Financial Planning Is Not About Buying Insurance Policies

Today a business friend asked me if there is any way to insure her parents, who are in their late 70s, against medical costs.

I told her that unfortunately the policies at my disposal have a maximum entry age of 75, and therefore I’m not able to provide cover for them. However I advised her on a viable alternative, that is “self-insurance”.

I asked if she has any other siblings and she replied yes. I then went on to suggest that from now on, she and her siblings should start contributing some money into a medical fund for their parents, and this pool of money becomes an “insurance fund” for them. Coupled with Medishield Life as well as their Medisave funds, this approach should help to alleviate most of the medical costs.

Suddenly I can see an imaginary light bulb lit up in her mind — an “a-ha” moment! She said that if each sibling contribute $200 monthly, it seems like this is a do-able strategy.

Financial planning isn’t always about buying more insurance policies. Sometimes, seemingly simple ideas like this can also solve complicated problems.

- CJH

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