Explain why group cover cannot replace personal cover, and say when the gap matters most.
If your employer gives you insurance, it is easy to stop thinking about it. The cover is there every working day, so it starts to feel permanent, but it isn't. A group policy covers you because you are an employee. When your employment ends, the cover usually ends with it, often on your last day of work.
The reason you leave makes no difference. Resigning, being retrenched, taking long unpaid leave and leaving to start a business all end cover in the same way. Your hospital cover, your outpatient cover and any group life cover all stop when the job does.
Some insurers let departing staff turn part of their group cover into a personal policy, at personal rates. This is called a conversion option. Not every insurer offers it, and the terms vary from plan to plan. Ask HR whether your plan has one and what it involves. Ask well before you leave, rather than in your last week.
Arjun works with Hui Min. In two years he plans to take six months off to travel, and after that he may start a small business with a friend (both time periods are example figures). Hui Min asks him what happens to his insurance during that time. He says he is covered by work, and then he realises what he has just said: his work cover would end on the day he left.
The first gap is the time between jobs. There is often a stretch with no employer at all. When you do start somewhere new, that employer's group plan may begin on day one, or only after a probation period. The new plan also applies its pre-existing condition rules from scratch.
The second gap matters more than the weeks between jobs. It is what happens to your health while you rely on group cover. If you are diagnosed with a condition while you are on a group plan, that plan pays, so you barely notice the cost. Later, when you apply for a personal hospital plan, the insurer asks about your health. It may exclude the condition, charge you a higher premium or decline to cover you. A condition that develops while you are covered at work becomes a pre-existing condition for every new policy you apply for.
This does not mean you must buy personal cover on your first day of work. It means waiting has a cost that is hard to see. Your health today may be the best it will ever be for buying insurance, and you can't control when that window closes.
The third gap is in the amounts. The employer usually sets group term life cover as a multiple of salary, such as a number of months of pay, and the same rule applies to all staff. The amount is not based on what your family would need if you died. For a first jobber with no dependants, a group life benefit may be more than enough. Arjun's case is different, because his mother relies on part of his pay each month. A group life payout sized for the whole office might leave her well short, and it would disappear on the day he left anyway. Group disability and accident cover work the same way. Their benefit levels are chosen for a policy covering hundreds of people, and they are not matched to any one person's life.
MediShield Life does not depend on your job. It is Singapore's basic national health insurance, run by the CPF Board under the Ministry of Health. It covers all Singapore citizens and permanent residents for life, and it covers pre-existing conditions. MediSave can pay its premiums. It is sized for large hospital bills in subsidised wards, so it will not pay for everything. It does not end when your job ends. For current coverage details, check moh.gov.sg and cpf.gov.sg.
MediShield Life is the base layer of any plan. Group cover sits on top of it while you are employed. Any personal cover you buy is the layer that stays on top of it after group cover ends. Module 6 starts from MediShield Life for this reason. In some situations, it is the only cover you will have left.
To find your own gaps, picture several situations and ask what cover you would lose in each. Some to start with:
a sabbatical like Arjun's a layoff a move to a start-up with no group plan going freelance an illness long enough to end your employment
For each situation, note where MediShield Life would be the only cover left.
When Arjun goes through his own list, he realises that his whole sabbatical-year plan assumes he stays in good health. He decides not to change the plan, but he wants to know what it would cost him if that assumption turned out to be wrong.
Your situations will differ from his. Base them on the life you are actually planning, and for each one, note what cover you would lose and where MediShield Life would be all you have.
Write down three situations, such as a layoff, a sabbatical or starting a business. For each one, note which cover you would lose.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).