an Additional Benefit Type or Acceleration Benefit
Type of CI Insurance. If he decides on the Additional Benefit Type, then he must
be informed that the coverage will normally cease at the age of 65 years, unlike
the Acceleration Benefit Type. Since the Acceleration Benefit Type is usually
attached to a Whole Life Insurance policy, this type of benefit will last the whole
of life.
• Does he want a benefit on early diagnosis of a critical illness, does he want to
be able to make multiple critical illness claims, does he want to cover other
conditions such as diabetes or mental illness?
• His preference and comfort level. Some prospective clients will require only
S$50,000 CI Insurance cover, while others will feel that even S$500,000 cover is
insufficient.
Basic principles before • Recommend products only if the prospective client needs them.
making any product • Recommend products which are only the most suitable for the prospective
recommendation client, given his existing circumstances.
• If prospective client needs a product that the company you represent does not
carry, let him know, so that he can find alternatives.
Sample questions to ask • What is the product range?
for better understanding • What does the product serve to do? For example, reimbursement of expenses
of the product or replacement of income?
• What are the eligibility criteria for making a claim under the policy?
• Does the policy have any waiting period? If so, find out the duration and
effective date of the waiting period.
• Is the policy guaranteed renewable, optionally renewable, conditionally
renewable or cancellable?
• What are the exclusions and limitations under the policy?
• Does the policy have any special features, such as the survival period under a
Critical Illness Insurance policy, and the requirement to inform the insurer of
any change in occupation under a Disability Income Insurance policy?
• Is the policy subject to any Co-ordination of Benefit Clause?
• Does the policy have any deductible or co-insurance feature?
• Is there any per day, per year or per lifetime limit under the policy? How much
are the limits?
• When and how are the benefits payable? For example, a Hospital Cash (Income)
policy pays a flat amount for each day of hospitalisation capped at a certain
number of days.
• What are the distribution costs, charges and expenses levied on the products?
• What is the duration of cover under the policy?
• What are the premiums and the frequency modes for premium payments, and
are they subject to changes?
• Is there a grace period allowed for the payment of premium due and, if so, what
is the time frame?
• What is the implication of non-payment of premium?
• What are the medical and non-medical limits (i.e. the underwriting guidelines
on when a medical test is required for the assessment of an application) of the
products?
• Which types of policies have non-forfeiture options?
• Is there any geographical limit imposed on the policy?

59
IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS
Why is affordability an • Affordability is an important factor when selecting the most suitable product to
important factor when recommend to the prospective client.
selecting a suitable • Most policies require regular premiums to be paid. Being able to afford the
product to recommend to initial premium does not mean that he will be able to sustain the regular
the prospective client? payments.
• The insurer, the insurance representative and the prospective client do not
benefit from early policy lapses.
» The prospective client loses the coverage.
» The insurance representative loses the prospective client’s goodwill and the
commission payable under the policy.
» The insurer has to absorb the high initial cost of underwriting the policy.
Important points on policy • Ensure that the new recommended policy provides cover only for his coverage
selection shortfall to minimise over-insurance.
• Ensure that the prospective client has the longest coverage possible.
• Ensure that the prospective client can afford the premium in the long term.
• Ensure that the prospective client is not over-insured.
• Ensure that the policy insures the right life.
• Ensure that the prospective client with dependants has sufficient death
protection in place.
• Recommend a rider if it can help to save premiums.
• For Critical Illness (CI) Insurance, take note of the two types of cover - Additional
Benefit Type and Acceleration Benefit Type.
• Discuss the following with the client - expiry age, premium difference, whether
he should take up a CI rider if he has existing life policies.
• Consider to attach the CI Waiver of Premium rider for the client who has other
life insurance protection.
• For the prospective client who is covered under his employer-sponsored
Medical Expense Insurance (MEI) and has a need for additional MEI cover,
ensure that the proposed plan complement the one provided by the employer.
• Always check for alternative policies to the one that you are recommending.
Example of a systematic • State the purpose of the product (i.e. the need which is actually being met by
process of explaining this product).
recommendations to the • Give a description of the nature of the product.
prospective client • Brief the prospective client on the benefits and limitations of the product.
• Give a detailed explanation on the options within the product.
• Give a summary of the reasons why the product is being recommended.
• Explain the benefit illustration and highlight the guaranteed and non-
guaranteed benefits (if applicable).
• Disclose any distribution costs, charges and expenses under the policy.
When the reviews for • A change in the client’s personal circumstances, such as the birth of a child.
prospective client are • External developments, such as changes in the CPF ruling which can have an
necessary? impact on the client’s financial position and/or the appropriateness of products
already held.
• Original products purchased by the client are not adequate to cover all his need.
• Launching of new products in the financial services market.

60
Health Insurance

CHAPTER 15
CASE STUDIES

CHAPTER OUTLINE

1. Introduction
2. Case Study 1 – Individual Health Insurance
3. Case Study 2 – Group Health Insurance
Appendix 15A – Group Hospital & Surgical Insurance

LEARNING OUTCOMES

After studying this chapter, you should be able to:

▪ apply the principles that you have learnt from the previous
chapters so as to carry out a proper needs-based sales advisory
process through looking at two case scenarios

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 15. Case Studies

Contents
CHAPTER OUTLINE ......................................................................................................... 324
LEARNING OUTCOMES .................................................................................................. 324
1. INTRODUCTION ....................................................................................................... 326
2. CASE STUDY 1 – INDIVIDUAL HEALTH INSURANCE ............................................ 326
A. Maintenance Costs............................................................................................ 327
B. Medical Costs .................................................................................................... 328
3. CASE STUDY 2 – GROUP HEALTH INSURANCE.................................................... 333
APPENDIX 15A ................................................................................................................ 335

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Health Insurance

1. INTRODUCTION

1.1 In this chapter, we bring you through two case studies to illustrate how the
whole needs-based sales process may be carried out.

1.2 The examples given here cannot be used as a comprehensive guide for every
situation. You should also keep abreast of the LIA and GIA Guidelines On
Disclosure Requirements and Needs-Based Sales Process for A&H Insurance
Products.

2. CASE STUDY 1 – INDIVIDUAL HEALTH INSURANCE

2.1 Angela has done a fact-find with Tommy Tang, her new client, who is a
Singapore Citizen. Below is a summary of the data that she has extracted from
the Fact-Find Document:

Mr Tang : 35 years old

Mrs Tang : 35 years old, housewife
Son : 5 years old
Daughter : 1 year old

2.2 Existing Health Insurance Policies:

▪ Group Hospital & Surgical (H & S) Insurance (Plan A) (See Appendix 15A)

2.3 Angela has also obtained the following information from Tommy:
(a) Mr and Mrs Tang have sufficient cover for death protection.
(b) His family’s average monthly expenditure is S$3,000 and his income is
S$6,000.
(c) He has not set aside any funds for protection planning, other than his
savings which is intended to meet any emergency needs, such as
hospitalisation.
(d) He would like to have a Critical Illness Insurance policy of S$200,000 for
himself and S$100,000 for his wife.
(e) He thinks that he will need maintenance cost for 21 years for his wife in
the event of his disability, as the youngest child should be independent
by then.
(f) The estimated expenses required for the children in the event of Mrs
Tang’s disability are S$1,500 per month.
(g) He and his family would stay in the A ward of a public hospital should
they be hospitalised.
(h) His budget for Health Insurance cover is S$700 per month.

2.4 Having gathered the necessary information, Angela then proceeds to analyse
the insurance needs of Tommy and his family members.

