This article was contributed to us by Mark Czajkowski, Chief Marketing Officer of Manulife Singapore & Chief Analytics Officer of Manulife Asia
Today, rising costs seems to be a constant refrain. Whether it’s property or daily essentials, prices seem to be steadily climbing. Healthcare is no exception – government spending on healthcare has tripled between 2010 and 2019, with expenses projected to reach S$27 billion by 2030. According to data company WTW, the average medical care costs in Singapore are expected to rise by nearly 10.7% this year alone.
This economic reality is forcing many to make tough financial choices. We draw up budgets and try to identify areas to trim our spending – whether it’s fewer shopping sprees, less dining out, or cutting costs on other products and services. In fact, the recent Manulife Asia Care Survey 2024 revealed that nearly half of respondents view healthcare as a luxury they can cut back on when finances are tight.
The ‘DIY’ Approach: How some people in Singapore are navigating rising healthcare costs
The concern is widespread – 81% of the Manulife Asia Care Survey 2024 respondents in Singapore worry about rising healthcare expenses and how they might affect their long-term financial goals. Among all areas of healthcare, the rising cost of out-patient services is felt most acutely by 41% of respondents, followed by preventive healthcare services like regular health checks and vaccinations (39%), and drugs – both over-the-counter and prescription (37%).
In response to these concerns, many are taking a proactive stance, with half of those surveyed exercising more and nearly 45% adopting healthier diets to stay fit and avoid falling sick.
While these efforts toward a healthier lifestyle are commendable, the survey also uncovered some concerning trends in how these respondents are managing healthcare costs:
Delaying or skipping health checks: Almost 15% have delayed or skipped health checks and treatments altogether.
Opting for less expensive healthcare services: This includes relying on generic medicines.
Choosing insurance plans with less coverage
While the urge to reduce expenses is understandable, cutting down on necessary healthcare and protection may result in undesirable consequences. For example, while saving money by cutting out health checks might seem appealing, discovering a medical condition too late could result in significantly higher treatment costs and an even greater financial burden, especially if you lack adequate coverage.
The case for rethinking protection insurance
While we prioritise retirement planning and wealth-building through various investment solutions, protecting our financial and mental well-being is equally important. This is where protection insurance can serve as a tool to safeguard the most important assets: you and your loved ones’ well-being from the stress of large, unexpected bills.
It’s important to recognise that insurance is not an expense but is designed to provide peace of mind. However, many people still view insurance as a gamble or a “bet” against the insurance company. The real gamble lies in not protecting ourselves and our loved ones and leaving them exposed to financial risks. As the cost of living continues to rise and unexpected events occur, being unprepared can take a heavy toll on your finances.
A common misconception is that insurance is worthwhile only if you make a claim and ‘recoup’ the premiums you’ve paid. However, this is a flawed perspective since the role of insurance is not to bet against yourself, but to protect your assets and promote your well-being by offering peace of mind.
How much insurance is enough?
That said, it’s important to avoid purchasing insurance indiscriminately. Similar to other financial tools, your insurance coverage should evolve with your life stages and career trajectory. As you reach new milestones, your needs will change, necessitating adjustments to your financial plans. For instance, you may need more coverage when you have children or have additional dependents.
If you are unsure about your needs, the Basic Financial Planning Guide – developed by the Monetary Authority of Singapore, MoneySense, CPF Board, Association of Banks in Singapore, Association of Financial Advisers (Singapore), and Life Insurance Association – can be a valuable resource. While the Basic Financial Planning Guide has general rules of thumb for Critical Illness and Death & Total Permanent Disability insurance, the guide offers tailored recommendations for individuals at different life stages, such as young working adults, those supporting dependents, and individuals approaching retirement.
Figure 1: The Basic Financial Planning Guide has several rules of thumb to meet an individual’s key financial needs (Source)
By rethinking your approach to insurance, you can both protect your health and secure your financial future. It is possible to do both, with careful planning. Protection insurance should be seen not as a luxury, but as a critical component of a sound financial strategy.
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