It goes without saying that you need both good health and sufficient wealth to enjoy a fulfilling life.
While some may rate health as more valuable than wealth, the stark reality is that you cannot really enjoy your good health if you do not have enough money, especially in old age.
Similarly, even having all the money in the world counts for little if you are bedridden or constantly in poor health.
The good news is that you don’t have to choose one over the other; the best of both worlds is possible. The secret to excelling in both areas is surprisingly easy – start planning as early as possible.
If you want to have enough money when you are older, you should start to save and invest from as young as possible to give more time to accumulate and grow the interest and rewards.
Similarly, if you start to adopt a healthier lifestyle when you are younger by watching what you eat and doing regular exercise, you are likely to enjoy better health and feel better when you are older, too.
Starting early was the unanimous call from all panellists in The Straits Times Roundtable on Financial Health, which looked at how families can have their cake and eat it too when it comes to planning, especially in the wake of rising healthcare costs.
The event, held in partnership with AIA Singapore last week, was moderated by ST Invest editor Tan Ooi Boon. The panellists were Ms Melita Teo, chief customer and digital officer at AIA; Associate Professor Tan Hiang Khoon, deputy chief executive of Singapore General Hospital (SGH); and biotechnology professional Herbert Ho, who represents the sandwich generation as he has to take care of his two children as well as his elderly parents.
Here are highlights from the hour-long discussion.
Q. Why it is critical to plan for healthcare costs?
Ms Teo: Such costs have been increasing at double Singapore’s inflation rate for quite a few years. The cost of treating cancer, for example, can go up to $200,000 a year. We all want to be well and get well, but having a disease to manage and deal with on an ongoing basis can put a real dent in anyone’s bank account.
Second, as Singaporeans live longer, the costs of retirement and healthcare are expected to rise as well. We have to take care of our parents, ourselves, the kids, and sometimes even grandparents.
We must always anticipate what we cannot really be prepared for. We did a Live Better study this year and found that three in five people in Singapore are concerned about being diagnosed with an illness in the future.
So, taking the time to plan for some of these unexpected events is necessary for everyone. This is why we think proper financial planning is critical, as it can help us with adequate healthcare planning as well.
Prof Tan: No country in the world can sustain the escalation of healthcare costs. And because of the magnitude of this problem, it is an issue that all of us – the Government, the healthcare system, the people and the insurers – need to work together to solve.
And part of that is that everyone has to take responsibility for their health. There is no better way of lowering healthcare costs than to prevent yourself from getting sick in the first place. And this starts with very simple things – taking care of your diet, taking part in physical activities and exercising regularly, having good sleep, and so on.
I think we are also trying to move these measures upstream to cultivate these good habits when (people) are young. I have three daughters and, like most children, they are not particularly crazy about eating vegetables. But when my youngest went to primary school, we noticed that she began asking for vegetables.
We found out later that the school had started to give nutritional lessons during physical activities class to teach children about the goodness of vegetables and fruits. If these early habits are generated when you are young, hopefully, it carries through to your adult life.
I think there are a lot of things that individuals can do to keep themselves healthy, and that’s critically important for us to tackle rising healthcare costs.
Mr Ho: The older generation generally does not have any sort of insurance coverage because it wasn’t something important to that generation then. I have first-hand experience with my family, with a parent who is bedridden. You have to juggle “the unplanned costs” of diseases as you age, and if you do not have adequate coverage.
Apart from the anxiety and emotional stress of wanting to deliver the best treatment for your loved ones, you have to grapple with unplanned costs, which include caregiving, medication and dietary requirements.
Recently, a relative who is not covered had unplanned surgery. And we had to (make) out-of-pocket (expenses) of about $50,000 just for the operation. It puts a big dent in your pocket, and you have to find that sum to facilitate that treatment, so that financial stress along with that emotional stress (in dealing) with the treatment – that multiplies the stress.
Q. How can families deal with “unplanned costs”?
Ms Teo: I believe it is necessary to start early, even if that means starting with a small amount, to buy some form of insurance coverage.
This is because there is quite a large gap in terms of protection. For example, there is a 21 per cent gap for mortality protection needs and a 74 per cent gap for critical illness protection needs. This shows that people are still not well covered.
