IP insurers offer cheaper riders that still protect against huge hospital bills
SINGAPORE – As people age, some are giving up their private medical insurance plans and riders because of the high premiums charged.
To retain them, several insurers offer a choice of riders: maximum coverage at higher premiums, or less cover at lower premiums.
Anecdotally, people first give up their riders, which could cost more than their main insurance plan.
Riders are meant to cover only the portion of bills not paid for by the Integrated Shield Plans (IPs).
IPs cover 90 per cent of bills beyond the initial deductible of $1,500 to $5,250, depending on age and ward class.
After that, if policyholders find the cost still too high, they may also downgrade to an IP that covers treatment in a lower ward class.
Like some, AIA chief executive officer Wong Sze Keed decided to retain her rider, but downgraded her IP and rider from a private hospital to a Class A plan, significantly reducing the premiums she now pays.
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Two in three of the 2.97 million people, or 71 per cent of residents, with IPs also buy riders to prevent the shock of facing a huge medical bill.
Once they have a rider, however, people tend to make more frequent, as well as bigger, claims.
Insurers find themselves paying twice as much for claims by those with IPs and riders compared with those who have only IPs.
Hence, the need to keep pushing up the premiums for riders that encourage the higher consumption of medical treatments.
Mr Chan Wai Kit, executive director of Life Insurance Association Singapore (LIA), said: “IP riders play an important role in helping individuals reduce their out-of-pocket expenses for large hospitalisation bills and medical treatments.
“Many policyholders recognise the value of these IP riders in providing additional financial protection, especially amid concerns of rising healthcare costs.
“IP insurers offer a range of IP rider options to cater to different needs and budgets.
“These may vary in coverage levels, co-payment requirements and premiums, allowing customers to select an IP rider that best suits their protection needs and budgets.”
Insurers have come up with a variety of combinations to reduce their rider premiums to suit different policyholders.
A spokesman for Great Eastern said it recognises that there is no one-size-fits-all solution and so has come up with two types of riders, with a big difference in premiums charged.
He said: “We have observed that customers are prioritising affordability and are willing to self-fund deductibles at (the) time of claim. The vast majority of new customers choose the more affordable plan.
“The higher take-up rate for such policies points to a more conscious and responsible healthcare consumption trend in Singapore.”
On the other hand, AIA said its most comprehensive rider remains more popular than the cheaper alternative.
Patients with this rider pay 5 per cent of their bill, capped at $3,000 a year, the first time they claim.
If they were to make a claim the following year, they will need to pay a $2,000 deductible. If no private hospital claims are made for three consecutive years, the rider will again cover the deductible.
Mr Ben Siah, general manager of Raffles Health Insurance, said it provides three tiers of riders so people can choose the level of coverage they want, with different premium rates.
Prudential has decided to reward policyholders for not making claims by giving them a 20 per cent rebate on premiums.
And SingLife has launched a $1 rider for younger people below the age of 38 years that caps what patients have to pay to $20,000 a year.
Income, which probably has the biggest share of the IP market, offers two types of riders – patients pay either 5 per cent (Deluxe Care) or 10 per cent (Classic Care) of the bill, capped at $3,000 a year.
The higher-cover rider costs about twice that of the other rider.
Its spokesman said: “Based on our current portfolio, we observe higher uptake of the Classic Care rider.”
Explaining why Income’s rider premiums are among the highest in the market, the spokesman said more than half of its policyholders are over 50 years old – higher than the 39 per cent of Singapore’s population.
Claims from older people are higher.
The spokesman added: “Income Insurance’s overall IP claims (main plans and riders) are experiencing an inflation of up to 25 per cent against the backdrop of medical cost inflation in Singapore (10 to 13 per cent per annum).
Furthermore, he said Income does not practise claim-based pricing.
Claims-based pricing discourages patients from making claims in order to pay lower premiums the following year.
In July 2024, Health Minister Ong Ye Kung warned that insurers are “risking a race to the bottom” with their intense competition to garner a larger share of the IP and rider market.
He said: “This includes IPs that promise no claim limits and riders to protect policyholders from co-payment.
“These features look generous and very attractive and give absolute peace of mind, but they have also aggravated the buffet syndrome and are pushing up healthcare costs.”
Coverage by the cheaper riders vary, from not covering the deductible to having patients pay a larger portion of their bills, subject to an annual cap – in some cases, having an annual cap higher than the minimum mandated amount of $3,000.
Said LIA’s Mr Chan: “Over time, the proposition of IP riders – including their benefits, coverage and premiums – evolve in response to factors such as medical costs, claims experience and regulatory developments, such as the implementation of the Cancer Drug List.
“We encourage policyholders to carefully assess the suitability of an IP rider based on their healthcare needs and affordability, as it is important to make informed decisions that balance coverage protection with sustainable premium commitments.”
According to the Ministry of Health, there was a 5 per cent drop in people with private hospital IPs between 2021 and 2023.
Between 2020 and 2023, 2.2 per cent of people over the age of 60 gave up their IPs altogether, falling back on the basic MediShield Life.
There is no available data on the number who have given up their riders.
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