Karen Tang, CFP®: Certified Financial Planner in Singapore
Is Maternity or Pregnancy Insurance Necessary for You?
Many newly wedded women are still new to the idea of maternity or pregnancy insurance. A good number of women who are already pregnant also do not give much attention to this type of protection. The cost of not being informed can be great, especially, when things don’t turn out the way they should.
Pregnancy or maternity insurance provides financial protection for both the mother and the soon-to-be-born child. In fact, this insurance can be bought as early as the 13th week of pregnancy for some insurers and the latest around the 32nd or 36th week.
A real life story
A client of mine referred her cousin, Mrs G, to me. Mrs G had just turned 40 when she was about to deliver her baby boy. Mrs G went through an emergency C-section to deliver the little one last August. Thankfully both mother and newborn are fine except that he is born with a birth defect – cleft palate. Baby had to spend 4 days in the high dependency ward of a private hospital, resulting in a hospitalization bill of nearly $10,000.
A little about cleft palate:
A cleft palate is when the roof of the mouth contains an opening into the nose. This can result in feeding problems, speech problems, hearing problems, and frequent ear infections. The cause is unknown in most cases. Cleft lip and cleft palate can often be diagnosed during pregnancy with an ultrasound exam. The condition can be successfully treated with surgery. For cleft palate, surgery is done before eighteen months. Speech therapy and dental care may also be needed. With appropriate treatment, outcomes are good.
So, why did Mrs G want to meet with me?
She was worried, and rightfully so, that her newborn is unable to get any insurance cover. She wanted to know the options she has to cover the costs of future surgeries, treatments and therapies to rectify the condition. And consulting a top specialist in this field is a priority.
I informed Mrs G that as a cleft palate is a birth defect and hence, a pre-existing condition, insurers will either:
a) indicate a deferment of the application (till a certain age)
b) reject the application altogether or
c) accept with exclusions.
In my experience, it is likely to be option b or c.
As much as I would have liked to help, it was a little too late. However, there is some consolation in knowing that Medishield Life covers for congenital conditions of newborn but there is a limit to the benefit and coverage is for Government hospitals, B2 and C class wards. Anything spent above the limits and stipulated class ward will be borne by the payer.
Mrs G had heard of maternity or pregnancy insurance but she never gave much consideration to it since the first delivery experience of her daughter was all smooth sailing.
So, what does Maternity or Pregnancy Insurance cover?
1. It covers congenital illnesses and pregnancy complications
Examples of the conditions being covered:
Mother
- Amniotic Fluid Embolism
- Fatty Liver of Pregnancy
- Pre-Eclampsia or Eclampsia
- Placenta Increta/Percreta
- Postpartum Haemorrhage requiring Hysterectomy
- Uterine Rupture
- Still birth
Child
- Anal Atresia
- Cerebral Palsy
- Cleft Palate/Lip
- Club Foot
- Congenital Diaphragmatic Hernia
- Congenital Dislocation of Hip
- Down’s Syndrome
- Retinopathy of Prematurity
- Spina Bida
- Ventricular Septal Defect
2. It can be a standalone plan or bundled with a life insurance cover
There are at least 5 insurers offering this type of coverage and they have unique features such as cover for IVF pregnancy, twins pregnancy and stand-alone or bundling options.
Pregnancies are different experiences for different women. Therefore, different features and benefits of one plan may be more suited over the others for you. This is where the financial planner will explain and guide you to arrive at the most suitable solution.
For example, if you have an IVF pregnancy, you should buy a basic plan that covers IVF. If you are carrying twins, you would want the coverage to cover both children and not one. Or if budget is tight and all you want is just some basic protection, choose an option that makes sense to you.
Also, you can bundle the pregnancy insurance with an investment, savings or life insurance plan to give your child a head start. It really depends on what you want.
Note: Go into an Investment Linked Insurance Plan (ILP) only if you know the full picture of what is involved – the pros and cons. Insurance agents will not bother to highlight to you the disadvantages of ILP as the commissions for selling this product is far too attractive. A planning principle that I adhere to since I started my financial planning practice is that insurance and investments should be kept separate.
Check out my article on ILP. An ILP should not be used for education savings either.
3. It guarantees insurability of your child (excluding pre-existing conditions)
For those who are procrastinating about their insurance planning, think again. We can be fine one day and be diagnosed with something the next. Even when we are ready to pay for protection, we may not get it. There is no better time to get insurance than when we are in the pink of health.
So, to me, the most valuable feature that pregnancy insurance brings to the table is ‘guaranteed insurability’.
This means that you can purchase insurance or transfer existing coverage (bought on your life from the start) to the newborn without the need to undergo any insurance underwriting or medical assessment. However, do note that there are terms and conditions tied to this benefit:
- The benefit amount you can purchase or transfer
- The type of coverage you can purchase or transfer
- The timeframe within which the purchase or transfer must be done (within X days after birth) to enjoy the guaranteed insurability benefit
Sounds complicated? It need not be.
If your financial planner is competent enough, you will be educated with the facts and figures and know whether maternity insurance is suitable for you or not.
On average, the maximum amount you can claim from maternity insurance is $10,000 for pregnancy complication and $10,000 for congenital condition. Yes, this amount is not earth shattering. On the other hand, a child can be covered for up to $200,000 on a guaranteed insurable basis when born. However, all pre-existing conditions are excluded. Even though this is the case, the child is given the chance to be covered for all other conditions that did not surface at birth with no questions asked.
Note: Besides Medishield Life (compulsory for Singaporeans and Permanent Residents), there is no other insurance that a child born with a pre-existing condition can reasonably expect to buy.
In Mrs G’s case, a cleft palate condition is considered minor relative to a more serious congenital condition like spina fida.
How do you prepare financially for a future of medical and lifestyle unknowns with only a basic medical insurance?
It could run up to high 5 figures or even exceed that. The answer to this concern could be found in comprehensive international healthcare solutions in the market that both Singaporeans and foreigners can buy.
To buy or not to buy Maternity or Pregnancy Insurance?
Such coverage is typically in the range of $10,ooo to $25,000 and premiums are very affordable. For those who want ‘no frills’, the inexpensive way to get maternity insurance is to buy the ‘standalone’ type of plan, without the bundling feature. These days, even the standalone plan offers the benefit of guaranteed insurability for the child.
Tip: The earlier you get yourself covered, the better. As pregnancy progresses, more ultrasounds are done, and more health conditions could potentially surface. As long as the claim criteria is met, the benefit will be paid out.
At the end of the day, it is about managing risks.
Here are 3 tips to help you decide whether you need to take up this insurance:
1) Age and health status
Age, undeniably, is a factor that can increase pregnancy risks to both the mother and child. Your general health disposition would also give you a clue whether you should get this protection or not.
2) Family history
A client once shared with me that having twins somehow runs in the family, specifically from her mother’s side. And she also knew that some of the pregnancies were not exactly smooth sailing. So, when her gynaecologist told her she was having twins, she was not exactly surprised. She was prepared for pregnancy complication where she may have to deliver via C-section. Fortunately, she was spared and her twins were born normal and healthy.
3) Your comfort level
You need to ask herself if you are totally fine without getting this insurance. If you are not, then take action and secure that peace of mind. I have encountered a few mothers who, on hindsight, wished they had bought pregnancy insurance as the unexpected happened to them.
If you are having a baby, my heartiest congratulations!
To learn more about this type of coverage, please schedule a consultation. I would be happy to go through the various options with you so that you will have clarity to make an informed decision.