How Missing Critical Illness Coverage Could Change Your Life
Critical illness has become an increasingly discussed topic amongst Singaporeans, especially considering the upcoming changes that will occur to its definition within insurance policies, effective on August 26, 2020. Last year, the Life Insurance Association (LIA) of Singapore announced this upcoming change, which will take into account the advances in medical treatments and technologies that may impact the treatment, management, and mitigation of critical illnesses. The definitions will be updated to provide greater clarity and consistent coverage across industry to promotes consumer confidence in the critical illness product.(SingSaver 20202).
Critical illness insurance pays the policyholder a certain amount of money when they are diagnosed with a severe illness. This payment can be used to cover healthcare or personal costs that may occur as a direct result of that diagnosis.
Yet although it remains a current topic of discussion, the critical illness insurance remains one of the least prioritized plans purchased each year. These studies showed that the average Singaporean was at risk of facing a 6-digit protection gap, with a critical illness coverage of just $60,000 – covering only an estimated few years’ worth of medical bills (StraitsTimes 20183).
The LIA of Singapore recommend coverage to provide for both the policyholder and their family’s needs during the assumed period of five years to appropriately adjust to the changes that will occur with a critical illness diagnosis, with a recommended protection of 3.9 times the average adult’s annual income. And critical illness coverage has been found to increase the likelihood of survival and recovery from chronic conditions and illnesses!
So, what makes this gap even more worrisome? Even with an existing critical illness plan, Singaporeans would only be covering 20% of their needs, without considering the specific type of critical illness, length or severity, recovery timeline or provisions for family needs. This could potentially cover household expenses and ongoing monthly expenses payments but does not include immediate medical expenses which should be covered by initial health insurance policies (Dollars & Sense 20191).
The average Singaporean spends eight out of 82 years in poor health (Today Singapore 20184) and the incidence of chronic diseases among all ages is increasing each year. The onset of critical illness and the specific timing or severity cannot be avoided, so if you are considering coverage options, there’s no better time than now to protect yourself and your loved ones.
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