Orlando Harmon
Critical illness insurance is an important supplement to your insurance portfolio in Singapore. It provides a financial safety net in the form of a lump-sum payout upon diagnosis of a severe illness, helping to cover medical costs and lost income during recovery. With only a third of Singaporeans having critical illness coverage, many are vulnerable to huge medical bills and lost earnings during unexpected illnesses. Critical illness insurance policies vary widely, from comprehensive coverage for over 100 conditions to more affordable plans covering only the Big 3 critical illnesses: cancer, heart attack, and stroke. The recommended critical illness coverage is about $256,000 to $316,000 for an average Singaporean, with various customizable policy terms and premium options available.
| Characteristics | Values |
|---|---|
| Purpose | Financial safety net in the event of a critical illness |
| Payout | Lump sum upon diagnosis of a covered illness |
| Coverage | Varies widely, from over 100 conditions to only the "Big 3" critical illnesses: cancer, heart attack, and stroke |
| Cost | Varies, with premiums as low as S$18/month or $0.24/day |
| Policy Term | Customisable, ranging from 10 to 99 years |
| Recommended Coverage | About $316,000 for an average Singaporean, or 3.9 times the average annual pay |
| Protection Gap | Average Singaporean has a critical illness insurance gap of S$256,000 in lost earnings during recovery |
| Types of Policies | Term life, whole life, term cancer, early critical illness, multiple payout |
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What You'll Learn
Lump-sum payout upon diagnosis
Critical illness insurance is a supplement to your healthcare coverage in Singapore. It provides a financial safety net in the form of a lump-sum payout upon diagnosis of a severe illness covered by your policy. This payout is intended to help with treatment, daily expenses, or lost income while you focus on recovery.
The LIA Critical Illness Framework defines 37 severe stages of critical illness, and these are consistent across all insurance companies in Singapore. This makes it straightforward for customers to choose the right critical illness plan without the confusion of comparing medical terms. Some policies focus on the three most common critical illnesses: cancer, heart attack, and stroke. More comprehensive plans offer coverage for multiple critical illnesses, including various stages of these conditions.
There are several types of critical illness insurance plans available in Singapore, including:
- Term life with critical illness rider: This plan provides death and total permanent disability coverage by default, and allows customers to add critical illness riders. When the rider is added, the lump sum is paid out if the insured person is diagnosed with a critical illness.
- Term cancer plans: These plans are better for individuals who may not be in optimal health conditions, as they have a simpler health declaration process and may waive the requirement for a medical check-up. Term cancer plans also provide an opportunity for individuals with pre-existing conditions to purchase coverage, which is typically not allowed with most critical illness plans. However, they only cover cancer and exclude other critical illnesses.
- Early critical illness plans: These plans provide payouts at earlier, less severe stages of a critical illness.
- Multiple payout critical illness plans: These plans cover early-stage critical illnesses and are crucial for breadwinners or key contributors to the household, as they help cover any income loss when diagnosed with an illness.
When considering critical illness insurance, it is important to note that the policy term is the length of time that the insurance policy will cover you. In a yearly renewable term policy, the premium amount increases annually based on your age. Thus, it is advisable to opt for policies with longer policy terms to save on premiums in the long run. Additionally, critical illness insurance policies vary widely in terms of coverage, from over 100 conditions at any stage to only the "Big 3" critical illnesses. Those with a family history of certain critical illnesses may want a plan that provides multiple payouts from early to late stages, as some forms of critical illnesses, such as cancer, can recur.
In summary, critical illness insurance in Singapore provides a lump-sum payout upon diagnosis of a covered severe illness. This payout serves as a financial safety net to manage treatment costs, daily expenses, and lost income during recovery. When choosing a plan, it is important to consider the number and types of critical illnesses covered, the stage of illness covered, and the policy term.
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Coverage for multiple illnesses
Critical illness insurance is a supplement to your insurance portfolio, but it is a very important one. Even with comprehensive health insurance, a major illness can hit your finances hard. Critical illness insurance bridges the gap by providing a financial safety net. It gives you a lump-sum payout upon diagnosis of a pre-defined severe illness covered by your policy, regardless of hospitalisation or specific medical costs. This payout can be used to manage treatment, daily expenses, or lost income while you focus on recovery.
Critical illness insurance policies vary widely, from coverage for over 100 conditions at any stage to only the “Big 3” critical illnesses: cancer, heart attack, and stroke. The LIA Critical Illness Framework has defined 37 severe stages of critical illness, and these are consistent across all insurance companies. This makes it straightforward for customers to choose the right critical illness plan without the confusion of comparing medical terms. Some policies focus on these three most common critical illnesses, while more comprehensive plans offer coverage for multiple critical illnesses, including various stages of these conditions. For example, Singlife's plan covers you for 132 conditions across various stages of critical illnesses.
If you are a breadwinner or key contributor to your household, it is important to consider a multiple-payout critical illness plan, as it helps to cover any income loss when diagnosed with an illness. Most of them require you to wait for 12 months after a claim, while a select few do not. Death benefits and payouts differ too. For example, the Tokio Marine MultiCare plan allows you to claim up to 2 times within the 12 months' waiting period and covers 98 different stages of critical illnesses, not including terminal stage illnesses. There are also 10 juvenile conditions covered.
