Money Matters

Top 5 Questions Singaporeans Have About Critical Illness Insurance

(Source: dollarsandsense.sg)

This article first appeared on fundMyLife.

Critical illness insurance is one of the most commonly discussed insurance plans. In short, the basic critical illness plans provide you with a lump sum of money when you are diagnosed with any of the 37 critical illnesses. Yet, there is still much uncertainty and questions (which is why you are here, aren’t you?) because of how complex it can get. Indeed, it can be quite a confusing affair. We here at fundMyLife love questions, and so we collected some of the most common critical illness insurance questions out there to answer for you.

1. Why should I get critical illness insurance?

One-line summary: Shield plans take care of hospital bills, critical illness takes care of life bills.

You might be thinking – why get critical illness insurance when you have MediShield Life and Integrated Shield Plans? Here is a consideration. When you’re sick with flu you’d get medicine for a couple of days and you’d rest up and all is well. However, if you’re ever sick with late-stage cancer, it would not just be a couple of days (more like a couple of months to a year) and you’d be even sicker with the cancer treatment.

In this case, it’s highly unlikely that you’d be able to work. If you’re the sole breadwinner in family, what happens then? While hospitalisation plans help with hospitalisation (duh), the lump sum payment from critical illness plans or riders helps you to tide through the period when you are being treated, reducing the financial impact of lost income. It leaves you with a bit more resources to engage helpers or even experimental treatment that is not covered under normal plans.

2. Should I get early critical illness plan as well?

One-line summary: It depends on whether you regularly check your body, and if you can afford it.

Ah, indeed it is a classic question. The answer: it depends. More specifically, it depends on whether you can detect the disease early. There is a certain sense of irony if your disease was not deemed severe enough for a claim payout. There are horror stories of consumers not being able to claim because, for example, the stage of cancer was not advanced enough.

If you avoid doctor visits like the plague, chances are you’ll be detecting diseases in the later stages. However, if you’re a hypochondriac and go for yearly full body check-up pilgrimages, early critical illness might not be a bad idea.

Early critical plans themselves come with their own sets of terms and conditions and are less standardised compared to the usual critical illness plans. In addition, you have to scrutinise the T&Cs closely for the definition of diseases in their early, intermediate, and late stage. There’s also the cost to consider as well since they don’t come cheap. 

3. Should I get a single plan or multiple claim plan?

One-line summary: Single plans one time, multiple claims several stages several times. It depends on whether you want to, or are able to fork out the money.

Numerous critical illness plans are available as riders for life insurance. Typically, these plans are terminated upon payout. However, after contracting the first critical illness, it is hard to be reinsured as companies are not willing to take up more risks. In the oft-cited AIA Health Matters Survey 2016, it revealed that 9 in 10 Singaporeans find it challenging to purchase another critical illness plan after a diagnosis of a critical illness.

For multiple claims, the advantage lies in providing several payouts upon diagnosis. For example, one payout for early-stage cancer diagnosis and additional payouts in later stages. Sounds too good? It somewhat is. The caveat is that the multiple claim plans have much higher premiums compared to single claims plans. Furthermore, there is a waiting period of some plans in between claims.

The good news is that we’re seeing more innovation in this space, as more companies are coming up with multi-pay critical illness plans.

4. What is the difference between disability income insurance, total and partial disability insurance, and critical illness insurance?

One-line summary: Disability plans give you monthly $ for being disabled, total and partial disability give you lump sum $ for extreme injuries, and critical illness plans give you lump sum $ for falling really sick.

Disability insurance helps you when you are unfit for your current profession after injury. Total and partial disability insurance helps when you lose limbs and/or endure extreme injuries. Critical illness insurance helps when you are really sick. Amount-wise, disability insurance gives you a monthly amount to keep you going while you are recovering from injuries. Both total and partial disability insurance, and critical illness provide you a lump sum when conditions are met. The conditions for all three types of insurance are strict, and require documentation and evidence for your current condition. Each of these serve different purposes are meant to be complementary, premiums notwithstanding.

5. Is there anything I should look out for in particular?

One-line summary: Family medical history, your lifestyle, insurance waiting period, survival period.

There are several factors to look out for when considering critical illness plans. The incidence of the critical illnesses in the list, are informed by your family’s medical history. For example, your risk of ovarian and breast cancer increases when you have relatives or family members with it. Other critical illnesses, such as kidney failure, correlated with lifestyles and diet. Prevention is better than cure so we highly encourage you to adopt a healthy lifestyle. In a way, no one truly wants to in a situation where they qualify to make these claims.

Critical illness plans also have waiting periods, typically 90 days from beginning of coverage – no benefits are paid out if any diagnosis or surgery are carried out within the waiting period. As such, it’s always good to get it while you are healthy and not when you suspect something is amiss in your body. Another period you have to look out for is survival period, a period of time in which you need to survive. Only after the survival period can you be paid. The implication is that if you die during the survival period there will be no money paid to your family. After all, it’s a recovery benefit and not a death benefit.

Got more questions?

We hope you found the article useful and it clarified some of the questions that you might have. Got more critical illness insurance questions? You can use the widget below to ask your insurance questions and receive answers from qualified financial professionals.

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More Info: dollarsandsense.sg

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