What is a Critical Illness (CI) plan?
In Singapore, there are various health insurance plans available such as integrated shield, hospitalisation cash insurance and personal accident plans. However, there is one health insurance plan that many people deem it as unnecessary or optional: Critical Illness insurance.
A critical illness plan provides you with the sum assured when the policyholder is diagnosed with any of the critical illnesses covered by the policy. Some of the examples of critical illnesses include cancer, dementia, kidney failure and stroke. According to The Life Insurance Association, there is a list of 37 critical illnesses. Generally CI plans cover more than 30 different illnesses although not all are covered.
One important point to note about CI plans is that there is a strict definition for CI and, when it comes to making a claim for a CI, the policyholder may only be able to claim a payout upon the late stage of a CI disease unless the person has an early or intermediate CI plan.
Differences between a Critical Illness plan and an Integrated Shield plan
Critical illness plans are often mistaken for Integrated Shield plans and, a lot of people think that their existing hospitalisation plans already cover critical illnesses. Both plans function differently and serve different needs.
The most distinct value of having a CI plan is that it gives you a lump-sum payout that you can use to cover your financial needs in order to recover from your illness. The payout can be used for expenses that are not covered by your hospitalisation insurance such as your bills and daily expenses that you will still need to pay in spite of the loss of your income due to your inability to go back to work. In addition, it can also be used to pay for extra help needed during the recovery process such as hiring a domestic helper.
Is it wise to buy a CI plan if I have no dependants?
Although your financial burdens may not be as high as those married people with children or elderly parents, if a CI strikes, you have nobody to depend on but yourself. In such cases, having a CI plan can help you cope with the loss of your income and recovery expenses.
Factors to consider before getting a CI plan
1. Income replacement & expenses to cover during recovery
According to Life Insurance Association (LIA), the estimated recovery time from a critical illness is 5 years. During this recovery period, you will unlikely be able to go back to work and, the loss of income will definitely hit hard on you.
Your daily expenses for yourself and family, loans, bills etc. will still need to be paid despite your illness and inability to go back to work.
Some people may use their hard-earned savings to help them with the expenses during the recovery stage. However, savings are normally kept for designated purposes (e.g. retirement, children’s education). Therefore, it is not the best option to use savings to tide you through during the recovery period and it should only be considered as a last resort when there’s no other way out.
2. Personal care services during recovery
When one is critically ill, the person may not be in a good shape to take care of oneself and, additional help may be required to manage their illness and household chores. People normally hire a domestic helper to help out with household activities and caretaking. The cost of hiring a domestic helper in Singapore is about $1,000 SGD per month. In addition to this, there may be other costs such as home-based medical equipment and transport arrangements for regular checkups and treatments.
3. Different types of CI coverage
Early, intermediate or severe stage
Many traditional CI plans only cover severe stage critical illnesses. Many people unknowingly buy CI plans without realising that they are not covered for early and intermediate stages. With the advancement of medical technology, it has become easier to detect critical illnesses and, early treatment highly correlates with higher survival rates. Therefore, it is recommended to buy a CI plan that not only covers the severe stage, but also the early and intermediate stages in order to get a payout early and get yourself covered.
Single or multiple payouts
Some CI plans only allow you to claim once, which means if you want to get another CI plan after a claim has been made for the first plan because of a critical illness, you will either be rejected or have limited coverage due to your pre-existing medical conditions. Therefore, once a claim has been made for the first critical illness, should the same illness strike again or be diagnosed with a different critical illness, you will no longer be eligible to receive payouts.
The solution to such problems is to get a multiple-payout CI plan like Aviva’s MyMultiPay Critical Illness Plan. This plan provides up to 5 payouts upon diagnosis of critical illnesses across early, intermediate or severe stages. Moreover, there are up to 2 payouts if you are re-diagnosed with cancer or suffer from recurrent stroke or heart attacks.
Therefore, having a right CI plan that covers early to severe stages and provides multiple payouts, would help to lessen the financial burden from the beginning upon the diagnosis of a critical illness until the recovery period and future recurrences.
If you are interested in getting a critical illness insurance plan or would like to know more about it, feel free to contact me here.