While critical illness is something no one wants to think about, it is an unfortunate growing reality for Singapore's aging population. Despite the growing prevalence of illnesses such as cancer and heart disease and the financial burden that comes with treating these types of conditions, Singaporeans remain woefully underinsured. One way to solve this gap in coverage is to consider a critical illness insurance plan. Critical illness insurance aims to provide financial protection upon diagnosis of a critical illnesses and can either act as a supplement to your life or health insurance policy or be purchased as standalone policy. Below, we explain the different types of critical illness insurance as well as some of their main benefits.
What is Critical Illness Insurance
Critical Illness (CI) insurance is an insurance policy that provides coverage against the 37 critical illnesses listed by the Life Insurance Association. Unlike a terminal illness (which should be coverable by any life insurance policy), patients with a critical illness are expected to survive for at least a year following the diagnosis. In a standard critical illness plan, when a policyholder is diagnosed with a CI, they will receive lump sum payment of their sum assured and the policy will cease. These plans are purchasable with a term limit (e.g. for 5, 10 or 20 years) or up to a particular age (e.g. up to when you turn 99).
You may want to get a critical illness insurance plan if you are worried that a future critical illness may make it difficult for you to provide financially for your family. This is because unlike health insurance, which only provides coverage for hospitalisation and disease treatment, critical illness insurance lets you spend your lump sum on anything you may need it. The exact type of critical illness plan you may require depends on what kind of protection you need (i.e. early critical illness coverage, female only illnesses, etc.), whether you want to be able to claim for more than one critical illness and what your financial budget allows. Lastly, because different insurers provide coverage for different illnesses, you should review which conditions each insurer covers to make sure you get the policy that is right for your medical needs.
Types of Critical Illness Policies
There are several types critical illness plans available in Singapore, ranging from plans that only cover specific illnesses such as cancer to comprehensive multiple-claim policies. You can also purchase critical illness insurance as either an add-on to a life insurance or health insurance plan or as a standalone plan.
Direct Purchase Insurance Critical Illness Riders
If you are purchasing a Direct Purchase Insurance (DPI) policy, you can also opt to get a critical illness (CI) insurance rider. This will provide simple critical illness insurance coverage against 30 critical illnesses (listed below). Usually the amount of coverage you can add for this rider depends on how much you chose for your death coverage. The pricing of the CI rider depends on your age, the amount of coverage you're getting and the insurer you're buying from.
|Critical Illnesses Covered with DPI CI Rider|
|Alzheimer's/Severe Dementia||Angioplasty & Other Invasive Treatments||Aplastic Anaemia|
|Bacterial Meningitis||Benign Brain Tumour||Blindness|
|Coma||Coronary Artery Bypass Surgery||Deafness (Irreversible Loss of Hearing)|
|End Stage Liver Failure||End Stage Lung Disease||Fulminant Hepatitis|
|Heart Attack||Open Chest Heart Valve Surgery||Severe Encephalitis|
|End Stage Kidney Failure||Irreversible Loss of Speech||Major Burns|
|Major Cancers||Major Head Trauma||Major Organ/Bone Marrow Transplant|
|Motor Neurone Disease||Multiple Sclerosis||Muscular Dystrophy|
|Paralysis (Irreversible Loss of Use of Limbs)||Idiopathic Parkinson's Disease||Primary Pulmonary Hypertension|
|Stroke with Permanent Neurological Deficit||Open Chest Surgery to Aorta||Occupationally Acquired HIV Due or due to Blood Transfusion|
Early Coverage Critical Illness Insurance Policies
Early coverage critical illness insurance is a critical illness plan that covers all stages of critical illness. This is different than regular critical illness policies, which only cover late-stage (or severe) conditions. For instance, with an early critical illness plan, you will be covered for minor cancer conditions such as a carcinoma-in-situ (where the cancer is still confined to one location), whereas for traditional critical illness plans, you could only claim for a malignant tumor. Thus, early critical illness insurance can be beneficial since early detection and treatment of a critical illness means better chance for full recovery and a smaller chance for complications.
Multi-Pay Critical Illness Insurance Policies
While most critical illnesses cease coverage after the first claim, multi-pay critical illness plans let you claim several times. This can be especially helpful because while some conditions may lead to complications or cause other illnesses to appear a few years after the first treatment, you may have a hard time finding another CI plan to cover you. For instance, if you are diagnosed with cancer—whereas a regular critical illness plan will pay a lump sum and cease your policy, a critical illness will stay in place and will let you claim if your cancer reappears or spreads to another form of cancer. Other features of a multi-pay critical illness plan can include a multiplier where you will get a certain percentage of your sum assured (e.g. 200% of your sum assured for a particular claim), a death benefit, and a premium waiver. Some plans may also offer a cash value, where you will get 100% of your sum assured minus any benefits you paid when you reach your plan's maturity date.
Tailored Critical Illness Insurance Policies
Some critical illness policies offer specialised coverage. For instance, some insurers offer coverage for female-only or male-only critical illnesses, such as breast cancer, ovarian cancer, prostate cancer and other gender-specific maladies. Other types of specialised critical illnesses may only provide coverage for a particular condition, such as cancer-only critical illness coverage. This type of plan can make sense if you are at a risk of a particular illness and would prefer to only spend money on the coverage you'll need the most.
Important Things of Note
Before you choose a critical illness policy, there are some important considerations to note. First, pre-existing conditions may not be covered and thus you can not claim for a critical condition arising from said pre-existing condition. Second, regardless of plan, there is a 90-day waiting period before you can claim for angioplasty and other invasive coronary artery treatment, certain serious coronary artery disease, bypass surgery, certain heart attacks and major cancers. Last, critical illness policies also have a survival period requiring you to survive at least 7 days after the diagnosis or surgical procedure to be able to claim for the illness.
Critical illness policies are long-term commitments and the decision to purchase a policy should be discussed with a licensed financial advisor. However, you should avoid purchasing a policy if you feel pressured by a seller, especially if you think the plan is not the right fit for you. It is important to take the time to carefully consider if you will be able to afford the payments, if the coverage is enough to cover your financial obligations and if the policy is right for your medical needs. It may be helpful to compare quotes across multiple insurers and carefully read the terms and conditions of any policy you may be interested in purchasing.