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Your Guide to Critical Illness Cover

When critical illness strikes or when a breadwinne r dies, financial trauma can soon follow in the form of high medical bills or the loss of income.

The 2017 Protection Gap Study published by Life Insurance Association (LIA) Singa pore in 2018 points out that Singaporeans & PRs lack 80% of Critical Illness protection needs.

This means In times of critical illness, economically active Singaporeans and permanent residents are only covered for a year of their expenses – or 20 per cent of what is needed should they be out of the workforce for five years.

I Already Have A Hospitalisation Plan!

Critical illness cover is different from a hospitalisation plan.

A critical illness policy pays a lump sum on diagnosis of a covered illness. It is not dependent on admission to hospital or medical expenses.

Even though H&S insurance covers most of your hospital bills, the road to recovery may take up to 5 years, during which you may not able to work while there are still bills to pay, dependents to support, and additional non-reimbursable medical costs to pay.

Critical illness insurance policies provide coverage for major illnesses, including cancer, heart attack and stroke. They ensure critically ill adults will be able to cover future household expenses, loans and the needs of their children or elderly parents, among other things.

By incorporating Critical Illness into your health insurance plan, you are able to mainta in your family’s lifestyle while you recover!

How Much Critical Illness Cover Do I Need?

The amount you need is dependent on your monthly living expenses. As a rule of thumb, experts recommend covering a minimum of 60 months, as this is roughly the amount of time the average person would need to recuperate from a major illness. The types of illness and treatment matter too. Some illnesses, like cardiovascular diseases and cancer and their treatment option involved, may require longer recovery periods.

The first step, and it is a critical one, is to identify protection gaps - the shortfall in the amount of cover needed to maintain living standards of dependents.

The 2017 LIA Protection Gap study reveals that on average, the Protection Needs is about S$ 300K per economically active adult.

image credit: 2017 LIA protection gap study

Use the Major Illness Coverage Calculator, to find out how much coverage you need.

What Are the Types of Critical Illness Plan?

Whichever the insurer, there are a few types of critical illness plans to consider: 

Basic plans

provide coverage only during more severe stages of illness (Late Stage)

Early-stage plans

allow policyholders to claim payouts regardless of the stage of the illness (Early, Intermediate or Late Stage) e.g.

PRUearly Stage Crisis Cover

PRUtriple Protect with Early Protector Rider

Single-payouts plans

provide a lump-sum payment upon diagnosis — but the policy ends right there and then. e.g. PRUlife Multiplier Flex

Multi-payout plans

In contrast, multi-pay plans provide multiple payouts upon diagnosis, a feature that is especially crucial as once a person is diagnosed with CI, they won't be able to buy anymore CI plan while they may be diagnosed with other CI, for example, heart-attack, then stroke, then cancer. e.g. PRUtriple Protect

Special conditions plans

a unique health plan that is specially tailored to focus on certain coverage, e.g.:

PRUlady, cover illnesses and medical procedures which afflict women and come with a free medical checkup every two years

PRUman, the similar version with PRUlady but for men

PRUvital Cover, a unique plan that provides coverage even with these existing medical conditions:

Type 2 Diabetes

High blood pressure

High cholesterol

High BMI

What Are the Considerations When Buying Critical Illness Insurance

Does your family have a history?

For example, if there is a high incidence of cancer in your family, you might want to look into a multi-pay plan.

Does the plan stipulate a Waiting and/or Survival period?

Most critical illness plans come with Waiting and/or Survival periods.

As the name suggests, a Waiting Period means that the benefits will only come into effect after a certain period of time has passed since your diagnosis.

Similarly, a plan with a Survival Period may only pay your claim if you can survive a period of 7, 14 or 30 days after being diagnosed (depending on the terms of the plan).

In general, the shorter the waiting period and/or survival period, the better.

Know What You Are Covered For

While most critical illness plans in Singapore would cover the majority of the common illnesses (per Life Insurance Association's standard), it’s recommended that you understand the coverage that you are getting, before buying any plans.

And if you have old CI plans prior to 2015, you may be missing out on some important CI covers as LIA revised th e standard definitions for the severe stage of common Critical Illnesses in Aug 2014.

Besides knowing what are the illnesses you are covered for, you should also know that there are different stages (early, intermediate and late stage) that the illness can be classified under when it’s diagnosed.

Many traditional critical illness plans only cover you at the late stage of an illness. For example, if a person is diagnosed with early-stage cancer, a traditional plan may not pay out the sum assured, until it reaches a late stage. By then, recovery is usually a lot more challenging.

Special Benefits

Some plans come with special benefits, such as

Free health check-up,

Policy conversion without proof of good health,

Premium Waiver

Maternity Cover 

Additional medical conditions or medical procedures coverage

Speak with me to find out more about your protection needs, and gaps for Critical Illness soon!

Pau Cen - Financial Advisor - (65)9783.4915 

 www.prudential.com.sg/FC-info -