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A. Maintenance Costs

2.5 The most suitable policy for maintenance cost is Disability Income Insurance.

2.6 Tommy does not have a Disability Income Insurance policy. He has indicated
in his Fact-Find Document that he has an urgent need for cover for loss of
income resulting from accident or sickness, as he is the sole breadwinner in
his family.

2.7 As such, Angela proposes a Disability Income Insurance policy with benefit at
75% of Tommy’s monthly salary, i.e. S$4,500 and an escalation benefit of 5%.
This will ensure that the family is adequately provided for, in the event of
Tommy’s disability. The deferred period will be six months, as the employer
will continue to pay Tommy’s salary up to six months in the event that he is
disabled. Mrs Tang, a housewife, is not eligible for Disability Income
Insurance. In her case, there are two possible ways to provide her with
protection against disability, i.e. through the Total and Permanent Disability
(TPD) Benefit under the Life Insurance policies, or through a Personal Accident
Insurance policy.

2.8 The amount of TPD cover which she requires is as follows:

Maintenance Costs Required On Mrs Tang’s Disablement

Yearly income needed : S$1,500 (current monthly expenditure) x 12
= S$18,000

Number of years income : 21 years

is needed

Expected annual rate of : 3% (assume that rate of return is 5%, and

return from funds inflation rate is 2%)
(adjusted for inflation)

Estimated funds required : S$18,000 x 15.8775 (refer to Table A2 at end of

to provide income this Study Guide) = S$285,795

Less Funds available : S$0

Existing Insurance

Funds required : S$285,795

2.9 Having determined the maintenance costs for the Tangs, Angela then goes on
to determine whether the Tangs’ current Medical Expense Insurance policies
are sufficient to meet their needs.

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Health Insurance

B. Medical Costs

2.10 The policies that may be used to meet medical costs are:
(a) Medical Expense Insurance;
(b) Managed Healthcare Insurance;
(c) Long-Term Care Insurance;
(d) Critical Illness Insurance;
(e) Hospital Cash Insurance; and
(f) Personal Accident policy with medical expense benefit.

2.11 According to the fact-find results, Tommy only has Medical Expense Insurance
coverage under his employer’s insurance. Angela informed Tommy that
Group H&S is not portable and that he may lose it later or the coverage may
change if he moves into a different job or retire. They agreed to consider
Group H&S as a temporary (not lifetime) benefit instead. She then proceeds to
determine the coverage he requires for Medical Expense Insurance policies to
meet the Tangs’ needs in the event of hospitalisation.

2.12 Angela went through the following to recommend a suitable Medical Expense
Insurance:
(a) Confirm his preference of stay in the event of hospitalisation.
(b) Briefly compute what his Group H&S would have covered him in a
specific medical condition to provide a view if it can cover a portion of
co-insurance and deductible of a hospitalisation for as long as the GHS is
valid.
(c) Present a medical expense insurance plan that will provide cover for
Public Ward A hospitalisation, showing the current and future annual
premiums of the proposed plan. Please refer to the insurer’s website for
the latest premium rates.
(d) Tommy was informed that:
(i) Premium rate is non-guaranteed. With medical inflation, the
insurer will update the current premium table periodically and
premium will get more expensive in the future. This is to give a
practical view of the future affordability of premium on the
chosen plan.
(ii) While the benefits payable under Group H&S can be used to
cover part of co-insurance and deductible of the average bill size
of the medical condition, Medical Expense Insurance and Group
H&S are both subject to the Co-ordination of Benefits Clause.
Hence it may not be necessary to have first dollar cover for his
individual medical expense insurance. This way, he can save
some premiums to fund for future premiums.
(iii) Once he loses the Group H&S, his co-payments for any
hospitalisation has to be made out-of-pocket.

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 15. Case Studies

(iv) Tommy acknowledged this and agreed to go with a plan that has
deductible and co-insurance in order to lower the premiums.

2.13 The discussion with Tommy on affordability should not only be on the
present, but also the future sustainability to pay premiums, whether with
Medisave or cash.

2.14 The Tangs also require Critical Illness Insurance cover, as the medical
expenses incurred in the event of a critical illness may not be fully covered by
Tommy’s policies. They will also need Long-Term Care Insurance cover (under
ElderShield) if they can afford the premium, as the cover is not insured by his
two existing policies.

2.15 As the Tangs already have policies for protection against premature death,
Angela proposed a 100% Acceleration Benefit type of Critical Illness Insurance
policy packaged with a Whole Life Insurance policy, so that they can have the
cover for life. This policy will also take care of Mrs Tang’s TPD needs. To
summarise, the package for Mr and Mrs Tang is shown in Table 15.1 below:

Table 15.1: Summary Of Insurance Package For Mr & Mrs Tang

Mr Tang (Tommy)
Type Of Plan & Sum Assured Monthly
Premium
Enhance Income Shield Advantage Plan S$500.63/year
and Fully funded
by Medisave
100% Acceleration Benefit Type of Critical Illness S$380.00
Insurance policy packaged with Whole Life Insurance
policy - S$200,000
Disability Income Insurance of S$4,500, with a 5% S$125.50
escalation and six months’ deferred period, up to the age
of 65 years
Total Monthly Premium with cash S$505.50

Mrs Tang
Type Of Plan & Sum Assured Monthly
Premium
Enhance Income Shield Advantage Plan S$500.63/year
and Fully funded
by Medisave
100% Acceleration Benefit Type of Critical Illness S$180.00
Insurance policy packaged with Whole Life Insurance
policy - S$100,000
Personal Accident (PA) Insurance policy - S$50,000 S$10.00
Total Monthly Premium with cash S$190.00

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Health Insurance

Two Children
Type Of Plan & Sum Assured Monthly
Premium
Enhance Income Shield Advantage Plan S$175.63/year
per child and
Fully funded by
Medisave
Source of IncomeShield Premium: https://www.income.com.sg/forms/general/enhanced-incomeshield-
main-premium-table

2.16 The total premium payable with cash works out to be S$695.50 (i.e. S$505.50 +
S$190.00) and is within Tommy’s S$700 budget. As there is no excess
premium for the Long-Term Care Insurance cover, Angela has decided not to
propose it at this moment.

2.17 Having decided on the types of policies that are suitable to Tommy, Angela
next proceeds to complete the “Representative Recommendations” section of
the Fact-Find Document.

REPRESENTATIVE’S RECOMMENDATIONS
Please note that the information that you provide will be the basis on which advice
will be given. Please also note that any inaccurate or incomplete information
provided may affect the suitability of the recommendations presented to you.

Client’s Objective(s) He likes to have a Critical Illness Insurance

Client’s concern, investment policy of S$200,000 for himself and
objectives, shortfall amount ($), S$100,000 for his wife.
time horizon, investment risk
profile, where applicable

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REPRESENTATIVE’S RECOMMENDATIONS
Plan(s) Recommendation  Medical Expense Insurance
Full name of plan and rider, Proposed Enhanced IncomeShield
duration, sum assured ($), Advantage Plan for the entire family
premium ($)/frequency, fund which are fully payable with Medisave.
name(s), investment amount and This plan provides cover for up to
respective risk classification, Public Hospital Ward A in the event of
where applicable hospitalisation. There is co-insurance
and deductible on this policy to make
the premium affordable.
Reason(s) for Recommendations
▪ State how the plan meets the  Critical Illness Insurance Policy
Client’s need(s). Tommy
▪ State and explain features and Proposed a 100% Acceleration Benefit
benefits relating to the product Type of Critical Illness Insurance cover
sold. packaged with a Whole Life Insurance
policy – sum assured of S$200,000 as
Risk / Limitation(s) of Plan specified by Tommy.
▪ State any possible risks This policy is suitable for Tommy’s
relating to the product sold. budget. It will provide him with death,
▪ State possible disadvantage(s) disability and critical illness coverage.
It serves to supplement the Whole Life
based on circumstances of the
Insurance policy in providing for the
Client.
family, in the event of his early
demise.

