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Getting covered for critical illnesses.

Tuesday, November 18, 2014

The following is an email from a regular reader, Tree:

Hi AK,

Let me talk to myself a bit too. :)

To start with, I think it is important for readers to understand what CI coverage is for... it is actually term insurance coverage for the 30 illness, which are likely to lead to either death or TPD of some form.

A lot of people have signed up for CI coverage only to find out years later that they are not covered when they contract one of the 30 critical illnesses (mainly due to the clause, for example cancer, only end-stage [stage 4] is eligible for claim). That is where early CI coverage came in. Even then, the requirement for early CI is still quite stringent.

Understand that the coverage is very very narrowly defined within the illnesses (read: very very seriously ill).

It is thus very very important all readers, for this insurance, to go over the details of the coverage so that you do not become disillusioned, furious, shocked, dismayed, disappointed, upset etc. with the actual coverage.

So CI coverage, like term insurance, is for your family. It is to help your family cope with the bills caused by the illness if it occurs, but only the very seriously ill version.

Since you have a family and you are bread winner (I assume), you ought to get the CI coverage for your family if your family cannot cope with the bills if you *choy choy choy*.

If your family can cope with ease, it is optional.

Same reasoning with early CI.

Please note that with the coming implementation of Medishield life, there will be better coverage overall for hospitalisation and as such, the need for CI coverage decreases.

Related post: SAF Group Insurance and CI coverage.


Melvir S said...

Guys.. What's the advantage of CI over h&s other than the ability of the former to cover for loss of income?

I believe a proper h&s with complete riders cover both operation costs as well as per and post timelines.

AK71 said...

From my FB wall:

Brendan Yong Weng Chun:
"I recommend 3-5 years total annual expenses (income is u can afford) for CI. Reason: if CI strikes, major costs for hospital will be borne by your integrated shield plan plus riders. The CI payout buys time for 3-5 year "break" from work so you can be stress free, hopefully get well enough to go back to work. Maybe pay for some incidentals: supplements, medical devices, experimental drugs .. Early CI in my view generally not necessary, just a good to have."

9 Feb 15

Ray said...

Does anyone know if chemotherapy is covered by H&S with rider?
IF not, such an expensive and long term treatment may require the CI insurance to help cover the expenses right?
But if the cancer is early (stage 1 to 3) perhaps the CI does not even cover?
Appreciate some enlightenment here.


AK71 said...

Hi Ray,

I am very sure that my H&S from NTUC Incomeshield covers chemotherapy.:)

However, I also have CI coverage from AXA. I feel that it is important to have CI coverage because a critical illness could put us out of action for quite a while and the money will come in handy especially if our emergency fund runs out in the meantime.

I have asked a friend who is quite the expert on CI coverage to leave a comment here for us if he has some time later. I got my CI policy with his advice too. :)

Jared Low said...

Hi Ray,

I supposed your 'H&S with rider' refers to an integrated shield plan with its rider to provide coverage from the 1st dollar. You are pleased to know that an integrated shield plan covers the cost incurred from chemotherapy. You may wish to find out the coverage limits with your insurer.

An integrated shield plan covers only medical cost, but a Critical Illness (CI) plan/benefit provides lump sum to you so you can continue living without comprising your lifestyle while focusing on recovery. A healthy guideline is to have 3-5 times of your annual income. You may speak with you adviser to calculate your shortfall.

There are basically 2 classes of critical illness coverage:

1) The 37 common and standardized critical illness - where it covers the more severe stages of a critical illness. i.e. cancer at severe stages refers to the cancer cells is active, uncontrolled and spreads to other parts of the tissue.

2) In addition to point 1, Early stage critical illness coverage also covers the early stage of the critical illnesses. i.e carcinoma-situ on the breast, lung, liver, prostate and etc, or requires mastectomy, prostatectomy, gastrectomy. Please refer to insurer for the full listing.

If you like to explore further, you can drop me a message and I will get in touch with you.

AK71 said...

Hi Jared,

Thanks for taking the time to comment. You took a while to respond and, for a while, I thought you might not be doing it. I am sure your comment has helped to clarify stuff for Ray. :)

Ray said...

Thanks Jared and AK!

I can understand the "out of action for a while" but 3 to 5 years of annual income?
5 years of recuperation seems rather long.
If someone is expected to recover sufficiently to work again, I would think 2 years is enough?

Thanks alot for sharing all your insights.

Jared Low said...

Hi Ray,

3 - 5 years of annual income is a general guideline when securing critical illness protection. It is simple, straightforward, and assumes the worst case scenario. If your cash flow is healthy with low liabilities, 2 years of income maybe sufficient as well. Perhaps you can work out your cash flow and budgeting and find out how many years you can sustain with your 2 years of annual income? Then you can have a much better understanding and reassurance.

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