Having financial safeguard when critical illness strikes
When was the last time you reviewed your health insurance policies? Health insurance is an important component of one’s protection needs, designed as a means of financial support in the event of health complications or death.
In Singapore, there are a myriad of health insurance options to be considered, such as integrated shield plans, hospitalisation cash insurance and personal accident policies. However, this health insurance policy is one which many people may neglect or see as optional: Critical Illness insurance, otherwise known as a CI plan. Is it necessary or just an extra monthly cost?
Generally, critical illness insurance pays out a lump sum in the event that the policyholder is diagnosed with one of the critical illnesses covered by the policy. Some examples include cancer, kidney failure and Parkinson’s disease. Benefits will be paid only if the policyholder suffers from a condition that meets the exact definition. In the case that the policyholder is lucky enough to not suffer any of these stated illnesses during the coverage duration, no payout will be expected.
One major issue that consumers may face with standard CI plans is the strict definition of critical illness. For instance, one might only be able to claim a payout upon late stage cancer diagnosis.
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The rise of early Critical Illness Plans
However, advancement in healthcare gave rise to higher early detection rates. The ability to detect their critical illness diagnosis in its early stage allows people to seek out medical help early, thus increasing recovery and survival rates. With the changing critical illness protection needs, insurers are responding to that with innovative products that speak more to such evolving needs that covers early stage critical illnesses.
For example, a person suffering from early stage cancer would be able to have some financial protection if he took up an early stage critical illness plan. Since there is a higher chance of recovery if detection and treatment are done early, having a lump sum payout not only helps with some of the costs of treatment, it also alleviates the stress of losing income during the recovery period. A CI plan may act as a form of income replacement – the payout can see one through this difficult period while not draining all his hard-earned savings.
More importantly, the key benefit of having an early critical illness plan is to receive financial support, in the form of a payout, upon diagnosis to help one cope with the living expenses and lost income due to the illness. In Singapore, some of the leading critical illnesses include cancer, heart attack and stroke 1. However, taking a closer look at the statistics of these illnesses, survival rates for these 3 critical illnesses in Singapore have greatly improved over the years.
In 1973 to 1977, 13.2% of men and 28% of women survive a cancer diagnosis by at least 5 years.
In 2008 to 2012, 48.5% of men and 57.1% of women survive a cancer diagnosis by at least 5 years.
In 2007, 6 in 12 people who suffered a heart attack died from the attack.
In 2016, only 1 in 12 people who suffered a heart attack died from the attack.
10% of stroke victims die from the attack.
10% of stroke victims recover almost completely.
80% suffer from minor to severe impairments.
This highlights the importance of having sufficient financial muscle to get a person through the recovery process, and getting life back to normal after surviving a critical illness.
With higher survival rates of these critical illnesses, should one still leave critical illness protection to chance?
Purchasing a CI Plan: What to look out for?
To ensure that you get a comprehensive CI coverage, here are some features you should look out for when selecting a CI policy:
1. A policy that covers a broad range of illnesses
The Life Insurance Association Singapore (LIA) has published a list of standard definitions for the severe stage of 37 Critical Illnesses5. The list includes only diseases in their severe stage. Since there is now a higher chance of recovery from CI with the advancement in medicine, you might want to look for a CI Plan that covers more than just the illnesses listed here. Simply put, a wider coverage equals better coverage.
Manulife is currently one of the insurers in Singapore that covers the widest range of CI conditions in the market. Ready CompleteCare, a CI policy offered by Manulife, covers up to 106 medical conditions and 18 other special conditions such as Diabetic complications, Mastectomy and Osteoporosis with fractures.
2. Coverage for different stages of an illness - from early to advanced stage
Having a CI plan that only covers severe stages of CI may mean the lump sum payout can merely see one through the last of his or her surviving years. But what if the CI is detected in the earlier stages? A policy that covers early stages of CI means that you will be able to use the lump sum payout to subsidise the financial costs of medical treatment, as well as make up for lost income during the recovery period. The latter could help to maintain the quality of life you have before the illness or finance extra care, if required, during the recovery period.
For example, breast cancer is the most common form of cancer detected in female Singaporeans. However, a report6 from the National Registry of Diseases Office found that with the improvements in treatment procedures, there is a significant increase in the survival rate of breast cancer patients from the period 2011-2015 as compared to 2006-2010.
Therefore, having the right critical illness plan that covers early to advanced stage CIs in place would help to ease the financial burden right from the treatment procedures and recovery period.
3. Continued coverage even after a claim
As one recovers from a critical illness, there is always a chance of relapse or the diagnosis of a different critical illness. Therefore, it is crucial to find a CI plan that can provide continued coverage even after a claim.
Here’s where Manulife’s Ready CompleteCare can help. With the “cover me again” option, you can be assured that your coverage will be restarted to 100% of basic coverage after a 12-month claim-free period from the last CI.
Let’s imagine Jenn, who decided to purchase a $100,000 Ready CompleteCare (cover me again) plan. At the age of 45, she was diagnosed with Early Stage Breast Cancer. In this case, she would receive a total claim of $100,000 from her plan. While there are many critical illness plans that would terminate after the lump sum claim, Jenn’s policy would continue to be in force after this claim. This is extremely beneficial for people who have survived cancer, as many of them would find it challenging to take up new critical illness policies given their medical history.
What happens if Jenn suffers from a stroke many years later? In this case, with the “cover me again” option, Jenn would be able to claim an additional $100,000 from her Ready CompleteCare plan.
It is important for a good CI plan to help one maintain their quality of life when a critical illness strikes. During the recovery period and undergoing medical treatment, a quality CI policy can provide coverage from hefty medical fees and also allows the policyholder to maintain their quality of life despite lost income.
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