A Guide To Choosing Critical Illness Insurance Plans

A Guide To Choosing Critical Illness Insurance Plans

In Singapore, an average of 41 people are diagnosed with cancer everyday. 1 in 4 people here may develop cancer in their lifetime. The likelihood of developing critical illnesses such as cancer, severe heart attacks, stroke or kidney failure may not be as rare as we might believe. By purchasing a critical illness insurance plan, we give ourselves the assurance of a financial safety net. And having the peace of mind that we will be supported when we need it most — is invaluable.

What is critical illness insurance

A critical illness insurance (CI) plan insures you in the event that you are diagnosed with a critical illness and supports you throughout your recovery stage. Most CI insurance plans cover 36 common critical illnesses including: 

  • Major cancers 
  • Heart attack 
  • Coronary artery bypass surgery
  • Stroke and kidney failure
  • Parkinson’s disease
  • Major head trauma
  • Major organ transplantation

Your insurance company pays a lump sum when you are diagnosed with these common ailments, allowing you to cover expenses such as treatment and hospitalisation fees, as well as for essentials such as rent and food, if your source of income is terminated.

A CI plan is not the same as term life insurance, which covers permanent disability and death. Neither is it the same as medical insurance or hospital & surgical insurance, which usually covers minor surgeries and specialist healthcare. This coverage is specifically for medical diseases or emergencies that can result in hefty hospital bills over an average recovery period of 5 years. This can be purchased separately or as an add-on to a current term life plan, called a rider.

There are many misconceptions surrounding critical illness insurance plans. You might assume that youth protects you from cancer or that your current medical and hospitalisation plans cover you when you are diagnosed. These lull you into a false sense of assurance, dissuading you from adequately protecting yourself and your family.

Why do I need critical illness insurance?

Disregarding the possibility that you might develop a critical illness can be a costly mistake.

Should you be diagnosed with such a disease, holding on to your job can prove to be difficult. Your energy is depleted as you go for repeated treatment sessions and adjust to the effects of therapy. Without an income, your savings are drained, paying for hospital bills and sustaining these costs may not be possible over an extended period.

This is where a comprehensive critical illness insurance plan comes in, proving to be an absolutely vital lifeline, tiding you through this difficult stage of recovery. With this coverage, you have the financial capability to pay for your medical bills without going into debilitating debt. If your loved ones depend on your income, having a CI insurance plan is essential in safeguarding your well-being as well as theirs.

What to consider when taking critical illness insurance

Taking a critical illness insurance plan is a long-term financial commitment and requires careful consideration of your budget, coverage required and family medical history. Comparing the different CI plans available, the illnesses they cover you for and the final compensation amount, would bring you a step closer to deciding on a plan that’s right for you.

A study done by Life Insurance Association (LIA), and as reported by Straits Times, found that an average working adult has insurance plans that only cover them for 20 per cent of their needs should they be diagnosed with a critical illness. LIA recommends that a working adult with a single dependant requires an average of $739,000, nine times their annual salary, in order to have their needs fully covered. Different insurers provide various critical illness packages with different coverage terms. Choose one that addresses your vulnerabilities.

What types of critical illness insurance plans are available? 

Decide from several types of CI insurance plans: Late stage or early stage CI plans, single-pay or multi-pay CI plans.

Traditional CI plans, or late stage plans, cover the insured only if their disease is at an advanced stage, and are also known as basic or conventional CI insurance plans. Early CI plans, however, provide coverage when diseases have been detected at an early stage, allowing one to be financially supported early on.

Single-pay CI plans only cover the insured once, paying them a total lump sum just that once, regardless if they suffer relapses or other critical illnesses later in life. Multi-pay CI plans, however, cover possible future relapses and if a second critical illness develops. While these types of plans have higher premiums, they provide the insured with greater coverage over a lifetime.

Learn more about Expat Insurance’s critical illness coverage

Life can take unexpected twists and turns. To guard against such uncertainties, Expat Insurance emphasises the importance of including a critical illness insurance plan in your suite of insurance policies. Speak to our agents to understand your current insurance plans and how our expat health coverage can fill any gaps you might have. Protect yourself and your loved ones with us. 

Authored By John Ntatsopoulos

CEO

Over the course of his 34 years career, our CEO, John, have worked predominately in the area of insurance and financial services across major APAC…

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