What are Critical Illness plans?

A Thorough Comparison & Analysis

One-Stop Financial Website Icon (Critical Illness CI)

Critical illness insurance pays a lump sum if you are diagnosed with a critical illness or a form of treatment that is covered by the plan. These include Major cancers, Heart attack, Kidney failure and Stroke.

Critical illness plan provides extensive protection without disrupting your coverage, from the detection of chronic conditions to the diagnosis of a wide range of critical illnesses, and even in the face of relapses.

Critical illness may occur more than once to someone. Protect yourself and your loved ones safe from the tremendous cost instead of leaving it to chance!

Table of Contents

Why do we need critical illness coverage?

Much has been said about the prevalence and the implications of an occurrence of Critical Illness. In 2017 there was a study conducted by The Straits Times and Today with Singapore’s average working individual has about $60,000 of Critical Illness coverage. The association recommends a $316,000 coverage. This leaves a $256,000 protection gap and their coverage accounted for only 20% of their total needs.

Changes to critical illness coverage from Aug 2020

From August 2020, LIA will make changes to CI definitions mainly in the areas of major cancer, heart attack of specified severity, stroke with permanent neurological deficit, coronary artery bypass surgery and end-stage kidney failure.

The changes to the definitions of critical illnesses under the 2019 CI Framework hope to address any ambiguity in definitions. The changes take into account recent medical advancements and trends in healthcare. 

What does critical illness policy cover me for?

First of all, it is important to understand that there is a standard list of 37 Critical Illnesses which will be adapted. Life Insurance Association Singapore (LIA) has complied the standard definitions for 37 severe-stage critical Illnesses. Here’s their full list.

However, critical illness plans offered by the various insurers may vary in the number and type of critical illnesses covered.

One-Stop Financial Critical Illness 37 Illness

Key features of critical illness plans

Insurers pay a lump sum if you are diagnosed with a policy-stated illness. Or after having a surgery covered by the policy.

Benefits will only be paid if the illness or surgery meets the policy definition.

Specific illnesses and types of surgery typically have a waiting period. If any illness is diagnosed or during the waiting period a type of surgery is performed, no benefits will be compensated.

Many critical illness plans pay a smaller amount for early cancer stages and make multiple payments on the diagnosis of different critical insured illnesses, according to the insured policy limits.

5 worrying statistics of critical illness in Singapore

1) Over 60% of all deaths are caused by critical illnesses

The World Health Organization has conducted a study on Singapore, and the two main causes of death, cardiovascular diseases and cancer, had contributed to over 60% of total deaths.

I’m sure you read about the many incidents that lead to death-horrific car accidents in the media and so on to give a different viewpoint. Nevertheless, these deaths lead only to less than 5% of all deaths. That’s the main reason why cancers have been the most “hot” problem in recent years (and the many years before). And one you really should be paying attention to.

These are the most common types of cancer diagnosed in Singapore, taking a deeper dive into cancer:

2) Probability of critical illness

The Singapore Cancer Society has reported that every day 37 people are diagnosed with cancer. And out of it, 16 people die every day. 

The numbers reflect an alarm that sounds off in such a small country, and it gets louder every day. We don’t know what if you don’t see this as a concern.

3) Five critical illnesses that make up more than 90% of all critical illness claims

Of all the insurance companies’ Critical Illness claims, around 95% comes from:

One-Stop Financial Critical Illness - Top 5 Major Critical Illness

This reveals the value of these major 5 critical illness compared to the rest. And if you really want to improve your health and well-being, keeping a healthy lifestyle will reduce a huge chunk of undesirables happening. 

4) Survival rates increase, but more in Singapore getting cancer

The Straits Times reported that over the past 35 years, the proportion of men who survive a cancer diagnosis by at least five years has gone up from 13.2% in 1973 to 1977, to 48.5% in 2008 to 2012.

For the same period, women survivors more than doubled from 28% to 57.1%. Survival rates have increased due to screening, early detection and treatment, resulting in longer lives.

Early screenings can detect pre-cancer cells that can stop it from becoming cancerous when is removed as soon as possible. And if it is diagnosed in the early stages, this increases the chances of survival and rehabilitation via quick treatment.

By seeking early critical illness plans that provide a lump sum to cover the period of rest and recovery away from work (and still pay the bills), and financial support to seek care outside the scope of hospitalisation insurance (such as alternative treatments).

Here you can compare the Early Critical Illness plans in Singapore.

