A HOSPITAL & surgical (H&S) plan helps to defray hospitalisation expenses, but there are other associated health costs such as the loss of income during the course of one's illness or recovery.
This is where covers such as disability and critical illness plans come in.
Mr Patrick Lim, the associate director of financial advisory firm PromiseLand Independent, considers a disability income plan the second most important cover, after a comprehensive H&S policy, as it complements all other plans in a person's insurance portfolio.
"A disability income plan provides the most comprehensive coverage and plugs the gaps found in both the 30 critical illnesses cover and the total and permanent disability (TPD) benefit," he said.
This is because the insured person will not be able to claim from his 30 critical illnesses cover if the diagnosed illness does not fall within any of the specified complaints.
Critical illness policies pay a lump sum upon diagnosis of an illness such as a heart attack, and this could protect against a loss of income or go towards medical and other expenses.
Some Singaporeans are under the mistaken impression that a critical illness cover is sufficient to cover hospitalisation expenses. But that is untrue and these expenses are best covered by a H&S policy.
Many people also do not seem to be aware of the limitations of the TPD benefit.
A TPD benefit is a standard clause included in a life insurance plan.
The clause made headlines recently when a High Court judge made a clear distinction between policyholders who have become disabled but are able to find work later and those who are permanently disabled.
Based on the TPD clause used in the contract under dispute, Justice Woo Bih Li ruled that a TPD benefit is payable only if the insured person is unable to sufficiently engage in any work, occupation or profession, or to earn wages, compensation or profit.
He said that some consumers may not be aware that policies with such a benefit are subject to a "strict interpretation" and urged insurers to educate clients on the limited scope of disability benefits in their life plans.
People concerned about the loss of income arising from disability should consider a specialised cover where a benefit is payable if the insured person cannot work in the same profession as he did before he suffered from TPD.
This is where disability income plans come in. These policies pay a fixed amount regularly to replace the income you would lose if you are not able to work as a result of an accident or illness.
They also pay for partial disability with s pecific definitions of what that means and so provide a broader interpretation of disability than that applied to the TPD benefit found in most life policies.