Reason(s) for Deviation(s) Furthermore, it provides life cover for

Reasons for any deviation from him, ensuring that he is covered in his
client’s profile, objectives and/or old age.
representative’s recommendations
(where applicable) Mrs Tang
Proposed a 100% Acceleration Benefit
▪ Premiums are more than Client’s Type of Critical Illness Insurance cover
budget packaged with a Whole Life Insurance
▪ Funds recommended (e.g. ILP policy – sum assured of S$100,000 as
sub-fund, par fund) are of a specified by Mr Tang.
higher risk than client’s risk
preference This policy will give Mrs Tang the
additional TPD cover that she needs. It
Client’s choice of product/funds will also provide her with life cover, thus
differs from representative’s ensuring that she will be covered in her
recommended plan/funds old age when her need is the greatest.

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Health Insurance

REPRESENTATIVE’S RECOMMENDATIONS
 Disability Expense Protection
Tommy
Proposed a Disability Income Insurance
policy of S$4,500 (75% of salary), with 5%
escalation and a six months’ deferred
period, up to the age of 65 years

This policy is considered suitable for

Tommy, because it will provide his family
with a monthly income in the event that
he is totally or partially disabled.

Mrs Tang
Has not proposed Disability Income
Insurance policy, as she is not working
and, hence, not eligible.

Has proposed a PA Insurance policy of

S$50,000 to make up the shortfall for TPD
cover after she takes up the S$100,000
Critical Illness Insurance policy. This
policy is recommended, as it will provide
her with cover for death, TPD and
medical expenses at a very low cost. This
means that this policy may also help to
take care of the shortfall in Medical
Expense Insurance cover.

2.18 Having finalised the insurance package to be recommended to the client,

Angela then arranges to meet up with his client, and presents the package to
him.

2.19 The case study illustrates one of the possible sets of recommendations among
others. As a result, certain plausible suggestions have not been discussed,
such as extending the client’s coverage to include accidental loss of limbs, or
medical expenses arising from accidents.

2.20 As an insurance representative, you should also be aware of “Your Guide To

Health Insurance”, as well as the “Evaluating My Health Insurance Coverage”
sheet issued by LIA in conjunction with the MoneySENSE national financial
education programme. You can view and download them from the LIA
Website at: www.lia.org.sg

2.21 You should bring these documents to the attention of your prospective client
and discuss them with him.

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3. CASE STUDY 2 – GROUP HEALTH INSURANCE

3.1 We will now look at another case study focusing on a prospective client’s need
for Group Health Insurance. Apex Services Company Private Limited has
approached you for quotations on Group Term Life and Health Insurance
policies to cover its employees as part of its employee benefit package. As the
Company wants the policies to be tailored to their needs, you will have to get
the Company to complete the Group Insurance Fact-Finding (GIFF) Form. Note
that the format of the Form may vary for different insurers.

3.2 Before proceeding further, you need to find out whether the Company (i.e. the
prospective client) meets your insurer’s underwriting requirements in terms of
group size and group stability, etc.

3.3 Once you have established that the prospective client is eligible for the group
coverage, you may then proceed to explain to your prospective client the
following:
(a) the types of policies available and the benefits offered;
(b) the advantages of joining the Portable Medical Benefits Scheme,
Transferable Medical Insurance Scheme or providing a shield plan for
employees, as well as how these schemes work; and
(c) the differences between compulsory and voluntary participation, as well
as their advantages.

3.4 In addition, you will need to help your prospective client to determine the
amount of sum assured for each category of employees. If your prospective
client has an existing plan, they may wish to stick to the same amount of
benefit, or make some minor adjustments to it. For a prospective client buying
the Group Term Life Insurance for the first time, it is your responsibility to
help the prospective client to determine the sum assured. There are two
common methods which can be used, i.e.:
(a) according to rank; or
(b) number of times of the employee’s basic salary.

3.5 The first method is easier to manage, as it goes according to the rank of the
employee. However, it does not take into account the length of service of the
staff concerned.

3.6 For example, a new staff joining as an executive will get the same amount of
benefit as one who has been with the company for two years, although his
pay may be lower than the more experienced staff. The second method, on
the other hand, takes into account the length of service, as the salary of a
more experienced staff is likely to be higher than that of a new staff. Hence,
this method may be more equitable as compared to the former method. You
may also ask for the client’s budget, as this will also help to determine the
sum assured to be covered.

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Health Insurance

3.7 For instance, in this case, your prospective client has told you that the
Company prefers to go by the ranking method. Based on the budget given,
you can then design a plan, such as the one below:

Category Sum Assured Per Person

Term Assurance Living Assurance
Senior Management S$500,000 S$250,000
Managers/Executives S$250,000 S$125,000
Assistant Executives S$100,000 S$50,000
Clerks S$50,000 S$25,000

3.8 By attaching 50% Acceleration Critical Illness Insurance cover as a rider to the
Group Term Life Insurance policy, it will help your prospective client to
provide the benefit at an affordable amount (if there is a constraint in the
amount that the Company can spend).

3.9 For the Group Hospital & Surgical Insurance policy, you can also plan
according to the ranking method as follows:

Category Plan
Senior Management Plan 1 – Room & Board S$450
Managers/Executives Plan 2 – Room & Board S$300
Others Plan 3 – Room & Board S$200

3.10 Next, obtain the Company’s past three years of claims history and list of
probable incurred but not yet reported claims. The claims history is very
important, as this will determine the premium to be charged.

3.11 Note also that your prospective client must duly complete and sign the GIFF
Form. It is important that you sign this Form too. The insurer is not allowed to
give any quotation, unless this Form has been duly completed and signed.
Having completed the GIFF Form, submit it to the insurer to work out a
quotation for your presentation to the prospective client.

3.12 The sales quotation will include the coverage, underwriting guidelines,
premium chargeable, exclusions and waiting periods, etc. You have to go
through the quotation and highlight the important points that your
prospective client needs to be aware of, e.g. exclusions, limitations, restricted
provisions and conditions, as well as no free-look period applicable to any
Group Insurance policy.

3.13 Once your prospective client accepts the quotation, you need to assist in the
completion of the proposal and health declaration forms, if necessary, and
submit them together with the premium payment to the insurer. Additionally,
you need to arrange for the medical examination, if any of the employees’
coverage falls outside the free cover limit.

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APPENDIX 15A

ABC LIFE LIMITED

Group Hospital & Surgical Insurance

Benefits (S$) / Plan Type 1 2 3

Maximum Per Disability (S$)
(Limits apply as per disability basis, unless otherwise stated)
1. Room & Board
a. Daily Room & board (max. 120 450 300 200
days inclusive of ICU)
b. ICU (per disability) 10,000 10,000 10,000
2. Hospitalisation
Other in-patient benefits:
- Hospital Miscellaneous
Services
- Surgical fees
- In-hospital Doctor’s Visits
3. Outpatient Benefits
a. Pre-Hospitalisation Diagnostic 25,000 20,000 15,000
X-Ray & Laboratory Tests &
Specialist Consultation (leads
to hospitalisation within 90
days)
b. Post-Hospitalisation Follow-Up
Treatment (max. 90 days after
discharge)
4. Emergency Accidental Outpatient
Treatment 3,000 2,000 1,500

5. Overseas Hospitalisation due to

Accident (applicable for Benefits 2 150% of Benefit Limits
& 3 only)
6. Miscarriage Benefit
(including ectopic pregnancy) 1,000 1,000 1,000

7. Death Benefit 10,000 10,000 10,000

8. Outpatient Cancer & Kidney
Treatment (max. per policy year) 20,000 15,000 10,000

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CHAPTER
15
CASE STUDIES

Below are just some of the pointers to take for Individual Health Insurance and Group Health Insurance. This chapter
requires candidates to apply the principles learnt from the previous chapters to carry out a proper needs-based sales
advisory process.