5) Cost of critical illness treatment

Seedly has conducted research on medical care and cancer costs in Singapore and has estimated the cost of late-stage cancer to range from $100,000 to $200,000, which translates to $8,400 to $16,700 per month. AND considering that Singapore’s medium gross monthly employment income is $4,437 in 2018, how will one ever sustain with the monthly cost? 

Think for yourself: do you think your savings are enough to last you for 5 years? (Critical Illness recovery rule of thumb) and how much do you need?

And so, if many people’s income is only 1 year, what happens to the other 4 years? While you couldn’t work for an income but the expenses go on or even higher. These numbers are a general guideline and it’s unique for everyone.

Not to forget that there will also be emotional and physical costs, on top of the financial cost.

Implications of a critical illness

You’d know it’s not just the medical costs that may be a concern. Other financial costs are also to be considered. Critical illness can take away the ability to work along with Death or Total & Permanent Disability (TPD).

How would you be able to find money to replace income lost during that period? (Some people may never recover from a critical illness).

Here are some of the typical commitments, goals and expenses you may occur during your lifetime:

One-Stop Financial Term Whole Life and Universal Life - Timeline A

So, in addition to the Critical Illness’s medical costs, don’t forget … You still have to account for these other commitments and goals, which could be a huge amount.

3 insurance plans with critical illness coverage

If you want your critical illness cover to beef up, what are the options?

  1. Hospital plan
  2. Critical Illness Cover
  3. Early Critical Illness Cover

By having these 3 plans, you’ll get very comprehensive coverage for Critical Illness.

One-Stop Financial Critical Illness - Insurance Plans That Deal With Critical Illness

Comparing the differences between Early Critical Illness and Critical Illness

One-Stop Financial Critical Illness - Early Critical Illness vs Critical Illness

Critical illness rider on top of whole life plan or term plan

You can get Critical Illness coverage in a Whole Life / Term plan through a rider.

If you still yet to be covered for death or TPD (or lack of coverage), you can consider getting a term policy for Critical Illness. 

If you already have those covered a standalone plan may be more appropriate

How much critical illness coverage should i get?

The mortality protection gap is the shortfall in the amount of money you should be providing to meet the financial needs of your family in the event of your death.

The Critical Illness protection gap is the shortfall in the amount of money you should be providing to meet the financial needs of you and your family before you can return to work.

Do you know your shortfall amounts? Life Insurance Calculator by the Life Insurance Association will estimate how much additional insurance you need.

5 key considerations when getting for Early Critical Illness coverage

If you’re going for this regular assessment, problems like high blood/cholesterol or minor (or not) illnesses may be detected These will affect your chances of getting insurance, particularly Early Critical Illness.

Chances are that submissions will be excluded or rejected. Then you will find yourself in the land of no man. And make sure you get protected when you’re in good health.

Regular screening leads to a greater chance of Early-stage Critical Illness detection before it gets more serious.

9 in 10 Singaporeans find it challenging to purchase another critical illness plan after a diagnosis of a critical illness. This is where Early Critical Illness plans come into the picture because they allow multiple claims (subject to terms and conditions) that may be very beneficial to a diagnosed patient because there are much-increased chances of another occurrence.

Besides (which you should already have) Hospital & Health insurance, do you already have the 3 main coverage: Death, TPD, Critical Illness?

Those 3 are the foundation as they take away the ability to function. It wouldn’t make sense to cover Early Critical Illness without first catering for the first basic 3. 

Early Critical Illness premiums are one of the most expensive life insurance forms (high probability of occurrence).

If you’re young, the premiums would be cheaper. If you are older, the Early Critical Illness premiums may not be justifiable (if you have a surplus budget, it will be good to get it covered).

Serious illness can be inherited, such as heart disease and cancer.

If your family members have such a record, you may find yourself paying higher premiums for life insurance.

In conclusion...

In summary, Critical Illness can cause your entire world to crumble-financially, psychologically, and physically. Not just on yourself, but the people around you (who are the most important). While the emotional and physical pain that comes with it may not be addressed, the financial pain may be prevented. 

Through Critical Illness and Early Critical Illness insurance, you can have greater peace of mind that you can still be in safe hands if a Critical Illness is to occur.

Get your (Early) Critical Illness Plan comparisons from the top providers in Singapore here!

If you are one of the lucky few in the budget, consider if Early Critical Illness plans are for you, then take the first step to compare the different types of Early Critical Illness or Critical Illness plans.
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