CRITICAL ILLNESS INSURANCE: A QUICK GUIDE

Critical illness (CI) cover and its complex medical definitions can be confusing, never mind that the conditions and their exact nature are clearly listed in the policy. But then, how many people really understand the meaning of “carcinoma in situ” or “non-invasive cancer”? Most people simply take it that as long as they have bought CI insurance, they will receive cash if stricken with cancer. That wrong assumption can, obviously, cause unnecessary distress. Read on to better understand the role of CI policies in healthcare-insurance planning.

FINDINGS: AIA HEALTH MATTERS SURVEY

In March this year, the AIA Health Matters survey, pulling together responses from 508 Singaporeans, aged between 40 and 70 years, uncovered alarming findings:

35%

1 in 3 believes they will need to downgrade their standard of living should they be afflicted with a critical illness in the future.

30%

1 in 3 does not have CI cover. Of those who do, almost half bought it more than 10 years ago.

BETWEEN THOSE AGED 60 TO 70 YEARS

 56% 1 in 2 does not own a CI plan

OF THIS 56%: 
49% will have to rely on personal savings to pay for healthcare expenses

52% will have to rely on their salary to pay for healthcare expenses

HOW DO I BUY CI INSURANCE?

Here are six things to know about CI insurance before you sign up with an insurer:

1, What CI insurance covers

All insurers will have a detailed guide to the illnesses and conditions covered. Ask to see this, as well as the document setting out the policy's key features, benefits and exclusions. In Singapore, the list of CI definitions is standardised, and can be found on the Life Insurance Association website.

Your financial services consultant should explain the CI list as well as the terms and conditions clearly, and how the conditions have to be of a specified degree of severity before a payout is made.

Ultimately, what you see is what you get: Just remember, if the condition is not listed, it’s not covered. For each condition, ask as much as you need about the different severity scenarios to qualify for a payout. This is no time to be shy or embarrassed, it is your health at stake. Besides, insurers are more than happy to answer your queries – they too, would like customers to take up a policy with eyes wide open.

2, What CI insurance does not cover

Just as you need to know what the policy covers, it is essentially crucial to know what is not covered.

For instance, a CI plan does not cover any CI acquired due to Human Immune-deficiency Virus infection, or if the CI arises from a genetic disorder.

3. CI insurance payout methods

In the past, CI payouts were paid in a single lump sum, as soon as the individual was diagnosed with a covered condition.

However, these days, some insurers actually make multiple cash payments. For instance, if you contract cancer and you survive, you get one payment. Five years later, you get a heart attack. The insurer makes another payment.

New-generation CI insurance also incorporates "severity-based" cover, or early-pay cover. This is where plans pay out a part of the sum assured – depending on the level of severity of the diagnosis. Coverage is continued for the more serious conditions.

Do check what a partial payment will do to your cover. In general, details vary from insurer to insurer. For instance, AIA’s Prime Critical Cover offers early payouts for seven special conditions, and the payout for the remaining covered conditions is made in a lump sum upon diagnosis.

4. Confusion between CI cover and other plans

CI cover and life cover – these are two completely separate types of policies.

Just remember: CI insurance pays out when you survive, while life cover pays out upon death.

For CI policies in Singapore, all insurers require a survival period, ie, the policy holder must survive for a certain number of days, before making a claim. What varies is the duration. Most companies set it at 30 days but AIA has it at seven days for its Prime Critical Cover policy.

What about CI and hospital and surgical (H&S) plans? CI plans are a form of health insurance but they by no means replace H&S plans. One of the major differences is that H&S plans pay for in-patient treatment.

5. Switching CI policies

If you already have CI coverage, avoid switching to other policies as it is usually not worth it. But if you really have to, do not cancel an existing policy until a new one is in place.

Once you take out a critical illness policy, it is not usually worth making any changes to it and you have to be very careful when switching critical illness policies. But if you do, it is crucial you never cancel an existing policy until a new one is in place."

6. CI cash payouts are handy

You may think that you don’t need a CI insurance plan but its cash payments can come in useful if you don’t have much savings to tide you over a serious illness and/or if your employee benefits package is not adequate to cover time off work.

Think of it this way: The cash can be used to defray living expenses during recuperation, to pay ancilliary medical costs, post-hospitalisation medical requirements not within the H&S plan purview, and/or replace a family member’s income if time off is taken during work to care for the policy holder.

THE LATEST CI PLAN IN SINGAPORE, SPECIALLY FOR OLDER ADULTS

AIA's Prime Critical Cover is the latest CI plan to dive into the health insurance market. Before you write it off as yet another CI plan amid the already mind-boggling selection, here are its differentiating features from the rest of the crowd:

#1 Typical cover till 85 years of age is extended to 100.

#2 Maximum age entry is 70 (last birthday) instead of 65.

#3 Minimal medical examinations for those aged 40 to 70 years who are healthy or diagnosed with hypertension, high cholesterol, obesity or diabetes.

CLICK HERE TO FIND OUT MORE ABOUT THE AIA PRIME CRITICAL COVER

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