As a Singaporean living in India, should I buy global health insurance?

I am a Singaporean citizen staying in India on a long-term work assignment. I have Singapore health insurance and a local health insurance policy in India. Should I opt for global health cover instead of managing two separate policies? I do not anticipate staying in any other country, except for short leisure or business trips.

- Name with-held on request

NRIs and high-networth individuals are increasingly choosing global health insurance. It is an effective way to get treatment anywhere in the world. However, these policies tend to be more expensive than local plans. The higher cost is driven by expensive geographies such as US.

Since you do not anticipate staying in countries other than Singapore & India, it would be better to keep your local plans. Domestic plans provide access to localised service. They give you access to a wider network of hospitals, and a quicker claims process. Another significant advantage of domestic plans is that our regulations are policyholder-friendly, with benefits such as life-long renewability and no claim rejections allowed after five years.

Also read: Why that deluxe hospital room could cut your insurance cover by 50%

For your short business or leisure trips, you could buy travel insurance. Travel insurance plans provide coverage for emergency hospitalisation and medical expenses.

If I want to invest in a unit-linked insurance plan (ULIP), what are the costs I should be aware of? Apart from the returns of the underlying funds, I want to evaluate the cost structure of ULIPs. It is my understanding that the costs built into ULIPs can significantly undermine long-term returns.

- Name withheld on request

Your understanding is correct. Costs, especially recurring ones, of a ULIP plan can significantly hamper the returns of any investment instrument.

There are three key recurring expenses for a ULIP. The first recurring cost is the fund management fee, which depends on the underlying fund. It tends to be high for equity-oriented funds and low for debt funds. The fund management charge for an equity fund is around 1.35%. 

Also read: Investors rarely pocket the returns that mutual funds generate. Know why?

Then there is the policy allocation charge, which could be between 0 and 6%. Third is the policy admin charge. This is generally 0 to 0.9%. 

However, the regulator puts a cap on the total charges allowed. This cap depends upon the policy tenure. Charges allowed outside the cap are mortality costs – the cost of providing death cover. Generally, as the investment corpus grows, the sum at risk falls. So, for long-term plans the mortality costs tends to be negligible over time.

Abhishek Bondia is a principal officer and managing director at SecureNow Insurance Broker Pvt. Ltd.

Also read | Capital gains on equities: All you need to know when filing returns this year