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Why you should know about Moratorium Underwriting

Posted 10 January, 2016 by Surely
in Technical Smechnical

Recently, I was having lunch with my friends when one of them started talking about upgrading their shield plan.
Her company was considering paying for their employees’ shield plans instead of continuing the existing corporate hospitalisation plan.
She was worried about not having a full coverage as she had some pre-existing health conditions.

That was when it was suggested to her to consider taking up Aviva MyShield due to this thing called Moratorium Underwriting.
If you choose Moratorium Underwriting for your application, you are not required to declare your pre-existing conditions (if any).
Instead, if the pre-existing conditions do not surface within the waiting period (Moratorium), they will be covered after the moratorium period of 5 years has passed.

 

After 5 years, you will be fully covered like these knights

After moratorium, you will be fully covered like these knights

 

For those unaware, pre-existing conditions are usually excluded from the coverage of a private shield insurance upon application.


When you apply for a shield plan from an insurer, they will do a full medical underwriting by having you answer a health declaration questionnaire.
You have to answer it in good faith or risk having your claim payouts slashed due to your misrepresentation.

Aviva is probably the only Singaporean insurer that lets you have the option of Moratorium Underwriting; the rest of the insurers require full medical underwriting.
When we investigated further on the Moratorium period, we noted that during the waiting period, it is required that you do not
a) experience any symptoms or
b) seek advice, request for tests or check-ups from a doctor, specialist or alternative medicine provider or
c) require any treatment or medication,

 

Lt. Aldo Raine: ong story short, we hear a story too good to be true... it ain't.

Lt. Aldo Raine: “Long story short, we hear a story too good to be true… it ain’t.”

 

In addition, you may note that there are pre-existing conditions that you can never get coverage for, regardless of the moratorium.
They are namely:
1) heart attack, heart bypass, angioplasty
2) chronic obstructive lung disease, chronic cor pulmonale, pulmonary hypertension
3) stroke
4) liver cirrhosis
5) paralysis
6) osteoporosis
7) AIDS or HIV infection
8) thalassaemia intermediate/major
9) diabetes with complications such as protein in urine or eye problem
10) kidney failure
11) organ transplant
12) systemic lupus erythematosus (SLE)
13) muscular dystrophy
14) multiple sclerosis
15) Alzheimer’s disease
16) dementia;
17) any form of cancer (other than skin cancer)
18) autism.

 

We agree but this has to be done

We agree but this has to be done

 

My opinion on Moratorium Underwriting?
At first glance, the possibility of insuring a pre-existing condition is very seductive, especially for those who have them.
However, the waiting period of 5 years is simply too long and the requirements are too stringent.
While Aviva states that you should not delay treatment or medical advice in hope to get cover, we can imagine a situation where the insured, when close to the end of the moratorium period, may simply do just that.

To us, a hospitalisation plan is something you should never take a chance on.
Everyone knows instinctively that the most important thing in life is actually life itself.
Never expose yourself to the risk of not having enough money to save your life.
Due to the fact that you are not allowed to have two private shield plans, you are essentially taking on a great risk when you choose Moratorium Underwriting as you could be left without any coverage.

 

You only live once. So treasure and protect it.

You only live once. So treasure your life and protect it.

 

There must be some scenarios in which this may work.
If you have a company hospitalisation plan and are certain that they will not change it for 5 years or more (maybe you are the CEO or HR director), you may potentially take advantage of this.
You will have full coverage for 5 years on your corporate hospitalisation plan while taking a risk on moratorium underwriting.
If your pre-existing condition does not surface within 5 years, you will be able to have them covered. Otherwise, it will be back to square one anyway. No Loss.
However, I must comment that most people do not have the privilege of guaranteeing whether they have corporate insurance for the entire period.

With the CPF Medishield Life, I am supposed to be covered, regardless of my health condition. Isn’t it so?

Yes, you are right.
However, that is only for the Medishield Life portion.
A private shield plan consists of two components – Medishield Life + additional private shield coverage.
That is why the insurers have to pay part of your premium to CPF for Medishield portion.
Thus, even if Aviva MyShield plan excludes your pre-existing condition, your Medishield Life will still cover it.

