Switching Integrated Shield Plans? Do it with Your Eyes Open

Contributed by Michelle Ee,
Wealth Management Director, Financial Alliance Pte Ltd
(The contributor can be contacted at michelleee@fa.sg)

In your financial planning endeavours, you may encounter the question of whether to switch your Integrated Shield Plan (“IP”) insurer. I urge you to take a step back and consider the pros and cons before you decide to switch.

Switching IP insurers may result in the loss of coverage for pre-existing conditions which could have been covered by your current plan. Do think very carefully whether you are truly better off by moving over to another insurer. Unless there is a very strong reason to move, and you are sure you will get better coverage without losing any existing cover, it is always safer to stay with the same IP insurer.

Every IP insurer throws some unique features into its Shield Plan in order to differentiate themselves from their competitors’ plans. Suppose you are currently covered under AIA Healthshield Gold Max and are contemplating whether to switch to AXA Shield because of its attractive benefits, such as covering post-hospital expenses for up to 365 days. Before you do that, you must be fully aware that you will have to give up the advantage of having no waiting period imposed on the Congenital Abnormalities Benefit, which is unique to AIA Healthshield Gold Max at this point in time. Likewise, if you are planning to switch from Income’s Enhanced Incomeshield to AXA Shield, your confinement period in a community hospital will be reduced from 90 days to 45 days. Consider this – would you be more likely to stay in a community hospital for more than 45 days or more likely to claim post-hospital expenses over a 365-day period?

Switching IP insurer because Insurer B offers lower premiums than Insurer A is also a risky move. This is because IP premiums are non-guaranteed, so Insurer B may increase premiums when they experience adverse claims, bigger claim amounts because of inflation in medical expenses or higher operating expenses. The insurer who offers the lowest premiums now may become the one with the highest premiums some years later. Some insurers offer low premiums for younger age groups but very high premiums for older age groups. Therefore, it is unwise to switch IP insurer based on premiums.

If you need higher coverage, upgrading with the same insurer is the safest way to go because your current plan will become the base level of coverage. In other words, medical conditions that surfaced after you first purchased your current plan will still be covered under the current plan as the upgraded plan treats them as “pre-existing conditions” and excludes them.

The above is just some food for thought if you are asked to switch IP insurer. Do think carefully before you act.