In life, most of us are looking to retire freely. We want to achieve financial freedom so that we do not have to worry about money. We are all working hard in our own ways – some choose to be an employee, others start their own business and yet others invest so as to make their money work harder and arrive at financial freedom earlier.

However, as we know, life is uncertain. The road to financial freedom is not a straight line. There will be ups and downs in life. We may get promoted, and we may secure new contracts for our businesses.  There will be down times as well, we may fall ill, meet with an accident amongst others. This is the time where we need to incur a large sum of money to pay for hospitalisation cost.

Moreover, most of the time we do not live alone. We are carrying someone else in our life. We will have assets, property, cash, investment. We will also have liabilities, mortgages and loans to repay.

Some of us have dependents. Our children and parents are depending on us for their living expenses. If an unfortunate event occur such that we pass on prematurely, who will be the ones taking care of our dependents? In the worst case, if we are unable to service our liabilities, we might even lose our hard earned assets.

Some of us may think that we have siblings who can take care of my dependents. They can take over my assets and liabilities in the event of premature death. But think carefully, our siblings also have their own dependents or liabilities to take care of. We should be responsible of our own dependents and liabilities. A responsible person would not want to burden others.

And in the event that we manage to recovered from our illness or accident. We may be disabled or work with limited ability. We will need a sum of money to take care of our own living expenses.

 

Even if we are able to achieve financial freedom without any incidence, as life expectancy becomes longer, up to a certain age in our life that we might need someone to take care of us as we may not be able to perform daily activities. There will be another cost of long term care.

So in our path to financial freedom, insurance plays a part. The role of insurance is to protect ourselves and our family in the event of these unforeseen circumstances. I will examine how government policies and private insurance can protect and provide for our 1. Hospitalisation expenses, 2. Death, critical illness and total permanent disability, 3. Long term care and finally how 4. insurance can help us achieve our retirement and financial goals.

1.Hospitalisation Expenses

Government Policies

In Singapore, we are quite fortunate that Singapore government has come out with few policies to take care of these costs.

For protection of hospitalisation expenses, CPF board has introduced Medishield Life. However, Medishield Life do not cover all hospitalisation expenses. Deductibles and co-insurance is not covered and there is a claim limit for hospitalisation expenses.

Private Insurance

To make sure ourselves are fully covered for hospitalisation expenses, we need to get private integrated shield plan from private insurer. For more details about Medishield Life and private integrated shield Plan, please read here.

 

Death, Critical Illness and Total Permanent Disability

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