Is Maternity Insurance Worth Buying?

Considering that most babies are born healthy in Singapore, many parents may not feel that they need to purchase maternity insurance. If you think that maternity insurance is unnecessary in Singapore thanks to MediShield and your existing medical insurance plans, you’re not the only one.

A good way to start thinking about maternity insurance would be on how it can help you manage unexpected costs that might occur with your pregnancy or delivery. 

When I was expecting my first child, I got confused because my family’s insurance agent did not recommend that we purchase maternity insurance, while every other insurance salesperson that I met at baby fairs was pushing us to buy one.

As a consumer and a budget-conscious mother myself, I hope that my article will help you understand the pros and cons of maternity insurance so that you can better make a decision for yourself on whether this will be beneficial for your family.

What does maternity insurance cover?

For parents who are worried about the unexpected large costs of pregnancy or post-delivery, a maternity insurance plan can come in handy.

The local insurers in Singapore offer maternity insurance to specifically cater to an expectant family’s needs, which mainly offer the following benefits:

1. Coverage for hospitalisation bills due to pregnancy or delivery complications
2. Lump-sum payout in the event that your newborn is born with a congenital illness
3. Lock-in insurability for your baby

1. Coverage for hospital bills 

You should first note that your MediShield already provides coverage against large hospitalisation bills due to serious pregnancy and delivery complications. These inpatient pregnancy complications can often also be claimed from your Integrated Shield Plans (subject to your insurer’s terms and conditions), as long as you got pregnant after purchasing the plan (due to the 10-month waiting period for maternity-related claims).

But while you cannot get a daily hospital allowance from your MediShield, you can claim that from your private maternity insurance policy. 

What’s more, in the event that your newborn suffers from neonatal jaundice (a common condition) and requires you to rent the phototherapy machine for outpatient treatment, some insurers (like NTUC Income) cover for that (one per cent of your sum assured, per day, which translates to $50 to $100 per day of rental and treatment).

2. Lump-sum payout in the event that your baby is born with a congenital illness

Most of us expect to go to the hospital for a smooth delivery and get discharged in three to five days with a healthy baby to bring home. No one really plans for a situation where the mother or baby may need to stay hospitalised for longer than usual or worse, deal with lifelong repercussions due to unforeseen medical conditions.

Should your baby be born with a congenital illness (such as a heart defect or cleft lip), your maternity insurance will pay out 100 per cent of the sum assured*, ranging from $5,000 to $25,000. This lump sum can help pay for any vital surgeries your baby needs, or defray some of the short-term costs incurred while making medical or caregiving arrangements.

*Note that the exact congenital illness coverage varies between insurers.

3. Lock-in insurability for your baby

This last benefit is one of the biggest reasons why many kiasu Singaporean parents are willing to fork out $3,000 to $5,000 for maternity insurance. It usually comes as a rider attached to a base, whole life plan that can be transferred to the baby without any medical writing, after birth.

If your baby is not born completely healthy, this helps to guarantee their insurability for life – because otherwise you’ll have issues getting them covered after.

What does maternity insurance NOT cover?

Unfortunately, if you’re looking for a maternity insurance plan that will reimburse you for your ob-gyn charges or an emergency C-section delivery (that can easily cost more than double of what you budgeted for), you won’t be able to claim that from any of the local insurers.

What’s more, one of the biggest worries that expectant parents have is that should their baby be born premature or require an extended stay in the neonatal intensive care unit (NICU), the bill can rack up to six figures. This was exactly what happened to my friend, when her baby was born premature at 25 weeks and ended up spending 400 days in the hospital. 

Local maternity insurance plans will pay at most one per cent to two per cent of the sum assured for each day of hospitalisation, often capped at 30 days, which translates into $1,500 to $15,000. While helpful, the reality is that this may barely help to alleviate your cost against a six-digit medical bill.

Only international insurers, such as Bupa, Cigna or TM Henner, offer such coverage. The catch? They can easily cost above $10,000 in premiums, and you’ll need to purchase this before you get pregnant.

How much does maternity insurance cost?

In Singapore, most maternity insurance plans are sold either as a standalone plan that covers you for a limited time period, or as a maternity rider that comes with a base plan such as a whole life plan, an Investment-Linked Plan (ILP) or a long-term endowment plan.

How much you pay largely depends on which plan you go for. 

• If you opt for a standalone maternity plan, costs generally range from $500 to $1,500 depending on your sum assured.
  
• If you opt for a bundled plan, your exact premium payable will be largely determined by your base plan chosen.

So… should you get maternity insurance or not?

At the end of the day, whether you choose to pay for maternity insurance is a personal decision that you’ll have to make.

Just like most insurance packages that we buy, maternity insurance is one that you purchase in hopes of never having to use it, because it requires either severe, sometimes life-threatening, medical complications in your pregnancy or delivery before you’re eligible to make a claim.

But if you give birth smoothly and to a healthy baby , it is unlikely that you’ll be able to claim anything from your policy - so you’ll have to be prepared to treat it as a sunk cost.

At the end of the day, the risk of major costs for expectant parents largely comes from potential complications of pregnancy or childbirth and newborn care. With the high likelihood of these expenses reaching thousands of dollars per day, some parents prefer to pay to get some level of financial protection, just in case.

Some expectant mothers who are older or not in the best of health may also opt to get maternity insurance because they are worried about possible pregnancy complications. Others go for it because they have a history of congenital illnesses in their families, while others pay to get that reassurance that their newborn baby will at least have life insurance coverage in the worst case scenario.

Within my social circle, only about 20 per cent of my friends managed to claim from their maternity insurance. Many chose to forgo it altogether and reserve the money for other newborn costs instead.

You will likely not end up making a claim

As you can see, there are clear benefits to buying maternity insurance, but the biggest question is whether you feel it is necessary and worth the cost,  given that the majority of births in Singapore are free from complications, and most people do not end up claiming from their maternity insurance.

That was me, too, as I purchased maternity insurance during both my pregnancies but never got to claim for it. Although one of my children was born with a congenital disorder, it did not fall within the list of conditions covered by any local insurer and hence, we were not able to claim anything for his surgery.

But despite getting nothing back from my premiums paid, I would still opt to purchase maternity insurance all over again as I prefer not to play with fire when it comes to something as sensitive as a pregnancy and a new life.

If cost is not a concern, think about whether getting maternity insurance for a peace of mind would serve you and your family well, or if you’d prefer to take the risk and save the money instead.

Dawn Cher is a mother of two boys and the founder of financial blog SG Budget Babe. While pregnant, she spoke to more than 10 different insurance firms and agents to understand maternity insurance and the role it plays in Singapore (and what it does not do).