Changes to Critical Illness (2020)

Most of us are familiar with the adage “Health is wealth”.

So what happens when our health fails us? Since health has a correlation to our wealth, surely our wealth also takes a hit when our health deteriorates.

We have to spend a small amount of money at a clinic when we get common illnesses like a pink eye or the flu. Life is unpredictable and even the healthiest among us could fall ill to more major health problems that would cost us an exorbitant amount of money.

If or when that happens, how healthily are we insured to cover the excessive costs?

The definition of what is considered “critical illness” will change and be effective as of August 2020. As such, it is urgent and important that we review our critical illness coverage to ensure that we are really protecting ourselves against hefty medical costs.

Below are the factors to consider:

How Much Is Enough

Critical illness coverage should be like a well-tailored suit that fits us personally. As each of us may encounter different health issues due to our individual lifestyles, diet, and so on, Critical illness coverage is custom-made for each individual.

To customize your coverage plan, consider the types of illnesses you might be susceptible to or already have, and deduce the estimated cost needed for medical treatment.

One area of coverage often overlooked is that while you’re undergoing treatment and subsequently recovering, this could mean a potential temporary loss of income. This might also hamper your capacity to pay the premiums.

The sum assured will depend on the amount you need every month to cover living expenses. A recommendation is covering a minimum of 60 months as this period is about the right duration for a person to recuperate from a critical illness. On top of that, it would be good to add on a lump sum to cater for the treatment and aftercare expenses.

The same method can be used to work out the amount required for early critical illness. The duration to cover expenses may be reduced to six months plus a small lump sum to cover care or treatment that falls outside the scope of hospital and surgical insurance.

What Type Is Suitable

Apart from medical insurance (which you should already have), do you already have the other 3 equally important coverage – for Death, Total Permanent Disability, and Major Critical Illness?

These 3 form the basis of proper insurance planning because they cripple the ability to work.

Being covered for Early Critical Illness does not make sense if you are not covered for those 3 first.

Early Critical Illness coverage is usually seen as an additional benefit.

Here’s an analogy that might help you better visualize the priorities: Basic Critical Illness is the main course of a meal, Early Critical Illness is dessert and Multi-pay Critical Illness is a privilege to refill your plate if needed.

Early Critical Illness cover is "good to have" but not the most important.

The most important insurance to meet early critical illness needs is a comprehensive hospital and surgical insurance like an Integrated Shield Plan.

The financial impact of being diagnosed with an “Early Critical Illness” is very much less severe compared to Death, Total Permanent Disability, and Major Critical Illness. Furthermore, premiums for Early critical illness coverage are rather expensive since such illnesses are presumed to occur more frequently.

Know Your Family’s Medical History

Before buying a critical illness plan, check your family's medical history.

Illnesses like heart diseases and cancer may be hereditary.

If you are aware of relatives or immediate family having certain illnesses, the chance of you inheriting the same or similar illnesses is increased.

Imagine standing in the middle of the road and seeing a truck charging towards you. The driver might or might not decide to slow down as the truck approaches you.

It may or may not hit you…

So, be sure to have a contingency plan for situations that we have no control over.

Multi-pay plans should be considered especially for those getting coverage for cancer since it is an illness that can recur.

Waiting Period

It would be wise to check if plans come with a long waiting period, meaning that some or all the benefits become effective only after a stipulated period has lapsed from when the critical illness was diagnosed. A long waiting period is not to your advantage. Your best source of information is a trusted advisor as they would have the most knowledge on plans.

Survival Period

Coverage plans that come with too rigid limitations or terms and conditions are also not favorable. For example, some critical illness coverage only pays claims if you can survive a period of seven, 14, or 30 days after being diagnosed with the covered illness. Jumping into buying plans without sufficient knowledge of it can blindside you, so be sure to find out all crucial information from your financial advisor.

Coverage Of Conditions And Other Policy Features

While most policies tend to cover major illnesses, not all provide the same coverage.

Do your research to see what is covered under the various plans, and consider which plans - be it in terms of coverage, payout terms or other policy features - would be most relevant to you given your medical history and financial needs.

Besides doing all the research by yourself, allowing your financial advisor to keep you informed and recommend the appropriate plans saves time and effort, making it a breeze for you to make informed decisions on buying coverage plans.

Assess Your Budget And Needs Over Time

Insurance plans are long-term commitments. You should plan your budget carefully and weigh your ability to meet the premium payments over time.

If you're young, the premiums would be cheaper.

If you’re older, the premiums may be more expensive and not justifiable.

The implications of a critical illness could cause your whole world to crumble down – financially, emotionally, and physically.

…not just on yourself, but the people around you (who matter the most).

While there is no wonder cure for the emotional and physical pain that comes with being critically ill, we can at least prevent or mitigate the financial pains.

With critical illness and early critical illness insurance, you can have a greater peace of mind that if a dreaded illness were to occur, you can still be in safe hands.

Remember, being fully informed of what each coverage plan entails is crucial for you to choose wisely which plan to buy. While you can do independent research, the best source of information would be your financial advisor. Arrange for a consultation with me now to find out more.