IMPORTANT CONCEPTS DEFINITIONS/EXPLANATIONS

Case Study 1 • Information collected from client.
Individual Health • Complete fact find form.
Insurance • What policy is suitable for maintenance cost?
1. Review and recommend.
• What policy is suitable for medical costs?
1. Review and recommend.
• Representative’s Recommendations
• Disclosures and documentations.
Case Study 2 • Assess if the prospective client meets the insurer’s underwriting requirements
Group Health Insurance in terms of group size and group stability, etc.
• Explain to the prospective client the following:
1. The types of policies available and the benefits offered;
2. The advantages of joining the Portable Medical Benefits Scheme or
Transferable Medical Insurance Scheme, as well as how these schemes
work; and
3. The differences between compulsory and voluntary participation, as well as
their advantages.
• Determine the amount of sum assured for each category of employees.
• Complete GIFF form.
• Sales quotations and documentations.

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Tables

Table A1 FUTURE VALUE OF ANNUITY FACTORS

Table A2 PRESENT VALUE OF AN ANNUITY DUE OF ONE DOLLAR

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 Tables

Time Value Of Money Tables

TABLE A1
FUTURE VALUE OF ANNUITY FACTORS
FVA Factor = [(1+i)n−1] / i where i = rate and n = periods

i= 0.5% 1% 1.5% 2% 2.5% 3% 3.5% 4% 4.5% 5%

n=1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 2.0050 2.0100 2.0150 2.0200 2.0250 2.0300 2.0350 2.0400 2.0450 2.0500
3 3.0150 3.0301 3.0452 3.0604 3.0756 3.0909 3.1062 3.1216 3.1370 3.1525
4 4.0301 4.0604 4.0909 4.1216 4.1525 4.1836 4.2149 4.2465 4.2782 4.3101
5 5.0503 5.1010 5.1523 5.2040 5.2563 5.3091 5.3625 5.4163 5.4707 5.5256

6 6.0755 6.1520 6.2296 6.3081 6.3877 6.4684 6.5502 6.6330 6.7169 6.8019
7 7.1059 7.2135 7.3230 7.4343 7.5474 7.6625 7.7794 7.8983 8.0192 8.1420
8 8.1414 8.2857 8.4328 8.5830 8.7361 8.8923 9.0517 9.2142 9.3800 9.5491
9 9.1821 9.3685 9.5593 9.7546 9.9545 10.1591 10.3685 10.5828 10.8021 11.0266
10 10.2280 10.4622 10.7027 10.9497 11.2034 11.4639 11.7314 12.0061 12.2882 12.5779

11 11.2792 11.5668 11.8633 12.1687 12.4835 12.8078 13.1420 13.4864 13.8412 14.2068
12 12.3356 12.6825 13.0412 13.4121 13.7956 14.1920 14.6020 15.0258 15.4640 15.9171
13 13.3972 13.8093 14.2368 14.6803 15.1404 15.6178 16.1130 16.6268 17.1599 17.7130
14 14.4642 14.9474 15.4504 15.9739 16.5190 17.0863 17.6770 18.2919 18.9321 19.5986
15 15.5365 16.0969 16.6821 17.2934 17.9319 18.5989 19.2957 20.0236 20.7841 21.5786

16 16.6142 17.2579 17.9324 18.6393 19.3802 20.1569 20.9710 21.8245 22.7193 23.6575
17 17.6973 18.4304 19.2014 20.0121 20.8647 21.7616 22.7050 23.6975 24.7417 25.8404
18 18.7858 19.6147 20.4894 21.4123 22.3863 23.4144 24.4997 25.6454 26.8551 28.1324
19 19.8797 20.8109 21.7967 22.8406 23.9460 25.1169 26.3572 27.6712 29.0636 30.5390
20 20.9791 22.0190 23.1237 24.2974 25.5447 26.8704 28.2797 29.7781 31.3714 33.0660

21 22.0840 23.2392 24.4705 25.7833 27.1833 28.6765 30.2695 31.9692 33.7831 35.7193
22 23.1944 24.4716 25.8376 27.2990 28.8629 30.5368 32.3289 34.2480 36.3034 38.5052
23 24.3104 25.7163 27.2251 28.8450 30.5844 32.4529 34.4604 36.6179 38.9370 41.4305
24 25.4320 26.9735 28.6335 30.4219 32.3490 34.4265 36.6665 39.0826 41.6892 44.5020
25 26.5591 28.2432 30.0630 32.0303 34.1578 36.4593 38.9499 41.6459 44.5652 47.7271

26 27.6919 29.5256 31.5140 33.6709 36.0117 38.5530 41.3131 44.3117 47.5706 51.1135
27 28.8304 30.8209 32.9867 35.3443 37.9120 40.7096 43.7591 47.0842 50.7113 54.6691
28 29.9745 32.1291 34.4815 37.0512 39.8598 42.9309 46.2906 49.9676 53.9933 58.4026
29 31.1244 33.4504 35.9987 38.7922 41.8563 45.2189 48.9108 52.9663 57.4230 62.3227
30 32.2800 34.7849 37.5387 40.5681 43.9027 47.5754 51.6227 56.0849 61.0071 66.4388

35 38.1454 41.6603 45.5921 49.9945 54.9282 60.4621 66.6740 73.6522 81.4966 90.3203
40 44.1588 48.8864 54.2679 60.4020 67.4026 75.4013 84.5503 95.0255 107.030 120.800
45 50.3242 56.4811 63.6142 71.8927 81.5161 92.7199 105.782 121.029 138.850 159.700
50 56.6452 64.4632 73.6828 84.5794 97.4843 112.797 130.998 152.667 178.503 209.348

Copyright reserved by the Singapore College of Insurance Limited [Version 1.0] 337
 Tables

Time Value Of Money Tables

TABLE A1 (CONTINUED)
FUTURE VALUE OF ANNUITY FACTORS
FVA Factor = [(1+i)n−1] / i where i = rate and n = periods

i= 5.5% 6% 6.5% 7% 7.5% 8% 8.5% 9% 9.5% 10%

n=1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 2.0550 2.0600 2.0650 2.0700 2.0750 2.0800 2.0850 2.0900 2.0950 2.1000
3 3.1680 3.1836 3.1992 3.2149 3.2306 3.2464 3.2622 3.2781 3.2940 3.3100
4 4.3423 4.3746 4.4072 4.4399 4.4729 4.5061 4.5395 4.5731 4.6070 4.6410
5 5.5811 5.6371 5.6936 5.7507 5.8084 5.8666 5.9254 5.9847 6.0446 6.1051

6 6.8881 6.9753 7.0637 7.1533 7.2440 7.3359 7.4290 7.5233 7.6189 7.7156
7 8.2669 8.3938 8.5229 8.6540 8.7873 8.9228 9.0605 9.2004 9.3426 9.4872
8 9.7216 9.8975 10.0769 10.2598 10.4464 10.6366 10.8306 11.0285 11.2302 11.4359
9 11.2563 11.4913 11.7319 11.9780 12.2298 12.4876 12.7512 13.0210 13.2971 13.5795
10 12.8754 13.1808 13.4944 13.8164 14.1471 14.4866 14.8351 15.1929 15.5603 15.9374