Aviva MyShield isn’t all that bad.

First, you can choose full medical underwriting instead of Moratorium Underwriting for the MyShield policy.
Next, we would like to highlight that MyShield has a unique benefit where if both parents are insured under MyShield plan 1 or 2, newborns (up to 6 months old) receive free cover of up to $50,000.
Thus, parents may wish to consider having Aviva MyShield together for the sake of free coverage for babies.

 

Man whispers, "Are you on MyShield?"

“Are you on MyShield?”

Conclusion

 

We do not think Moratorium Underwriting is the future if conditions remain as they are.
After all, insurance should give one a peace of mind, not make one fret about it for 5 long years.

Another thing to learn from this is that you should always get a hospitalisation plan when you are young.
You are likely to have no pre-existing conditions and hence, have less to worry about.

Do you think we might have missed out any other potential situation wherein Moratorium Underwriting will be useful? Share them with us in the comments below!

www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.

  1. Andy

    You missed out a senario whereby Morantorium underwriting is benefitical. Although it has a stringent definition on the waiting period for pre-existing condition , but for someone who has pre-existing condition. If he or she choose full under-writing , the outcome may be full rejection. So choosing Morantorium gives the insurer a chance to be covered under an integrated medical plan ( although do not cover the pre-existing medical condition ).

  2. Wilfred Ling

    The author of this article does not seem to be a practitioner. If this article is a graded assignment, I would give 55% score. The low score is because theory and practice are not necessarily consistent.

    Also the advice on parents getting the coverage just because the kids get free cover is a very bad advice. It’s like buying insurance because of free gifts.

    1. Surely

      We will love to hear your opinion on how moratorium underwriting may be applicable in practical sense.

      We agree with you that buying insurance just because of free gift is a bad idea.
      However, this is not the case.
      We wish to highlight the unique point of Aviva’s MyShield for our reader’s consideration.

    2. Macron

      Who are you, Wilfred Ling? Are you a practitioner? Who are you to grade their assignment?

      They are writing to inform people about moratorium underwriting and how it is beneficial, and you harp on the idea that free cover is bad?

      Screw you and your score, you should go f— yourself.

  3. Pingback: My Financial Planner is new to the Industry: Should I give him a chance? - Singapore's Insurance Blog

  4. Slacker

    Even if one is covered with corporate or other non-shield insurance and is able to utilize that in the 5 year moratorium period, I assume that any condition that develops or is uncovered during that period (i.e. non pre-existing or known before signing up), would also be excluded under myshield plan or? Does that mean you cannot claim anything during that 5 year period or is there a way one can establish if something is pre-existing or not and continue to be covered post the 5 year period? Such conditions would also not be covered by any other insurer post that whereas it would have been covered under the full underwriting option if chosen at the start.

  5. Surely

    It is a grey area.

    If your corporate insurance plan is not Aviva, the insurer should not know about any claim within the moratorium period and thus, should accept it.

    Our intent is that if you have corporate insurance in that period, then at least you have somewhere to make a claim if your condition really worsens. Whether it shall be approved a not is really up to Aviva’s underwriters’ discretion.

    1. Shawn

      Although I’m 2 years late in this thread but I need to point out your misguided part regarding moratorium underwriting. Yes you’re right regarding the 5 years waiting period. However it only applies to that particular illness or condition you have. Within that period, any new sickness or condition will be covered and claimable like any integrated plan provided in the market. So how you should have concluded this is that Aviva MyShield plan provides people who has preexisting conditions, the chance to be covered if it doesn’t relapse or resurface in the next 5 years as compared to other companies where it will be permanently excluded for life regardless of your health condition. And that’s the benefit of moratorium underwriting. If you understand it correctly, it is a really very useful benefit for kids who have congenital diseases but fully recovered from it after a few years. So please find out properly 100% before sharing it on the internet. Other than that, very insightful article! Cheers!

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