Essentially, the mortality coverage recommendation for an average Singaporean is about nine to 10 times annual income. For critical illness coverage recommendation, it’s four times annual income. And as your income grows, one should, on a regular basis, review how much coverage one has.
This is important because we take care of everyone’s needs in our ecosystem. Kids need tuition and parents may need home-based care, for instance. These things add on to the budget.
Q. How to encourage people to use healthcare resources responsibly?
Prof Tan: For a start, everybody wants the best for their health. Understanding that there’s a starting point is important, and that is about convincing the person that, in fact, what is best for health is not always the most expensive or the most comprehensive test.
What is the best for health is the test that has been proven through protocols, through years of experience, through clinical trials that it is the most appropriate level of investigation or test that’s required for you.
Medical journals and reports are full of examples where over-investigation leads to harm. Why? Because when you investigate, you get an outcome that generally falls into three categories.
The outcome is good, you don’t have to worry about it; the outcome is not so good, so you probably need to attend to it; or the outcome is one where we’re not very sure, which may prompt further investigations.
Certainly, over-investigation is not the way that we want to go. The general advice would be that if the doctor advises you on a certain procedure, stick with that, and try not to escalate the cost further.
Q. How should parents plan for their healthcare costs?
Mr Ho: I think it’s important for me that we do not burden our kids. We have been talking about the sandwich class, and I do not want to put my two girls through the same experience I’ve gone through, by not having adequate coverage.
If I fall ill, I do not want them to bear the mental stress of having to look after me as well as having to deal with the financial burden. So, for my wife and I, we ensure that we cover ourselves adequately to make sure that we do not add on to the stress of the children, who will have to grapple with the high cost of living in the future.
Q. Why do more people care about their health than having luxurious items now?
Ms Teo: The Covid-19 pandemic does make one think about how we calibrate our priorities. So we do see that from our survey results, and also from what customers tell us.
They no longer see themselves as just receiving treatment when they are unwell. They think about themselves as needing to be physically healthy so that they can live their own lives well.
I think that’s a great way of taking responsibility for your own health. Around the office area, we also see a lot more people doing walks and runs, even during office hours. So I think that’s great progress.
As consumer needs evolve, businesses also evolve. More companies are recognising the need to support mental health in the workplace, and have been taking action to expand health and wellness benefits for employees.
Prior to 2020, less than 1 per cent of our corporate customers included mental health coverage as part of their employee benefits. This figure has been steadily rising over the years and reached 10 per cent in 2023.
To make mental health treatments more accessible, we will also be expanding Whitecoat’s mental wellness teleconsultations and in-clinic consultations to AIA HealthShield Gold Max customers.
Q. Post-pandemic, what are some areas that have changed for patients and their families?
Prof Tan: Most of our general practitioners are private enterprises. For them now to be playing a big role in the government-supported scheme Healthier SG, to keep our nation healthy, to devise personalised health plans for individual Singaporeans, is truly a good example of a public-private partnership. It is critical for us to be successful in Healthier SG.
There is also a double silver lining from the pandemic. One is the acceptance of digital healthcare platforms such as teleconsultations and video consultations, which have become much more mainstream. The other is that the pandemic really highlighted the need for mental health and the challenges we have.
To build a healthy population, mental resilience towards adversity, and our ability to address mental health illnesses and see them as part of just another illness that we need to take care of, is a real positive step to remove the stigma associated with mental health.
Even within the hospitals, we are increasingly looking at healthcare and workers’ mental resilience and mental well-being. We are forming what we call Joy At Work in SingHealth, for instance. These are measures to hopefully create a society where we’re more honest with ourselves and more empathetic about mental health issues.
Q. Why is it still so hard to get people to plan for themselves early?
Ms Teo: In our recent Live Better study, two in five actually hadn’t done any financial planning in the last 12 months. What is alarming is that they didn’t know where to start. And while it may seem obvious to some people, there is still that procrastination, and I think it could stem from not anticipating that sometimes life can take a sudden turn.
