Things to Consider when Getting Critical Illness Coverage

The financial cost of dealing with a critical illness (CI) diagnosis can be just as crippling as the illness itself. Randy Ang, Associate Financial Services Director from Strategic Wealth Alliance - SWO, discusses what to watch out for when looking for comprehensive CI coverage.

Not too long ago, I met a client who was in the early stages of diagnosis for cancer, a common critical illness in Singapore. It was understandably an emotional time for not only my client, but the family as well, given that the whole process from suspicion to confirmation took up to two months. Nonetheless, the concerns they shared with me were not merely limited to health and physical capabilities as a result of the diagnosis. In fact, the first question they asked me was if they had sufficient coverage for the cost of treatment.

It is no secret that treating critical illnesses is costly. Further adding to that financial burden is the fact that your illness, subsequent treatment, and recovery, can severely impact your ability to work thus affecting your income. Getting critical illness coverage therefore isn’t just about preparing for the worst-case scenario, but about giving yourself the ability to focus on getting well rather than the stress of paying for treatment.

Which critical illnesses qualify?

The umbrella term of ‘critical illnesses’ applies to heart attacks, organ transplants, strokes, cancer and even kidney failure, to name a few. However, not all illnesses that fall under the list of aforementioned health issues are claimable from critical illness policies. This is due to the critical illness definitions set by the Life Insurance Association of Singapore (LIA) that defines if the diagnosis is claimable.

What is critical illness coverage?

Central to the idea of critical illness insurance is that people who have overcome serious health issues should not have to face a mountain of debt afterwards. Critical illness coverage is consequently best used as a supplement to health insurance such as hospitalisation coverage, especially given the fact that the cost of treating one critical illness alone could max out the coverage of your hospital insurance plan.

There are two types of plans which you can consider: (1) lump-sum payout when diagnosed with critical illness, and (2) multiple payouts for critical illnesses or second occurrences. Both types of plans cover critical illnesses from the early stage.

Do I need critical illness coverage?

As with all things, deciding on whether to purchase critical illness coverage requires an analysis of the costs and benefits. With regards to the literal cost, the total amount depends on a variety of factors including but not limited to age, gender, and medical history. Generally speaking, while coverage varies, critical illness insurance is relatively affordable with an annual premium of between S$300 to S$3,5001.

As for the benefits, critical illness coverage may prove more useful if you are the breadwinner of the family. If your family relies heavily on your income, and you do not already have an emergency health or medical fund set aside, critical illness insurance is something to seriously consider. Furthermore, if your current employment does not offer plans or benefits for extended time off work because of an illness, then it is highly recommended that you contemplate getting this type of coverage.

Again, there are significant variations between policies and corresponding premiums. Thus, if any of the above points resonate with you, then it is likely you will be able to find a plan within your means and tailored to your concerns.

How much critical illness coverage do I need?

Critical illness coverage is often offered alongside, if not within, regular life insurance policies. The amount of coverage you need will depend on a number of factors including your current pay, number of dependants and standing debts. However, the good news is that as your situation changes, you are likely to be able to adapt your policy to reflect your circumstances.

Similarly, the way in which you receive a claim can also differ based on circumstances and type. Some policies offer a lump-sum payment, while others allow multiple claims when the condition worsens or when there is a reoccurrence after an initial full recovery. Other consequences of a critical illness diagnosis can also be compensated, such as loss of income, or in unfortunate cases, death.

Nonetheless, with such a wide variety of policies to choose from, it can be overwhelming trying to find the right policy for you and your loved ones. If you are considering getting critical illness insurance coverage and would like help in sifting through your options, please do not hesitate to reach out to me. We at SG Alliance will use our expertise to guide you through the process of finding the right coverage for your needs.

1Source:SingSaver, Best Critical Insurance Plans in Singapore (February 2022)

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