From hospital charges to specialist treatments, healthcare costs are rising rapidly in Singapore. It is a complicated issue, partly due to how healthcare is financed, prescribed and consumed.
The Ministry of Health (MOH) has announced that new Integrated Shield Plan (IP) rider changes will take effect from April 2026. This is to help manage rising healthcare costs and encourage more prudent usage of healthcare. This may lead you to wonder: “Am I adequately covered? Under- or over-insured?”
Mr Chan Wai Kit, executive director at Life Insurance Association, Singapore (LIA Singapore) says it is common for policyholders to question if they are over- or under-insured, and wonder what happens if they do not make a claim or utilise their health insurance benefits.
He explains: “In reality, health insurance provides important financial protection and options during unforeseen medical events.” He adds: “Its fundamental purpose is to provide a safety net and added peace of mind. Not needing to make a claim on your health insurance simply reflects good health, which is the best outcome for policyholders. Health insurance works on the principle of risk pooling, where premiums collected from many policyholders are combined to help pay for the medical expenses of those who require treatment. This shared responsibility ensures that everyone has access to financial support when serious health issues arise.
“As healthcare costs rise and claims across the insured pool increase, premiums may be adjusted to ensure the sustainability of the scheme — even for individuals who have not made a claim. Health insurance is there to provide financial support for medically necessary treatments when required. It’s not a savings or investment plan and does not guarantee or maximise monetary returns.”
Before deciding whether to upgrade, downgrade, or drop any coverage, take a step back and revisit the purpose of health insurance.
A regular review with a qualified Financial Adviser Representative (FAR) will help you assess your financial goals and reduce the risk of being under-insured.
To help break down healthcare insurance, LIA Singapore answers some common questions you may have about your IP and IP rider:
MediShield Life provides basic national health coverage for all Singaporeans and Permanent Residents. It covers large hospital bills and treatments in public hospitals.
If you prefer to stay in private hospitals, higher-class wards, have access to Cell, Tissue and Gene Therapy Products (CTGTP) or cancer drug treatments not listed on MOH’s Cancer Drug List, IPs and IP riders are optional add-ons that enhance your health coverage beyond MediShield Life.
Source: MOH website
An IP offers an additional financial safety net so you can focus on recovery. It also gives you more comprehensive coverage on top of MediShield Life and covers medically necessary treatments as well as hospitalisations at both public and private hospitals.
IPs also cover pre- and post-hospitalisation treatments like specialist consultations before admission, diagnostic scans and tests leading up to hospitalisation, follow-up consultations, medications and therapies after discharge.
Some IPs cover higher class wards A and B1 in public hospitals and others extend coverage to private hospital admissions. While IP premiums are payable by Medisave, this is up to a specified limit and you will have to pay for the remaining balance in cash.
Consider purchasing or maintaining an IP only after considering your needs, preferences and financial circumstances, such as:
You are able to afford the premiums in the long term
You want to choose B1/A wards and/or have the option to seek treatment at private hospitals
You want choice in selecting your own doctor/specialist
You want to opt for more comprehensive coverage (e.g. higher claim limits), with an understanding that premiums will increase with age and medical inflation
IP riders are optional add-ons that enhance treatment options and coverage of an IP. They can reduce out-of-pocket costs, including some of the co-insurance portion of the bill. They also provide coverage for treatments that may not be covered by MediShield Life and IPs, such as non-Cancer Drug List treatments and also provide coverage for other benefits, generally not covered under IPs.
When chosen appropriately, IP riders have helped many policyholders and families get through difficult times. Do note that premiums for IP riders have to be paid by cash.
You may consider purchasing an IP rider if:
You are able to afford the premiums in the long term
You want enhanced coverage/benefits and treatments that MediShield Life and IPs may exclude, including non-Cancer Drug List treatments
You want to reduce some out-of-pocket costs (e.g. the co-insurance amount you need to pay)
While it is important to review your insurance policy regularly with your FAR, there are minimally three life stages that deserve a closer look.