11 14.5835 14.9716 15.3716 15.7836 16.2081 16.6455 17.0961 17.5603 18.0385 18.5312
12 16.3856 16.8699 17.3707 17.8885 18.4237 18.9771 19.5492 20.1407 20.7522 21.3843
13 18.2868 18.8821 19.4998 20.1406 20.8055 21.4953 22.2109 22.9534 23.7236 24.5227
14 20.2926 21.0151 21.7673 22.5505 23.3659 24.2149 25.0989 26.0192 26.9774 27.9750
15 22.4087 23.2760 24.1822 25.1290 26.1184 27.1521 28.2323 29.3609 30.5402 31.7725

16 24.6411 25.6725 26.7540 27.8881 29.0772 30.3243 31.6320 33.0034 34.4416 35.9497
17 26.9964 28.2129 29.4930 30.8402 32.2580 33.7502 35.3207 36.9737 38.7135 40.5447
18 29.4812 30.9057 32.4101 33.9990 35.6774 37.4502 39.3230 41.3013 43.3913 45.5992
19 32.1027 33.7600 35.5167 37.3790 39.3532 41.4463 43.6654 46.0185 48.5135 51.1591
20 34.8683 36.7856 38.8253 40.9955 43.3047 45.7620 48.3770 51.1601 54.1222 57.2750

21 37.7861 39.9927 42.3490 44.8652 47.5525 50.4229 53.4891 56.7645 60.2638 64.0025
22 40.8643 43.3923 46.1016 49.0057 52.1190 55.4568 59.0356 62.8733 66.9889 71.4027
23 44.1118 46.9958 50.0982 53.4361 57.0279 60.8933 65.0537 69.5319 74.3529 79.5430
24 47.5380 50.8156 54.3546 58.1767 62.3050 66.7648 71.5832 76.7898 82.4164 88.4973
25 51.1526 54.8645 58.8877 63.2490 67.9779 73.1059 78.6678 84.7009 91.2459 98.3741

26 54.9660 59.1564 63.7154 68.6765 74.0762 79.9544 86.3456 93.3240 100.914 109.182
27 58.9891 63.7058 68.8569 74.4838 80.6319 87.3508 94.6947 102.723 111.501 121.100
28 63.2335 68.5281 74.3326 80.6977 87.6793 95.3388 103.744 112.968 123.094 134.210
29 67.7114 73.6398 80.1642 87.3465 95.2553 103.966 113.562 124.135 135.788 148.631
30 72.4355 79.0582 86.3749 94.4608 103.399 113.283 124.215 136.308 149.688 164.494

35 100.251 111.435 124.035 138.237 154.252 172.317 192.702 215.711 241.688 271.024
40 136.606 154.762 175.632 199.635 227.257 259.057 295.683 337.882 386.520 442.593
45 184.119 212.744 246.325 285.749 332.065 386.506 450.530 525.859 614.519 718.905
50 246.217 290.336 343.180 406.529 482.530 573.770 683.368 815.084 973.445 1163.91

338 Copyright reserved by the Singapore College of Insurance Limited [V1.0]

 Tables

Time Value Of Money Tables

TABLE A1 (CONTINUED)
FUTURE VALUE OF ANNUITY FACTORS
FVA Factor = [(1+i)n−1] / i where i = rate and n = periods

i= 10.5% 11% 11.5% 12% 12.5% 13% 13.5% 14% 14.5% 15%

n=1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 2.1050 2.1100 2.1150 2.1200 2.1250 2.1300 2.1350 2.1400 2.1450 2.1500
3 3.3260 3.3421 3.3582 3.3744 3.3906 3.4069 3.4232 3.4396 3.4560 3.4725
4 4.6753 4.7097 4.7444 4.7793 4.8145 4.8498 4.8854 4.9211 4.9571 4.9934
5 6.1662 6.2278 6.2900 6.3528 6.4163 6.4803 6.5449 6.6101 6.6759 6.7424

6 7.8136 7.9129 8.0134 8.1152 8.2183 8.3227 8.4284 8.5355 8.6439 8.7537
7 9.6340 9.7833 9.9349 10.0890 10.2456 10.4047 10.5663 10.7305 10.8973 11.0668
8 11.6456 11.8594 12.0774 12.2997 12.5263 12.7573 12.9927 13.2328 13.4774 13.7268
9 13.8684 14.1640 14.4663 14.7757 15.0921 15.4157 15.7468 16.0853 16.4317 16.7858
10 16.3246 16.7220 17.1300 17.5487 17.9786 18.4197 18.8726 19.3373 19.8142 20.3037

11 19.0387 19.5614 20.0999 20.6546 21.2259 21.8143 22.4204 23.0445 23.6873 24.3493
12 22.0377 22.7132 23.4114 24.1331 24.8791 25.6502 26.4471 27.2707 28.1220 29.0017
13 25.3517 26.2116 27.1037 28.0291 28.9890 29.9847 31.0175 32.0887 33.1997 34.3519
14 29.0136 30.0949 31.2207 32.3926 33.6126 34.8827 36.2048 37.5811 39.0136 40.5047
15 33.0600 34.4054 35.8110 37.2797 38.8142 40.4175 42.0925 43.8424 45.6706 47.5804

16 37.5313 39.1899 40.9293 42.7533 44.6660 46.6717 48.7750 50.9804 53.2928 55.7175
17 42.4721 44.5008 46.6362 48.8837 51.2493 53.7391 56.3596 59.1176 62.0203 66.0751
18 47.9317 50.3959 52.9993 55.7497 58.6554 61.7251 64.9681 68.3941 72.0132 75.8364
19 53.9645 56.9395 60.0942 63.4397 66.9873 70.7494 74.7388 78.9692 83.4551 88.2118
20 60.6308 64.2028 68.0051 72.0524 76.3608 80.9468 85.8286 91.0249 96.5561 102.444

21 67.9970 72.2651 76.8257 81.6987 86.9058 92.4699 98.4154 104.768 111.557 118.810
22 76.1367 81.2143 86.6606 92.5026 98.7691 105.491 112.701 120.436 128.732 137.632
23 85.1311 91.1479 97.6266 104.603 112.115 120.205 128.916 138.297 148.399 159.276
24 95.0699 102.174 109.854 118.155 127.130 136.831 147.320 158.659 170.917 184.168
25 106.052 114.413 123.487 133.334 144.021 155.620 168.208 181.871 196.699 212.793

26 118.188 127.999 138.688 150.334 163.023 176.850 191.916 208.333 226.221 245.712
27 131.597 143.079 155.637 169.374 184.401 200.841 218.825 238.499 260.023 283.569
28 146.415 159.817 174.535 190.699 208.452 227.950 249.366 272.889 298.726 327.104
29 162.789 178.397 195.607 214.583 235.508 258.583 284.031 312.094 343.041 377.170
30 180.881 199.021 219.101 241.333 265.946 293.199 323.375 356.787 393.782 434.745

35 304.159 341.590 383.879 431.663 485.660 546.681 615.640 693.573 781.644 881.170
40 507.252 581.826 667.850 767.091 881.592 1013.70 1166.14 1342.03 1544.96 1779.09
45 841.836 986.639 1157.23 1358.23 1595.07 1874.16 2203.04 2590.56 3047.17 3585.13
50 1393.05 1668.77 2000.61 2400.02 2880.79 3459.51 4156.10 4994.52 6003.54 7217.72

Copyright reserved by the Singapore College of Insurance Limited [Version 1.0] 339
 Tables

