Portfolio hedge using insurance protection

Many people will think that hedging risk against portfolio means buying put option or any derivatives to protect downside when market goes south. I think to protect capital and portfolio gains, we should be buying insurance instead. Of course not any insurance, I am referring to purely insurance for protection.

Since I am managing the family monies which mean I need to hedge the capital risk of the portfolio against any illness of which my parents may encounter when they grow old.

Choy Choy Choy! But in reality this is happening to people around us, have you heard about XXX parents contracted cancer and did not have any hospitalization coverage?? Plenty of examples around us, we are just praying this isn’t happening to us anytime sooner!!

Instead of praying, I will hedge against any potential calamity which might happen to my parents whether it’s personal accident or major illnesses where they will draw capital from their retirement nest to pay off the hefty medical treatments.

Like many others, my parents in their generation doesn’t really believes in insurance and did not have enough insurance coverage especially hospitalization plans. They used to tell me, got cancer then die lah!! But I always reply what if you don’t die and illness drag for years … they say they will die!! Hahaha, that’s their mentality.

For me, I don’t need them to leave me what big insurance payout after they “move on” but just ensure they have enough to pay their hospitalization bill when their time comes. No need to buy what whole life plan, endowment plan etc

I reviewed their existing insurance when I started managing the family monies 3 years ago and added some protection “hedge” like upgrade their medishield to private shield plans up to govt A ward and also included an accident plan. Old people can get into accident very easily even at home like sprain back etc, this plan covers TCM (Traditional Chinese Medicine) as well.

As you see, there are already exclusion because they have existing illnesses already so private insurer had excluded them totally. These are the risk the portfolio have to take since they can no longer be insured but at least I cover any others that might happen. Insure early, my friends!

The game plan is easy, I used the passive income generated from the portfolio to pay for their insurance premium and in that case they don’t need to touch their savings or my savings.

In short, the portfolio is funding the “hedge” itself if it continues to generate passive income

For those who have aged parents like me, do consider reviewing their existing insurance coverage and take action today to avoid any regrets and “what-if” situation.

Eventually they cannot afford to pay? Who pay? Government pay? Fat hopes!! You will be the one paying for bills!!!

You can either speak to an insurance agent or DIY the insurance plan yourself like what I did. Remember keep it simple (separation between protection & investment). Buy what you need and not what the agent wants to sell you!!

Be happy and healthy always!!

Mum’s Insurance Type Insurer Plan Coverage Exclusion
MediShield CPF CPF C

 As charged

 
Supremehealth CPF+Cash Great Eastern A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
TotalShield Cash Great Eastern A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
Accident (Deluxe) Cash AIA  

 $100,000.00

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
DPS (Till 60) CPF Great Eastern  

 $  50,000.00

 
ElderShield CPF NTUC  

                –  

 
           
Dad’s Insurance   Insurer Plan Coverage Exclusion
MediShield CPF CPF C

 As charged

 
MyShield CPF+Cash Aviva A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
MyShield Plus Cash Aviva A

 As charged

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
Accident (Deluxe) Cash AIA  

 $100,000.00

1) Disorders of the heart
2) Cerbrovascula Accident / Stroke
DPS (Till 60) CPF Great Eastern  

 $  50,000.00

 
ElderShield CPF NTUC    $             –    

 

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