I think when you are young, you would think: Why would I want to pay a few hundred dollars for medical insurance? But when your health spirals out of control, then what do you do? For instance, an extra pair of spectacles may seem quite basic, but to some people, that extra cost can be a burden or stress.
Second, some could have challenges in sticking to the plan they created – unexpected changes in the macro environment, unforeseen events that led to the loss of income, or additional spending.
We saw that one in three faced unexpected expenses such as family or medical needs, struggled to adhere to budgets consistently, and made impulsive purchases leading to overspending.
Lastly, as with any plan, we often forget that there is a need to recalibrate. For example, young consumers aged 18 to 24 are prioritising their financial wellness early in life by actively investing. But three in five of them do not consciously update their financial goals regularly.
Also, most of us are in the sandwich generation: We take care of parents, kids and ourselves. That’s a lot of moving parts to take care of on an ongoing basis.
Therefore, the secret to passing this important test is having clarity on where your money is going each month and having a disciplined strategy to get your finances in order. You can start by evaluating your financial situation and finding out how much you are earning and spending every month.
You should also track your expenses and understand what you are spending on. A good starting point would be the 50-30-20 rule. This means allocating 50 per cent of your budget to essentials such as housing, food and transport; 30 per cent towards lifestyle; and finally, 20 per cent for savings, investments and insurance.
Q. How can families take charge of their own health?
Prof Tan: At the start of the panel discussion, you mentioned that you sort of need wealth to enjoy health. I would also say that you really need health to generate wealth.
It comes down to these two points – one is what you eat, and the second is probably what you do. I think research has shown that dietary input is critically important. Disease pattern changes in developing countries versus developed countries, primarily because of dietary changes.
It is true that expensive food doesn’t always mean good food. Food that we ingest in developed countries is often over-processed; we have high fat content, high salt, high sugar, and we lose the fibre, and we lose the natural nutrition that often comes with simple but natural ingredients.
So I think dietary habits are very important, and that it is really good to start when you are young and continue to go that way.
The other thing is what you do or what you don’t do, in some cases. Regular physical activity, and the recommendation would be at least three times a week of physical activity more than 20 minutes a day, is kind of the baseline.
You should have adequate rest in the form of sleep, but even mental rest in the form of awareness and self-reflection or quiet time is important to ensure that you have the physical and mental vitality that is so critically important for the wealth of life.
Q: How should families balance their household planning?
Ms Teo: From what our customers tell us, we realise that there are so many dots for them to join, and it’s not easy for many to understand what they need to do.
This is why we put together the AIA Health360 customer proposition that is all-encompassing in terms of helping them to understand where they can plan for better health and wealth.
Essentially, it builds on four areas – plan well, protect well, be well and live well.
“Plan well” is really knowing what your financial needs are, what your financial scope of spending is, what your long-term goals are. You can plan by using online calculators available on the MoneySense or CPF websites to see how much people should set aside for their financial needs.
“Protect well” is leveraging the very broad base of products that we offer to our customers. For instance, in anticipation of the “super-aged” population, we launched the AIA Centurion personal accident plan, which also has dementia coverage.
And with dementia, the home-based care element is very real and essential, and that’s what we have built into the product as a holistic coverage for customers.
To be well, we have government restructured hospitals like SGH on our panel; we also have private specialists on our panel. Partnerships are essential in terms of building that holistic ecosystem.
As an insurer and payer of claims, we have seen people being wrongly diagnosed in unfortunate situations. So we partner Teladoc to provide a second opinion and manage the cases. So far, we have had 22 per cent of customers who have a change in diagnosis through the engagement with them. And as a result, 49 per cent have had a change in treatment matters.
Finally, to live well is about taking small but regular steps of eating right, sleeping well and exercising. All these help in terms of providing a holistic health proposition for the customer, and that’s what we do with AIA Health360.
Mr Ho: Families should keep an eye on financial protection, which is very important. So ensure you have adequate coverage for unforeseen events for yourself as well as your family.
Lastly, I would say that your own personal investment is taking care of yourself, making sure that you get out there to do some exercise, just to make sure you’re healthy.
I always believe that insurance is something that you have, but you try not to make use of it. You want to know that you have a safety net, but never want to use that safety net.