Time Value Of Money Tables

TABLE A1 (CONTINUED)
FUTURE VALUE OF ANNUITY FACTORS
FVA Factor = [(1+i)n−1] / i where i = rate and n = periods

i= 16% 17% 18% 19% 20% 22% 24% 26% 28% 30%

n=1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 2.1600 2.1700 2.1800 2.1900 2.2000 2.2200 2.2400 2.2600 2.2800 2.3000
3 3.5056 3.5389 3.5724 3.6061 3.6400 3.7084 3.7776 3.8476 3.9184 3.9900
4 5.0665 5.1405 5.2154 5.2913 5.3680 5.5242 5.6842 5.8480 6.0156 6.1870
5 6.8771 7.0144 7.1542 7.2966 7.4416 7.7396 8.0484 8.3684 8.6999 9.0431

6 8.9775 9.2068 9.4420 9.6830 9.9299 10.4423 10.9801 11.5442 12.1359 12.7560
7 11.4139 11.7720 12.1415 12.5227 12.9159 13.7396 14.6153 15.5458 16.5339 17.5828
8 14.2401 14.7733 15.3270 15.9020 16.4991 17.7623 19.1229 20.5876 22.1634 23.8577
9 17.5185 18.2847 19.0859 19.9234 20.7989 22.6700 24.7125 26.9404 29.3692 32.0150
10 21.3215 22.3931 23.5213 24.7089 25.9587 28.6574 31.6434 34.9449 38.5926 42.6195

11 25.7329 27.1999 28.7551 30.4035 32.1504 35.9620 40.2379 45.0306 50.3985 56.4053
12 30.8502 32.8239 34.9311 37.1802 39.5805 44.8737 50.8950 57.7386 65.5100 74.3270
13 36.7862 39.4040 42.2187 45.2445 48.4966 55.7459 64.1097 73.7506 84.8529 97.6250
14 43.6720 47.1027 50.8180 54.8409 59.1959 69.0100 80.4961 93.9258 109.612 127.913
15 51.6595 56.1101 60.9653 66.2607 72.0351 85.1922 100.815 119.347 141.303 167.286

16 60.9250 66.6488 72.9390 79.8502 87.4421 104.935 126.011 151.377 181.868 218.472
17 71.6730 78.9792 87.0680 96.0218 105.931 129.020 157.253 191.735 233.791 285.014
18 84.1407 93.4056 103.740 115.266 128.117 158.405 195.994 242.585 300.252 371.518
19 98.6032 110.285 123.414 138.166 154.740 194.254 244.033 306.658 385.323 483.973
20 115.380 130.033 146.628 165.418 186.688 237.989 303.601 387.389 494.213 630.165

21 134.841 153.139 174.021 197.847 225.026 291.347 377.465 489.110 633.593 820.215
22 157.415 180.172 206.345 236.438 271.031 356.443 469.056 617.278 811.999 1067.28
23 183.601 211.801 244.487 282.362 326.237 435.861 582.630 778.771 1040.36 1388.46
24 213.978 248.808 289.494 337.010 392.484 532.750 723.461 982.251 1332.66 1806.00
25 249.214 292.105 342.603 402.042 471.981 650.955 898.092 1238.64 1706.80 2348.80

26 290.088 342.763 405.272 479.431 567.377 795.165 1114.63 1561.68 2185.71 3054.44
27 337.502 402.032 479.221 571.522 681.853 971.102 1383.15 1968.72 2798.71 3971.78
28 392.503 471.378 566.481 681.112 819.223 1185.74 1716.10 2481.59 3583.34 5164.31
29 456.303 552.512 669.447 811.523 984.068 1447.61 2128.96 3127.80 4587.68 6714.60
30 530.312 647.439 790.948 966.712 1181.88 1767.08 2640.92 3942.03 5873.23 8729.99

35 1120.71 1426.49 1816.65 2314.21 2948.34 4783.64 7750.23 12527.4 20189.0 32422.9
40 2360.76 3134.52 4163.21 5529.83 7343.86 12936.5 22728.8 39793.0 69377.5 120393
45 4965.27 6879.29 9531.58 13203.4 18281.3 34971.4 66640.4 126383 238388 447019
50 10435.6 15089.5 21813.1 31515.3 45497.2 94525.3 195373 401374 819103 1659761

340 Copyright reserved by the Singapore College of Insurance Limited [V1.0]

 Tables

Time Value of Money Tables

TABLE A2
PRESENT VALUE OF AN ANNUITY DUE OF ONE DOLLAR
PVAD = ({1−[1/ (1+i)n]} / i )×(1+i) where i = rate and n = periods

i= 0.5% 1% 1.5% 2% 2.5% 3% 3.5% 4% 4.5% 5%

n=1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.9950 1.9901 1.9852 1.9804 1.9756 1.9709 1.9662 1.9615 1.9569 1.9524
3 2.9851 2.9704 2.9559 2.9416 2.9274 2.9135 2.8997 2.8861 2.8727 2.8594
4 3.9702 3.9410 3.9122 3.8839 3.8560 3.8286 3.8016 3.7751 3.7490 3.7232
5 4.9505 4.9020 4.8544 4.8077 4.7620 4.7171 4.6731 4.6299 4.5875 4.5460

6 5.9259 5.8534 5.7826 5.7135 5.6458 5.5797 5.5151 5.4518 5.3900 5.3295
7 6.8964 6.7955 6.6972 6.6014 6.5081 6.4172 6.3286 6.2421 6.1579 6.0757
8 7.8621 7.7282 7.5982 7.4720 7.3494 7.2303 7.1145 7.0021 6.8927 6.7864
9 8.8230 8.6517 8.4859 8.3255 8.1701 8.0197 7.8740 7.7327 7.5959 7.4632
10 9.7791 9.5660 9.3605 9.1622 8.9709 8.7861 8.6077 8.4353 8.2688 8.1078

11 10.7304 10.4713 10.2222 9.9826 9.7521 9.5302 9.3166 9.1109 8.9127 8.7217
12 11.6770 11.3676 11.0711 10.7868 10.5142 10.2526 10.0016 9.7605 9.5289 9.3064
13 12.6189 12.2551 11.9075 11.5753 11.2578 10.9540 10.6633 10.3851 10.1186 9.8633
14 13.5562 13.1337 12.7315 12.3484 11.9832 11.6350 11.3027 10.9856 10.6829 10.3936
15 14.4887 14.0037 13.5434 13.1062 12.6909 12.2961 11.9205 11.5631 11.2228 10.8986

16 15.4166 14.8651 14.3432 13.8493 13.3814 12.9379 12.5174 12.1184 11.7395 11.3797
17 16.3399 15.7179 15.1313 14.5777 14.0550 13.5611 13.0941 12.6523 12.2340 11.8378
18 17.2586 16.5623 15.9076 15.2919 14.7122 14.1661 13.6513 13.1657 12.7072 12.2741
19 18.1728 17.3983 16.6726 15.9920 15.3534 14.7535 14.1897 13.6593 13.1600 12.6896
20 19.0824 18.2260 17.4262 16.6785 15.9789 15.3238 14.7098 14.1339 13.5933 13.0853

21 19.9874 19.0456 18.1686 17.3514 16.5892 15.8775 15.2124 14.5903 14.0079 13.4622
22 20.8880 19.8570 18.9001 18.0112 17.1845 16.4150 15.6980 15.0292 14.4047 13.8212
23 21.7841 20.6604 19.6208 18.6580 17.7654 16.9369 16.1671 15.4511 14.7844 14.1630
24 22.6757 21.4558 20.3309 19.2922 18.3321 17.4436 16.6204 15.8568 15.1478 14.4886
25 23.5629 22.2434 21.0304 19.9139 18.8850 17.9355 17.0584 16.2470 15.4955 14.7986