1. When you land your first job.
This is when you might take over the health insurance that your parents bought for you. You may also start to build up your insurance protection and consider reviewing the adequacy of your coverage and its affordability for the longer term. Consider the long-term implications of your IP as, over time, your earning abilities might change, and IP premiums will also increase as you age.
2. When you enter your 40s.
This is when your premiums increase as the probability of needing medical care increases with age. Premium increases are opportunities to conduct a thorough review with your FAR. Keep an eye on the long-term and assess whether you can afford to and should retain your policies. You may decide to upgrade or downgrade your private plan or riders to manage long-term costs and healthcare needs.
If you are married and have kids, you might also find yourself managing the health insurance needs of both your elderly parents and your children. When you are juggling multiple health insurance policies, careful financial planning becomes more important to ensure that everyone stays protected.
3. When you enter pre-retirement, typically around 55.
Review your health coverage as part of your retirement planning. If retirement is on the horizon, evaluate whether your current premium payments will remain manageable on a retirement income. Your health insurance needs may be different compared to your earlier years. You might have fewer dependents to protect, but potentially higher healthcare needs. It is important to re-look your preferred hospital ward choice and assess its affordability.
You may be under-insured if you do not have enough coverage to adequately cover your expectations of your current and future healthcare needs. You may be over-insured if your coverage exceeds these expectations.
Your insurance and healthcare needs are highly personal, depending on factors such as your lifestyle preferences and financial situation.
Your FAR can conduct a detailed financial needs analysis to understand your situation and assess if your current coverage aligns with your specific needs.
Here are three questions to ask your FAR:
What does each recommended policy cover/not cover?
What are the IP/IP rider options available, based on the type of hospitals/facilities and benefits that I wish to have access to?
Will I still be able to afford the plan as premiums increase with age?
The Health Insurance Planner is a useful resource to help you project how your health insurance premiums will change as you age. You may refer to the CPF Board checklist for questions to consider when you purchase or review your Integrated Shield Plan (IP) coverage. The Basic Financial Planning Guide also contains rules of thumb for you to start taking proactive steps to address your savings, insurance and investment needs at different life stages.
Downgrading coverage could possibly mean shifting a greater portion of potential healthcare costs claimable from your IP insurer back onto yourself. You may need to have adequate savings to pay for those costs out-of-pocket.
While the idea of reducing current expenses through lower premiums has benefits, it is important to consider other factors beyond immediate cost savings. If you decide to upgrade your coverage in the future, you will be subject to underwriting when you make the application, based on your health and circumstances at that moment in time.
Recognise that downgrading your coverage without a holistic review of your needs may leave you under-protected and vulnerable to significant out-of-pocket costs. You should carefully evaluate any changes to your health insurance coverage with your FAR to understand what benefits you might be giving up if you downgrade your current plan and, accordingly, what adjustments to make in future care episodes.
Here is what you should consider if you are thinking of downgrading your IP or IP rider:
Does the revised coverage better align with your evolving healthcare needs, preferences and long-term financial capacity?
Do you have a readily accessible emergency fund for potential medical expenses?
Are you comfortable footing a significantly larger bill for an unexpected illness or accident?
Consider your family medical history, current health status and lifestyle factors. Are there indicators that suggest a higher likelihood of needing medical care as you age?
If you have family members who rely on your financial stability, how would a substantial, unexpected medical bill impact their well-being and future plans?
Understand exactly which benefits you would lose, which limits would be reduced, and how much your maximum out-of-pocket liability would increase.
The accumulated savings from downgrading your IP or IP rider can be used to pay for the increased out-of-pocket expenses due to the lower coverage.
Do bear in mind that healthcare costs will increase over time and you should prepare accordingly.
Ultimately, downgrading your coverage should be a carefully considered decision, not a reactive one. It is important to ensure that the short-term relief does not create significant future financial strain for you and your loved ones.
For more information, speak to a qualified financial adviser representative.
