With higher life expectancy, more Singaporeans getting and surviving cancer, more people are understanding the need for critical illness insurance

In 2017, the Life Insurance Association (LIA) of Singapore shared that 80% of Singaporeans lacked critical illness insurance to protect themselves and their families in the event of a critical illness. Before getting a critical illness plan, here are several tools to helping you choose the right coverage for yourself.

1. Income replacement during period of recovery

3 in 4 of those diagnosed with critical illness stop working fully or partially and according to AIA Health Matters Survey in 2016, treatment and recovery of critical illness takes an average of 3.5 years. 

During this period, time needs to be taken off work to allow you to recover worry free while expenses still have to be paid for:

  • Household bills
  • School fees
  • Mortgage loan
  • Car instalments
  • Daily living expenses
  • Supporting dependants

At this point, many would consider using hard-earned savings or liquidating investments for daily expenses during recovery. This erodes emergency funds or steers us away from the intended purposes we were saving up for. Possibly incur huge losses if the investments are underperforming when forced to withdraw them.

With children / retired parents relying on your income, they continue to require financial support despite your loss of income. It is necessary to calculate the amount of money your dependants require in the event that you no longer earn an income for 3-4 years.

This minimises the impact on their lifestyles following a critical illness diagnosis.

2. Types of Critical Illness Plans (Early, Intermediate, Severe Stages)

From observation, should a new client’s last financial review come before 2016, coverage for early stage critical illness is typically not in his portfolio. If you are unsure about your current CI coverage, contact your adviser or reach out to me here.

[early, intermediate, severe diagram]

Traditional CI plans and riders only pay-out in the later stages of an illness. They do not serve as an income replacement during the early stages of an illness.

With the advancement of medical technology in recent years, diagnosis of critical illness is no longer a death sentence. Professional medical treatment and rehabilitation has helped many recover from critical illnesses successfully and continue to live their best lives. 

Also read: The importance of critical illness coverage

3. List of Critical Illness covered

Critical Illness insurance provides a lump sum pay-out in the event that a critical illness is diagnosed or surgery covered in the critical illness table is undergone. Many are not aware of the exact definitions of the critical illnesses covered under the plan they have purchased.

Not every insurer covers the same number of conditions which pay out upon the diagnosis of Critical illness. For instance, Great Eastern Critical Care Advantage covers 85 conditions while AIA’s Triple Critical Cover covers 104 conditions. It would be useful to understand the exact conditions you wish to be insured for, lest a situation where you do not get paid out for a conditions you assume was insured under your CI plan.

4. Cost of Insurance Premiums

If the cost of premium was not a big issue, we would all be comprehensively covered with the highest coverage.

But let’s be practical, we all face the stresses of the real world where we balance daily expenses with our future plans (education and retirement) and our ability to spend on insurance. 

Here at Millennials Finance, we believe that even the most basic early CI protection goes a long way to helping a person and his family in the recovery process of critical illness (should there unfortunately be any).

Should you, like many others have seen the importance of Critical Illness insurance and want to include it in your portfolio affordably, consider the following:

Annualised premiums: It is cheaper to pay for your premiums annually instead of monthly

Quit smoking: Quitting smoking helps you to reduce premiums as much as 50%

Join insurer’s wellness programmes: AIA Vitality Programme which encourages you to live actively and healthily rewards you with insurance premium discounts up to 15%

We hope this article sheds some light on choosing the right critical illness insurance. Millennial Finance’s process begins with reviewing your financial circumstances, concerns and goals before recommending a suitable plan for you. Contact us today to schedule an appointment. 

Something about this article that was not clear or do you have a question pertaining to critical illness insurance? Let us know below or drop us a message.

References:

https://www.straitstimes.com/singapore/aia-survey-uncovers-3-gaps-in-critical-illness-coverage-here

https://www.lia.org.sg/media/1527/lia_pgs_2017_key_findings_180426.pdf

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