26 24.4456 23.0232 21.7196 20.5235 19.4244 18.4131 17.4815 16.6221 15.8282 15.0939
27 25.3240 23.7952 22.3986 21.1210 19.9506 18.8768 17.8904 16.9828 16.1466 15.3752
28 26.1980 24.5596 23.0676 21.7069 20.4640 19.3270 18.2854 17.3296 16.4513 15.6430
29 27.0677 25.3164 23.7267 22.2813 20.9649 19.7641 18.6670 17.6631 16.7429 15.8981
30 27.9330 26.0658 24.3761 22.8444 21.4535 20.1885 19.0358 17.9837 17.0219 16.1411

35 32.1955 29.7027 27.4817 25.4986 23.7238 22.1318 20.7007 19.4112 18.2468 17.1929
40 36.3531 33.1630 30.3646 27.9026 25.7303 23.8082 22.1025 20.5845 19.2297 18.0170
45 40.4082 36.4555 33.0406 30.0800 27.5038 25.2543 23.2828 21.5488 20.0184 18.6628
50 44.3635 39.5881 35.5247 32.0521 29.0714 26.5017 24.2766 22.3415 20.6513 19.1687

Copyright reserved by the Singapore College of Insurance Limited [Version 1.0] 341
 Tables

Time Value of Money Tables

TABLE A2 (CONTINUED)
PRESENT VALUE OF AN ANNUITY DUE OF ONE DOLLAR
PVAD = ({1−[1/ (1+i)n]} / i )×(1+i) where i = rate and n = periods

i= 5.5% 6% 6.5% 7% 7.5% 8% 8.5% 9% 9.5% 10%

n=1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.9479 1.9434 1.9390 1.9346 1.9302 1.9259 1.9217 1.9174 1.9132 1.9091
3 2.8463 2.8334 2.8206 2.8080 2.7956 2.7833 2.7711 2.7591 2.7473 2.7355
4 3.6979 3.6730 3.6485 3.6243 3.6005 3.5771 3.5540 3.5313 3.5089 3.4869
5 4.5052 4.4651 4.4258 4.3872 4.3493 4.3121 4.2756 4.2397 4.2045 4.1699

6 5.2703 5.2124 5.1557 5.1002 5.0459 4.9927 4.9406 4.8897 4.8397 4.7908
7 5.9955 5.9173 5.8410 5.7665 5.6938 5.6229 5.5536 5.4859 5.4198 5.3553
8 6.6830 6.5824 6.4845 6.3893 6.2966 6.2064 6.1185 6.0330 5.9496 5.8684
9 7.3346 7.2098 7.0888 6.9713 6.8573 6.7466 6.6392 6.5348 6.4334 6.3349
10 7.9522 7.8017 7.6561 7.5152 7.3789 7.2469 7.1191 6.9952 6.8753 6.7590

11 8.5376 8.3601 8.1888 8.0236 7.8641 7.7101 7.5613 7.4177 7.2788 7.1446
12 9.0925 8.8869 8.6890 8.4987 8.3154 8.1390 7.9690 7.8052 7.6473 7.4951
13 9.6185 9.3838 9.1587 8.9427 8.7353 8.5361 8.3447 8.1607 7.9838 7.8137
14 10.1171 9.8527 9.5997 9.3577 9.1258 8.9038 8.6910 8.4869 8.2912 8.1034
15 10.5896 10.2950 10.0138 9.7455 9.4892 9.2442 9.0101 8.7862 8.5719 8.3667

16 11.0376 10.7122 10.4027 10.1079 9.8271 9.5595 9.3042 9.0607 8.8282 8.6061
17 11.4622 11.1059 10.7678 10.4466 10.1415 9.8514 9.5753 9.3126 9.0623 8.8237
18 11.8646 11.4773 11.1106 10.7632 10.4340 10.1216 9.8252 9.5436 9.2760 9.0216
19 12.2461 11.8276 11.4325 11.0591 10.7060 10.3719 10.0555 9.7556 9.4713 9.2014
20 12.6077 12.1581 11.7347 11.3356 10.9591 10.6036 10.2677 9.9501 9.6496 9.3649

21 12.9504 12.4699 12.0185 11.5940 11.1945 10.8181 10.4633 10.1285 9.8124 9.5136
22 13.2752 12.7641 12.2850 11.8355 11.4135 11.0168 10.6436 10.2922 9.9611 9.6487
23 13.5832 13.0416 12.5352 12.0612 11.6172 11.2007 10.8098 10.4424 10.0969 9.7715
24 13.8750 13.3034 12.7701 12.2722 11.8067 11.3711 10.9629 10.5802 10.2209 9.8832
25 14.1517 13.5504 12.9907 12.4693 11.9830 11.5288 11.1041 10.7066 10.3341 9.9847

26 14.4139 13.7834 13.1979 12.6536 12.1469 11.6748 11.2342 10.8226 10.4376 10.0770
27 14.6625 14.0032 13.3924 12.8258 12.2995 11.8100 11.3541 10.9290 10.5320 10.1609
28 14.8981 14.2105 13.5750 12.9867 12.4414 11.9352 11.4646 11.0266 10.6183 10.2372
29 15.1214 14.4062 13.7465 13.1371 12.5734 12.0511 11.5665 11.1161 10.6971 10.3066
30 15.3331 14.5907 13.9075 13.2777 12.6962 12.1584 11.6603 11.1983 10.7690 10.3696

35 16.2370 15.3681 14.5766 13.8540 13.1929 12.5869 12.0302 11.5178 11.0453 10.6086
40 16.9287 15.9491 15.0650 14.2649 13.5390 12.8786 12.2763 11.7255 11.2207 10.7570
45 17.4579 16.3832 15.4214 14.5579 13.7800 13.0771 12.4399 11.8605 11.3322 10.8491
50 17.8628 16.7076 15.6816 14.7668 13.9479 13.2122 12.5487 11.9482 11.4030 10.9063

342 Copyright reserved by the Singapore College of Insurance Limited [V1.0]

 Tables

Time Value of Money Tables

TABLE A2 (CONTINUED)
PRESENT VALUE OF AN ANNUITY DUE OF ONE DOLLAR
PVAD = ({1−[1/ (1+i)n]} / i )×(1+i) where i = rate and n = periods

i= 10.5% 11% 11.5% 12% 12.5% 13% 13.5% 14% 14.5% 15%

n=1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.9050 1.9009 1.8969 1.8929 1.8889 1.8850 1.8811 1.8772 1.8734 1.8696
3 2.7240 2.7125 2.7012 2.6901 2.6790 2.6681 2.6573 2.6467 2.6361 2.6257
4 3.4651 3.4437 3.4226 3.4018 3.3813 3.3612 3.3413 3.3216 3.3023 3.2832
5 4.1359 4.1024 4.0696 4.0373 4.0056 3.9745 3.9438 3.9137 3.8841 3.8550

6 4.7429 4.6959 4.6499 4.6048 4.5606 4.5172 4.4747 4.4331 4.3922 4.3522
7 5.2922 5.2305 5.1703 5.1114 5.0538 4.9975 4.9425 4.8887 4.8360 4.7845
8 5.7893 5.7122 5.6370 5.5638 5.4923 5.4226 5.3546 5.2883 5.2236 5.1604
9 6.2392 6.1461 6.0556 5.9676 5.8820 5.7988 5.7177 5.6389 5.5621 5.4873
10 6.6463 6.5370 6.4311 6.3282 6.2285 6.1317 6.0377 5.9464 5.8577 5.7716