The policy term is the length of time that the insurance policy will cover you. It is important to look out for premiums that might increase when the policy is renewed. For example, in a yearly renewable term policy, the premium amount increases annually based on your age. This is why a policy with a longer term and fixed premiums may end up being more economical in the long run.
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Early-stage critical illness plans
Critical illness insurance is an important supplement to your insurance portfolio in Singapore. It serves as a financial safety net, providing a lump-sum payout upon diagnosis of a severe illness, regardless of hospitalisation or specific medical costs. This payout can be used to manage treatment, daily expenses, or lost income while you focus on recovery.
- Coverage for multiple stages of illness: Some plans offer coverage for various stages of critical illnesses, from early to late-stage. For example, Singlife's plan covers 132 conditions across early, intermediate, and severe stages, providing a total payout of up to 900% of the sum assured.
- Multiple payouts: Certain plans allow for multiple payouts from early to late-stage diagnoses, which is especially relevant for illnesses like cancer that may recur. TM Multicare, for instance, offers multiple payouts for early, intermediate, and advanced stages of CI, with a total payout of up to 900% of the sum assured.
- Family history: If you have a family history of critical illnesses, consider a standalone plan with early-stage and multiple-payout benefits. This type of plan may be more suitable and provide peace of mind in case of recurring illnesses.
- Premium waiver riders: Many insurers offer premium waiver riders, which suspend future premium payments upon diagnosis of a critical illness or total and permanent disability.
- Limited pay period: Some plans offer a limited pay period, meaning you only pay premiums for a fixed number of years but remain covered for a longer term or even life.
- Complimentary child cover: If you're a parent, look for plans that offer a complimentary Child Cover Benefit, protecting your children against critical illnesses and juvenile conditions.
- Customisable policy term: The policy term for critical illness insurance is typically customisable, ranging from 10 to 99 years.
- Affordability: Early-stage and multi-stage CI plans generally come with higher premiums due to their broader scope. However, there are still affordable options available, such as FWD's Big 3 Critical Illness plan, which offers coverage for the top 3 critical illnesses with premiums as low as S$18/month.
In conclusion, early-stage critical illness plans provide valuable financial support and flexibility before a condition becomes severe or debilitating. They are worth considering as a supplement to your insurance portfolio, especially if you have a family history of critical illnesses or want the peace of mind that comes with early-stage coverage.
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Income loss protection
The lump-sum payout from critical illness insurance can help to replace lost income during the recovery period, which can last several years. This is especially important for those with financial commitments, such as mortgages, loans, and dependents. It is recommended to have critical illness coverage of around 3 to 5 years' worth of annual income or expenses.
Some critical illness insurance plans offer multiple payouts, which can be beneficial for illnesses with a high recurrence rate, such as cancer. These plans provide financial peace of mind during recovery, allowing individuals to focus on their health rather than financial concerns.
The recommended critical illness coverage in Singapore is approximately $316,000 for the average person, which is about 3.9 times the average annual salary. However, given factors such as inflation, this amount may not be sufficient for everyone. It is important to consider individual circumstances, such as lifestyle, number of dependents, and financial commitments, when determining the appropriate level of coverage.
Critical illness insurance is a wise choice for income loss protection, especially considering the significant financial impact of a critical illness. It ensures that individuals can maintain financial stability and provide for their dependents during a challenging time.
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Policy term customisation
Critical illness insurance policies in Singapore offer coverage for a set number of years or until the policyholder reaches a specified age, typically 65 or 85. The policy term itself is customisable, with options ranging from 10 to 99 years. It is important to note that the premium amount may increase annually for certain policies, such as yearly renewable term policies, where the premium is based on the policyholder's age. Therefore, it is advisable to consider policies with longer terms to lock in the premium for a more extended period and potentially save on costs in the long run.
When choosing a policy term, it is crucial to assess your needs and circumstances. For example, if you have dependants, term insurance can provide financial protection for them in the event of your death, terminal illness, critical illness, or total and permanent disability. Additionally, some policies offer complimentary Child Cover Benefits, protecting your children against critical illnesses and juvenile conditions.
The length of the policy term can also depend on the type of critical illness plan chosen. Term cancer plans, for instance, may be more suitable for individuals with pre-existing health conditions as they often have a simpler health declaration process and may not require a medical check-up. These plans provide comprehensive coverage for all stages of cancer, including death benefits, but they do not cover other critical illnesses. On the other hand, comprehensive critical illness plans cover multiple critical illnesses, including cancer, heart attack, and stroke, but may exclude early-stage cancer.
When considering the policy term, it is also worth noting that critical illness insurance serves as a supplement to your financial portfolio. It is designed to bridge the gap in coverage by providing a lump-sum payout upon diagnosis of a specified illness, helping to cover lost income and medical expenses. Therefore, selecting an appropriate policy term ensures you have the necessary financial protection during the chosen period.
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Frequently asked questions
Critical illness insurance provides a lump-sum payout upon the diagnosis of a severe illness covered by your policy. This financial safety net can be used to manage treatment, daily expenses, or lost income while focusing on recovery.
Some recommended critical illness insurance plans in Singapore include FWD Big 3, Etiqa 3 Plus Critical Illness, Singlife, and Great Eastern's GREAT Critical Cover.
The recommended critical illness coverage by LIA is around $316,000 for an average Singaporean, which is about 3.9 times the average annual salary. However, due to inflation and other factors, this amount may not be sufficient for everyone. To determine a more personalised figure, you can multiply your annual salary by 3.9.
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