Should you change your policy if you get vaccinated for Covid-19? Does your current policy offer employment cover in case you lose your job as a result of the pandemic? Allen Lim, Chartered Life Underwriter & Financial Consultant, and a member of IFPAS (Insurance and Financial Practitioners Association of Singapore), answers these questions and more.
Q: My current insurance policy doesn’t cover Covid-19. Should I get one that does?
Allen: In the insurance world, Covid-19 is still a new risk, so most insurance companies are taking a cautious approach. Existing hospitalisation and surgical insurance policies actually do not exclude hospitalisation claims due to the virus. However, if you need more assurance, you can find customised hospitalisation insurance especially for Covid-19 with a capped coverage. If it’s within your budget you can purchase it.
Q: What should I look for when buying a policy that includes Covid-19?
Allen: You should look at the benefits versus the cost of such a policy and make a decision based on your financial circumstances. From a technical standpoint, it might be wise to look for exclusions of the policy. For example, will you be covered if you contract the virus while overseas, such as during a cruise? For a better understanding of what the policy does and doesn’t cover, it’s probably best to speak to a professional insurance adviser and ask him or her to explain the terms and conditions of the contract to you.
Q: I have a pre-existing illness that puts me at a high risk for developing health complications, if I get the coronavirus. What does this mean when shopping for a new policy that includes Covid-19?
Allen: You must declare your pre-existing illness to the insurer. The outcome may be exclusion, postponement or even rejection of your application. If the insurer discovers that you have intentionally withheld this information, it has the legal right to void the policy. An insurance policy is a risk-pooling legal contract, and not like other financial products that you can buy based on financial merit. Risk pooling means that the insurer is pooling a (large) group of people of similar risk. Therefore if you have pre-existing illness, it will affect the risk pooling unfairly.
Q: Should my insurance policy also include employment cover in case I get Covid-19 and have to take months off work or lose my job?
Allen: It’s up to the insurance company whether or not they can pool enough people to offer such coverage in a sustainable way. Currently, such a policy is not common. If an insurance product is not common it does not mean there’s no demand for it; it means that the insurance company is not (yet) confident about the sustainability of insuring such risk.
Q: Should I look for a policy that will cover me for Covid-19 if I have to travel overseas?
Allen: It is prudent to have that because your local insurance policy might place an exclusion on risk that occurs overseas. Finding such an insurance policy is another challenge, though.
Q: Will I have to change my policy if I get vaccinated in 2021 or 2022?
Allen: The decision is yours. First, you need to balance the cost of risk with the premium you pay or are paying. Second, from a medical standpoint, being vaccinated doesn’t mean your risk of contracting the virus is completely eradicated, it just means your risk is lowered. Third, keep in mind that you don’t want to find yourself in a situation where you get the virus and then buy the policy afterwards, because you won’t be able to. Insurance is based on the concept that the risk of loss is yet to happen. Once it happens, you will be out of the risk pooling.
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