11 7.0148 6.8892 6.7678 6.6502 6.5364 6.4262 6.3195 6.2161 6.1159 6.0188
12 7.3482 7.2065 7.0697 6.9377 6.8102 6.6869 6.5679 6.4527 6.3414 6.2337
13 7.6500 7.4924 7.3406 7.1944 7.0535 6.9176 6.7867 6.6603 6.5383 6.4206
14 7.9230 7.7499 7.5835 7.4235 7.2698 7.1218 6.9794 6.8424 6.7103 6.5831
15 8.1702 7.9819 7.8013 7.6282 7.4620 7.3025 7.1493 7.0021 6.8606 6.7245

16 8.3938 8.1909 7.9967 7.8109 7.6329 7.4624 7.2989 7.1422 6.9918 6.8474
17 8.5962 8.3792 8.1719 7.9740 7.7848 7.6039 7.4308 7.2651 7.1063 6.9542
18 8.7794 8.5488 8.3291 8.1196 7.9198 7.7291 7.5469 7.3729 7.2064 7.0472
19 8.9451 8.7016 8.4700 8.2497 8.0398 7.8399 7.6493 7.4674 7.2938 7.1280
20 9.0952 8.8393 8.5964 8.3658 8.1465 7.9380 7.7395 7.5504 7.3701 7.1982

21 9.2309 8.9633 8.7098 8.4694 8.2414 8.0248 7.8189 7.6231 7.4368 7.2593
22 9.3538 9.0751 8.8115 8.5620 8.3256 8.1016 7.8889 7.6870 7.4950 7.3125
23 9.4649 9.1757 8.9027 8.6446 8.4006 8.1695 7.9506 7.7429 7.5459 7.3587
24 9.5656 9.2664 8.9845 8.7184 8.4672 8.2297 8.0049 7.7921 7.5903 7.3988
25 9.6566 9.3481 9.0578 8.7843 8.5264 8.2829 8.0528 7.8351 7.6291 7.4338

26 9.7390 9.4217 9.1236 8.8431 8.5790 8.3300 8.0950 7.8729 7.6629 7.4641
27 9.8136 9.4881 9.1826 8.8957 8.6258 8.3717 8.1321 7.9061 7.6925 7.4906
28 9.8811 9.5478 9.2355 8.9426 8.6674 8.4086 8.1649 7.9352 7.7184 7.5135
29 9.9422 9.6016 9.2830 8.9844 8.7043 8.4412 8.1937 7.9607 7.7409 7.5335
30 9.9974 9.6501 9.3255 9.0218 8.7372 8.4701 8.2191 7.9830 7.7606 7.5509

35 10.2043 9.8293 9.4809 9.1566 8.8542 8.5717 8.3075 8.0599 7.8275 7.6091
40 10.3299 9.9357 9.5710 9.2330 8.9191 8.6268 8.3543 8.0997 7.8615 7.6380
45 10.4061 9.9988 9.6233 9.2764 8.9551 8.6568 8.3792 8.1205 7.8787 7.6524
50 10.4524 10.0362 9.6537 9.3010 8.9751 8.6730 8.3924 8.1312 7.8875 7.6596

Copyright reserved by the Singapore College of Insurance Limited [Version 1.0] 343
 Tables

Time Value of Money Tables

TABLE A2 (CONTINUED)
PRESENT VALUE OF AN ANNUITY DUE OF ONE DOLLAR
PVAD = ({1−[1/ (1+i)n]} / i )×(1+i) where i = rate and n = periods

i= 16% 17% 18% 19% 20% 22% 24% 26% 28% 30%

n=1 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000 1.0000
2 1.8621 1.8547 1.8475 1.8403 1.8333 1.8197 1.8065 1.7937 1.7813 1.7692
3 2.6052 2.5852 2.5656 2.5465 2.5278 2.4915 2.4568 2.4235 2.3916 2.3609
4 3.2459 3.2096 3.1743 3.1399 3.1065 3.0422 2.9813 2.9234 2.8684 2.8161
5 3.7982 3.7432 3.6901 3.6386 3.5887 3.4936 3.4043 3.3202 3.2410 3.1662

6 4.2743 4.1993 4.1272 4.0576 3.9906 3.8636 3.7454 3.6351 3.5320 3.4356
7 4.6847 4.5892 4.4976 4.4098 4.3255 4.1669 4.0205 3.8850 3.7594 3.6427
8 5.0386 4.9224 4.8115 4.7057 4.6046 4.4155 4.2423 4.0833 3.9370 3.8021
9 5.3436 5.2072 5.0776 4.9544 4.8372 4.6193 4.4212 4.2407 4.0758 3.9247
10 5.6065 5.4506 5.3030 5.1633 5.0310 4.7863 4.5655 4.3657 4.1842 4.0190

11 5.8332 5.6586 5.4941 5.3389 5.1925 4.9232 4.6819 4.4648 4.2689 4.0915
12 6.0286 5.8364 5.6560 5.4865 5.3271 5.0354 4.7757 4.5435 4.3351 4.1473
13 6.1971 5.9884 5.7932 5.6105 5.4392 5.1274 4.8514 4.6059 4.3868 4.1903
14 6.3423 6.1183 5.9095 5.7147 5.5327 5.2028 4.9124 4.6555 4.4272 4.2233
15 6.4675 6.2293 6.0081 5.8023 5.6106 5.2646 4.9616 4.6949 4.4587 4.2487

16 6.5755 6.3242 6.0916 5.8759 5.6755 5.3152 5.0013 4.7261 4.4834 4.2682
17 6.6685 6.4053 6.1624 5.9377 5.7296 5.3567 5.0333 4.7509 4.5026 4.2832
18 6.7487 6.4746 6.2223 5.9897 5.7746 5.3908 5.0591 4.7705 4.5177 4.2948
19 6.8178 6.5339 6.2732 6.0333 5.8122 5.4187 5.0799 4.7861 4.5294 4.3037
20 6.8775 6.5845 6.3162 6.0700 5.8435 5.4415 5.0967 4.7985 4.5386 4.3105

21 6.9288 6.6278 6.3527 6.1009 5.8696 5.4603 5.1103 4.8083 4.5458 4.3158
22 6.9731 6.6648 6.3837 6.1268 5.8913 5.4756 5.1212 4.8161 4.5514 4.3198
23 7.0113 6.6964 6.4099 6.1486 5.9094 5.4882 5.1300 4.8223 4.5558 4.3230
24 7.0442 6.7234 6.4321 6.1668 5.9245 5.4985 5.1371 4.8273 4.5592 4.3254
25 7.0726 6.7465 6.4509 6.1822 5.9371 5.5070 5.1428 4.8312 4.5619 4.3272

26 7.0971 6.7662 6.4669 6.1951 5.9476 5.5139 5.1474 4.8342 4.5640 4.3286
27 7.1182 6.7831 6.4804 6.2060 5.9563 5.5196 5.1511 4.8367 4.5656 4.3297
28 7.1364 6.7975 6.4919 6.2151 5.9636 5.5243 5.1542 4.8387 4.5669 4.3305
29 7.1520 6.8099 6.5016 6.2228 5.9697 5.5281 5.1566 4.8402 4.5679 4.3312
30 7.1656 6.8204 6.5098 6.2292 5.9747 5.5312 5.1585 4.8414 4.5687 4.3317

35 7.2098 6.8541 6.5356 6.2489 5.9898 5.5402 5.1639 4.8447 4.5706 4.3329
40 7.2309 6.8695 6.5468 6.2572 5.9959 5.5435 5.1657 4.8457 4.5712 4.3332
45 7.2409 6.8765 6.5517 6.2607 5.9984 5.5447 5.1663 4.8460 4.5714 4.3333
50 7.2457 6.8797 6.5539 6.2621 5.9993 5.5452 5.1666 4.8461 4.5714 4.3333

344 Copyright reserved by the Singapore College of Insurance Limited [V1.0]

 Tables

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