Quick Guide to Critical Illness Insurance in Singapore 2023
In Singapore, critical illness insurance is considered good to have although it is not as essential as medical, hospitalisation or life insurance. If you have already got yourself and your loved ones covered with these basic needs, perhaps critical illness insurance is the next type of insurance that you might want to consider.
What Is A Critical Illness Insurance Plan?
A critical illness insurance policy is specially designed to offer a lump sum payout in the event that you get diagnosed with a serious illness. While each critical illness insurance policy maintains a set number of covered illnesses and each list varies from insurer to insurer, heart attack, stroke and late-stage cancer are almost always included on the list.
Is it necessary and how does it help me?
As you’ll never know when you may fall ill, it’s safer to get covered against any critical illnesses and excessive health expenses. Being able to claim for hefty medical and hospitalisation expenses due to your critical illness can help you avoid huge financial burdens such as taking up quick loans with costly repayments to pay off your critical illness medical bills.
Given so many different types of critical illness plans out there, how do you know if a particular insurer’s critical illness plan is comprehensive enough? This is when you’ll need to do a little bit of homework to read up on Life Insurance Association Singapore (LIA)'s list of appropriately considered critical illnesses and compare an insurer’s plans with LIA’s list.
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The 37 Severe Stage Critical Illnesses
The LIA Critical Illness Framework includes definitions of 37 severe stage critical illnesses which are standardised across the insurance industry. Do note that there were changes to the Critical Illness Framework in 2019, but only some of them including 21 severe stage critical illnesses standard definitions and names of 14 critical illnesses have been changed.
Type of Critical Illness
- Heart Attack of Specified Severity
- Stroke with Permanent Neurological Deficit
- Coronary Artery By-pass Surgery
- End Stage Kidney Failure
- Irreversible Aplastic Anaemia
- End Stage Lung Disease
- End Stage Liver Disease
- Coma
- Deafness (Irreversible Loss of Hearing)
- Open Chest Heart Valve Surgery
- Irreversible Loss of Speech
- Major Burns
- Major Organ
- Bone Marrow Transplantation
- Multiple Sclerosis
- Muscular Dystrophy
- Idiopathic Parkinson’s Disease
- Open Chest Surgery to Aorta
- Alzheimer's Disease / Severe Dementia
- Fulminant Hepatitis
- Motor Neurone Disease
- Primary Pulmonary Hypertension
- HIV Due to Blood Transfusion and Occupationally Acquired HIV
- Benign Brain Tumour
- Severe Encephalitis
- Severe Bacterial Meningitis
- Angioplasty & Other Invasive Treatment for Coronary Artery
- Blindness (Irreversible Lost of Sight)
- Major Head Trauma
- Paralysis (Irreversible Loss of Use of Limbs)
- Terminal Illness
- Progressive Scleroderma
- Persistent Vegetative State (Apallic Syndrome)
- Systemic Lupus Erythematosus with Lupus Nephritis
- Other Serious Coronary Artery Disease
- Poliomyelitis
- Loss of Independent Existence
How Does A Critical Illness Insurance Plan Work?
Coverage
Most critical illness insurance covers you for any late-stage illness diagnoses, but there are also many plans that offer payouts at early and/or intermediate stages, so that’s a good thing. However, these insurance plans will cost more as they cover for earlier illness diagnoses.
As the name suggests, early-stage critical illness plans give you a lump sum payout when you are diagnosed at an early stage of a critical illness. Early critical illness coverage is only good to have if you can afford it and can manage to set aside some budget for it in the long term.
Payout assured (upon illness diagnosis)
In the event you get diagnosed with one of the illnesses on LIA’s Critical Illness Framework list and in your critical illness insurance plan, you’ll usually receive a lump sum of cash. This lump sum payout amount is also known as the “sum assured”, which you can select. Let’s use an example to illustrate the basic mechanism of a typical critical illness plan. If you have a sum assured of $300,000, and heart attack is one of the conditions for which your plan offers full coverage for, you’ll be entitled to a lump sum payout of $300,000.
Certain plans have more complex payout terms in various situations such as a multi-pay feature and lets you make more than one claim with the opportunity to receive more than 100% of your sum assured. So these plans have more extensive coverage that goes beyond the basic mechanism.
