Friday, July 18, 2008

Protecting your income against Disability

What is a Disability Income Insurance Plan?
* A disability Income insurance plan is meant to cover loss of income in the event of any illness or accident when the insured is unable to perform his/her material duties for a continuous period defined by the insurer.(Generally 60, 90 or 180 days)
* The insured will receive a monthly payout if he/she becomes totally disabled or will get a partial benefit if is able to work but at a reduced capacity that leads to a reduction of pre-disability income. The partial benefit depends on the formula used by the insurer.

My research findings
* Only 2-3% of Singaporeans are covered with a Disability Income Insurance
* Singaporeans are grossly under-insured in this area of Disability Income Protection. LIA survey shows that average monthly household expenditure is around $3,400/mth.
* 3-4% of Singaporeans before retirement age are currently disabled and unemployed
* 1 in 3 workers are estimated to be disabled for a period of 90 days or more before they reaches 65 yrs old.
* The average disability absence is 2.5 years.
* 1 in 7 workers are estimated that they shall be disabled for over 5 years before they reach 65 yrs old.

Pls do not be confused between Permanent Total Disability(PTD) and Disability Income(DI) Insurance.
* The definition of Permanent and Total Disability is like totally not able to work at all for any remuneration or profit or if the person lost 2 limbs by complete severance above wrist or ankle or if the person lost 2 eyes.
* As for Disability Income Insurance, it uses an "Own Occupational" and "Suited by Training" definition to make a claim.

Time to Educate Singaporeans
The premium is not as high as some people thought it to be. I think its high time that insurers educate Singaporeans on the importance of this issue as they are generally unaware about this type of insurance.


Anonymous said...

Hi, do ntuc income offer such plan, is it the personal accident plan?

Anonymous said...

You are right about the confusion .Most insurance agents hardly know about this. Singaporeans are in danger. My ntuc agents friends know F about this. sometimes i wonder how can they ever call themselves consultants when they know nothing about a lot of things.They confuse tPD with with disability, temporary or permanent as defined...
The agents don't know that TPD is as good as vegetable arising from camp-lete severance of limbs or comatose brain dead or paralysis.
That is why i also said that insurance agents are not fit to advise . They are a bunch of unethical salesmen and women who push products for their own interest.

Anonymous said...

Application for DI cover requires the client to go for a very through medical checkup. Remember that it might be the last time a "healthy" client can get *ANY* health insurance at standard rates if the checkup reveals any new condition.

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Khiat Han Hwee Adrian said...

Not true that client must go for a Medical Checkup just to take up a Disability Income Insurance. Medical Checkup or not depends on the client's age and the amount of cover he is seeking.

Anyway, Medical checkup nowadays are very common especially when clients are taking a considerable amount of insurance cover. We seldom see it because most people buy very small cover as they get their cover via a life insurance.

Anonymous said...

Thanks Adrian!

I am learning a great deal from you! I seriously think that protecting income against disability is more down to earth than TPD. It is so strict to claim a TPD...

but the premium is much higher than normal TPD.

Khiat Han Hwee Adrian said...

The premium is not that scary as you think. 2 companies are offering such plan namely Aviva and Great Eastern. Check it out with them.