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Financial Planning for Families with Children with Autism

Posted on June 24, 2019 by All In

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Why is getting insurance coverage for a person who has been diagnosed with autism so tiring, difficult and confusing

In this article, our guest blogger Senior Financial Services Consultant Wilson Lee shares with us the reasons, options and useful tips when getting approval from insurance companies. He also provided a summarised roadmap on how parents can set financial goals and get started on the path of wealth management.


Contributed by Wilson Lee

Financial Goals 101

For many of us, thinking about our finances sounds like a tedious affair with endless lists of issues and concerns. It doesn’t help that in this information age, we all suffer from information overload, with everyone claiming to be an expert on everything. As a result, some of us may feel that it is better to just not think about it. Out of sight, out of mind.

It is even harder for families with children who are diagnosed with autism (ASD), as much of the caregivers’ time and attention are occupied with giving care to the children.

In addition, the responsibility of being a lifelong caregiver adds a layer of complication to the many questions we already have about financial planning, which are:

  • Do we have enough?
  • How much is enough?
  • What happens when we are not around?
  • What will happen to our children?

This article aims to provide a basic and clear overview on financial matters, specifically for families with children with ASD.

Simply put, financial planning is about planning financial goals in:

  • the short term (1 to 5 years),
  • the mid-term (5 to 10 years), and
  • the long term (10 years and more).

There are two main areas that we need to look at:

  1. Risk Management, and
  2. Wealth Management.

Risk management protects us from events that can rob us of our ability to create wealth. Our aim is to ensure that we have done what we can to manage the risks.

Wealth management enables our wealth to grow at the rate that matches our goals. We need to allocate our resources to the appropriate financial tools according to our financial goals. With proper allocation, our resources will be compensated fairly.

Risk Management 101

When it comes to risk management, there is no financial tool that is more effective than insurance.

We all know that insurance is important, even necessary, but we are often confused by the many different types in the market. The complex jargon that insurance companies use often makes our decision-making process even harder.

Here are the few most important scenarios and basic questions you have to ask when it comes to risk management, whether you have children with ASD or not:

  1. If I have been hospitalized, what does my insurance cover and how much will I need to pay in cash?
  2. If I got into an accident but was not hospitalized, what does my insurance cover?
  3. If I have a critical illness (early or advanced) and I have to stop working, what happens to my bills and expenses?
  4. If I am unable to work due to medical reasons, does my company continue to pay my monthly wages? If yes, for how long?
  5. If I am no longer alive, who will be taking care of my dependents? Will they have enough?

 

Risk management when you have children with ASD

With the basic considerations in mind, let’s now zoom in on risk management when you have children with ASD.

There are two main aspects we need to pay more attention to:

  1. health insurance, and
  2. life insurance.

The reality is that in Singapore, getting insurance coverage for a person who has been diagnosed with ASD is extremely tiring, difficult and confusing.

There are a few reasons for this.

Firstly, the options are limited because the ASD risk pool is too small for insurance companies to create products specific to the group.

Secondly, each individual ASD case can be unique. This is compounded by the fact that each insurance company has different criteria and guidelines.

Thirdly, if one company rejects an application, it is very likely that the rest will do the same. It takes stamina and perseverance to deal with different agents, handle different agendas, and write to apply to all the insurance companies on the chance that one of them might approve the application.

However, it is not impossible and there are some viable options.

I will attempt to explain the available options for each aspect.

Health insurance: coverage for medical bills

There are two kinds of medical bills we need to get coverage for:

1. medical expenses due to accidents and infectious diseases, and

2. medical expenses due to inpatient hospital treatment.

Medical expenses due to accidents and infectious diseases

1. Personal insurance policies that provide coverage for medical expenses due to accidents and infectious diseases.

      • To date, NTUC INCOME is the only local insurance company that has products catered for people with ASD.
        • NTUC INCOME SpecialCare (Autism) Insurance provides coverage for medical expenses due to accident and infectious diseases.
      • Some international health insurance policies might accept children with ASD (on a case-by-case basis)
        • International health insurance policies often coverages a wider spectrum of coverage, but at a much higher premium. These are often not distributed by your normal insurance agent. Financial advisors who represent different insurance companies might be able to provide a wider range of products and services.

Tip:

If you are keen on getting an international health insurance policy, it is best to submit your application to multiple insurance companies for underwriting to see which company have the best outcome.

Underwriting is the process where insurance companies evaluate the risks of offering coverage to the applicant. Insurance underwriters will decide whether to issue an insurance policy, how much coverage to offer, and how much premium needs to be paid. The underwriters’ job is to protect the insurance company from potential financial losses. Therefore, applicants that are deemed to be too risky to the insurer may be denied coverage.

To save you time and effort it may then make more sense to engage a financial advisor that represents multiple insurance companies.

2. Corporate/Employee benefits

      • Some of us may lucky enough to work for a company that provide medical insurance to the employees and their dependents. These benefits may help us cover our children with ASD for GP outpatient or even Specialist outpatient.

Medical expenses due to inpatient hospital treatment

Examples of such expenses include room and board charges, cancer treatments, and surgeries.

1. Personal insurance policies

      • CPF Medishield Life:
        • CPF MediShield Life is a basic health insurance plan that helps to pay for large hospital bills and selected costly outpatient treatments such as dialysis and chemotherapy for cancer.
        • It is basic because it is sized for subsidised treatment in the public hospitals. Medishield Life also cover all Singaporean/PR pre-existing conditions.
      • Integrated Shield Plan
        •  Unfortunately, attempts to apply for Integrated Shield Plan from your private insurers are often rejected for children with ASD.
      • International Health Insurance Policies
        • Some international health insurance policies allow children with ASD to get covered (strictly dependent on underwriting and severity of ASD).

