Why MINDEF & MHA Group Insurance Should Be a Supplement & Not Main Planning
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MINDEF & MHA Group Insurance is attractive due to its low cost and high coverage, but it can often be a hurdle when introducing private insurance planning. However, there are key aspects to consider before relying solely on it.
Here, we break down the four essential areas—1) Death/Disability, 2) Critical Illness, 3) Early Critical Illness, and 4) Accident Plan—highlighting why group insurance works best as a supplement, not a primary plan, and how you can help clients make informed decisions.
Important Points to Note Before We Begin:
MINDEF SAF: A group insurance plan where the insurer or managing organization can adjust terms and benefits for the entire group without policyowner consent.
Personal Term/Life Insurance: Individual plans with fixed terms and benefits that cannot be changed without the policyholder’s consent.
1) Death/Disability Coverage
To Note
Coverage is capped at a maximum age of 70, with fixed premiums until 65. However, from 65 onwards, policyholders will face a significant premium increase until coverage ends at 70.
With coverage lasting until 65, it serves as a great supplementary plan for added protection during the policyholder's golden years. However, its limited coverage period makes it unsuitable for legacy or estate planning purposes.
Since premiums remain fixed regardless of entry age, policyholders should first secure their private health insurance to lock in favorable rates before considering MINDEF & MHA group coverage as a supplementary option.
2) Critical Illness Coverage
To Note
Premiums are not locked in - Premiums increase every five years, making it initially more affordable. However, when compared to a term plan covering up to 65 years old, the total premiums paid could potentially be higher over time.
A 30-day survival period is required before a claim can be submitted, compared to the usual 7 days. If the policyowner passes away within this period, no critical illness payout will be issued as the claim cannot be processed.
The coverage term is capped at 65 years old, restricting policyowners from extending it, despite increasing life expectancy.
3) Early Critical Illness Coverage
To Note
Premiums are not locked in - Premiums see a steep increase after 45 years old and continue rising every five years, potentially becoming unsustainable in later years.
Only 10 out of the 36 critical illnesses covered under industry standards are included in the early-stage coverage, leaving policyowners vulnerable to a wide range of conditions such as blindness, deafness, lung failure, and kidney failure, among others.
A 30-day survival period is required before a claim can be submitted, compared to the usual 7 days. If the policyowner passes away within this period, no critical illness payout will be issued as the claim cannot be processed.
The coverage term is capped at 70 years old, restricting policyowners from extending it, despite increasing life expectancy.
4) Group Personal Injury
To Note
Does not provide coverage for common personal accident claims, including medical reimbursement or Traditional Chinese Medicine (TCM) treatment costs.
Coverage is limited to 70 years old with no option for extension, despite higher accident risks in later years.