Riders
At times, critical illness insurance coverage come as a rider to term or whole life insurance plans and they serve to extend your term or whole life insurance protection by letting you receive your life policy’s sum assured (previously only payable if you die or become totally and permanently disabled) in the event that you get diagnosed with a covered critical illness.
The good thing about these critical illness riders is that they are often cheaper than standalone critical illness plans. The downside of it is that once you get that payout, your policy may no longer cover death or permanent disability.
Things To Consider Before Buying A Critical Illness Insurance Plan
There are a couple of things to keep in mind when it comes to choosing a critical illness plan that suits you or your loved ones and these include the extent of coverage for specific types of critical illnesses, the amount of payout, the period of coverage, etc.
Early, intermediate or late-stage diagnosis coverage
If you have a family history of any form of critical illnesses or other medical conditions which may increase the chances of you getting certain critical illnesses in the future, it’ll make more economic sense to get those early and intermediate diagnosis coverage plans, if not, there’s no need to spend that extra money.
Single or multiple-payout options
Period of coverage
For example, a 45-year-old can expect to pay roughly 2 to 3 times more than a 35-year-old. For life insurance plans with a critical illness rider component, the coverage and premium structure will differ from standalone critical illness insurance plans, because premiums for life insurance plans with critical illness riders might be payable for a limited period only or for life.
No. of critical illness to be covered
Those with a family history of certain types of critical illnesses may want to go for a plan that provides multiple payouts from early to late stage, since some forms of critical illnesses like cancer have the tendency to recur.
Amount of sum assured
To work out a figure that is more suitable to your own circumstances, you may calculate it by multiplying your annual salary by 3.9. However, given the current inflation worldwide and other related factors, the estimated coverage figure may not be enough for certain people.
Best Critical Illness Insurance Plans In Singapore 2023
Advantages And Disadvantages Of Critical Illness Plan vs Critical Illness Rider
Be it an extensive coverage for over 100 conditions or insurance for only the “Big 3” critical illnesses, there are pros and cons to every critical illness plan or critical illness rider add-on feature. Here’s a quick overview of how a critical illness plan compares to a rider add-on.
Frequently Asked Questions
What is 100% sum assured?
- It is a feature of a critical illness plan with the protection value of 100% of the coverage amount guaranteed to you in your plan. Some plans offer protection values of 100%, 200%, 300%, 400% or 500% of the sum assured in the event of the diagnosis of a critical illness, which means you’ll get twice the coverage amount for 200% sum assured, thrice the coverage amount for 300% sum assured, vice versa.
Is a multiple-payout critical illness plan more expensive?
- Yes, multiple-payout plans tend to be more costly than single-payout plans as they allow you to make multiple claims if you suffer from a relapse or recurrence of an illness like for instance early stage cancer. So later on in your life if you happen to suffer from a relapse, you’ll likely be able to make 2 claims in total.
Should I get a standalone critical illness plan or a critical illness rider add-on?
Yes and no. It really depends on what your needs are and how much you can afford to pay for your premiums. Standalone critical illness plans are more expensive than rider add-ons as the coverage is more extensive with more flexibility given in terms of payout options. Rider add-ons are usually more basic, covering just a few major and common critical illnesses and the related conditions.
Those with a family history of certain types of critical illnesses may want to go for a standalone plan that provides multiple payouts from early to late stage, since some forms of critical illnesses like cancer have the tendency to recur.
Are there waivers for premiums of critical illness plans?
- Yes, there are optional riders available for many critical illness insurance plans, which you can opt to add on to your base plan so that in the event of critical illness or other conditions, the future premiums of your policy will be waived.
How do I know if my critical illness plan or rider has a limited pay period?
- You may check with your insurer or read the terms and conditions of your critical illness plan or rider policy. It should state that your plan includes a limited pay period which means you’ll only have to pay premiums for a limited number of years in exchange for a longer or lifetime’s coverage.
What will happen if I surrender my critical illness policy earlier than the end term?
- Most critical illness insurance policies do not have any cash surrender value as they are often not a savings or investment product. However, some insurance companies do provide a cancellation period (about a few weeks) from your policy start date, which you can find out from your insurer or read the terms and conditions of your critical illness plan or rider policy. If you cancel within this timeframe, you may get a refund of any premiums you've paid.