2. Corporate/Employee benefits 

Again, some company provides medical insurance to the employees and their dependents which can cover their children with ASD for hospitalization bills. Be sure to check with your HR department on the coverage terms and condition.

Life insurance: Coverage against critical illness, death and disability

Life insurance pays out a lump sum should early critical illness, critical illness, disability or death strike. The lump sum will enable the parents to take a break from work or to slow down their pace of work to take care of the children.

However, getting a life insurance to cover against critical illness for children with ASD can be extremely difficult as well because different insurance companies consider children with special needs differently and have different guidelines.

For example:

Some insurers will only consider for children with ASD after a certain age, e.g., 8 years old. This is because the underwriters want to see how the child develops to evaluate the risks to the company.

Some insurers will take into consideration the other comorbid conditions a child may have, e.g. epilepsy.

Some might require the children to take an IQ test.

Tips

Tip 1: Engage a financial advisor who can represent different insurance companies, so that you can save time and write in to apply to multiple companies.

Tip 2: Request for preliminary underwriting. This helps to save time. Also, doing so avoid formal records should an insurance company reject the application.

 

Wealth Management 101

Getting fair interest for different financial goals

We don’t only have to save up for a rainy day. We want to grow our money so that we can take better care of our family.

Wealth management means that you actively act to grow your money accordingly to your short term, mid-term and long-term financial goals.

In the short term, we need to put aside a sum of money that we need to use for expenses the next few years. This means that we want to select options that ensure high liquidity. However, the tradeoff is that interest rates are lower.

In the mid-term or long-term, we are talking about money we do not need to use now or in the near future. We need to make sure we put that money in a place that offers a FAIR INTEREST. In Singapore, the inflation rate is around 3%, so we need to put the money into a place that can hedge against inflation.

Below is a quick summary of the types of financial goals, the different considerations and options:


Short term goals (the next 1 to 5 years)

Examples of short-term goals: Emergency savings, costs of children’s education, down payment for housing

If your key considerations are: 

    • High liquidity
    • Capital guaranteed

Then your options are:

      1. Bank savings account
      2. Fixed Deposits
      3. Singapore Saving Bonds

Mid-term goals (5 to 10 years)

Examples of mid-term goals: Emergency savings, costs of children’s education, payment for mortgages

If your key considerations are:

    • High liquidity
    • Capital guaranteed

Then your options are:

      1. Bank savings account
      2. Fixed Deposits
      3. Singapore Saving Bonds
      4. Insurance endowment policies

If your key considerations are:

    • High liquidity
    • Non-guaranteed capital (potential higher return)

Then your options are:

      1. Insurance endowment policies
      2. Stock & shares
      3. ETF
      4. Unit Trust

Long term goals (more than 10 years)

Examples of long-term goals: Retirement, children’s long-term expenses

If your key considerations are:

    • High liquidity
    • Capital guaranteed

Then your options are:

      1. Bank savings account
      2. Fixed Deposits
      3. Singapore Saving Bonds
      4. Insurance endowment policies

If your key considerations are:

    • High liquidity
    • Non-guaranteed capital (potential higher return)

Then your options are:

      1. Insurance endowment policies
      2. Stock & shares, RIETS
      3. ETF
      4. Unit Trust
      5. Short-term bonds

If your key considerations are:

    • Low liquidity
    • Non-guaranteed capital (potential higher return)

 Then your options are:

      1. Property
      2. Insurance endowment retirement plans
      3. Bonds

Planning for children who cannot manage their own finances

So far, I have addressed the issue of risk management and wealth management for families while the parents or caregivers are still alive.

However, it is necessary to think about what happens to children who outlive their parents or caregivers. Possible options are as follows:

1. Trusts and Saving Schemes

To ensure regular long-term care for your child, you can set up a private Trust Fund, a Special Needs Trust Company (SNTC) Trust or a Special Needs Savings Scheme (SNSS).

2. Insurance annuities

Some financial products such as insurance annuities aim to provide monthly lifetime payouts to the beneficiaries. This ensures that the children will have income coming in to manage their daily expenses even if their parents are no longer around.

3. Monthly payouts

You can also look into investments such as stock, shares, unit trust that focus on paying out monthly dividends. This can provide a consistent income for daily expenses. You will need to set up joint investment and bank accounts with a guardian you trust or you can let professionals manage the portfolio by setting up a trust (see point 1). If you need advice, do consult a MAS licensed financial adviser who specialises in investments.

Where do we go from here?

The concern about inadequacy of insurance coverage for people with ASD is not unique to Singapore. The issue is that ASD is a broad spectrum and there isn’t a one-size-fit-all approach.

The good news is that things are changing. In Singapore, many people have spoken up about creating more inclusive and empowering structures in every area.

Meanwhile, remember that insurance is just one part of the entire process of financial planning. Where possible, parents of children with ASD can also consider focusing on wealth management.

 


 

Wilson is a Senior Financial Services Consultant with one of the largest financial advisory firms in Singapore. He has received multiple awards on both personal and corporate financial advisory fronts. He provides personalised personal and corporate financial advice, and has advised families with children with ASD since 2015.

You may contact him at withwilson@gmail.com


All the content found on the All In website, has been created for informational purposes only. The content is not intended to be a substitute for professional advice, diagnosis or treatment.

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