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Is early critical illness insurance necessary?

Thursday, August 17, 2017

I have blogged about the importance of having critical illness insurance before and because I get questions from readers now and then on whether early critical illness insurance is essential, I decided I should blog about it.

Please bear in mind that this is just my opinion and some might disagree.

I've started my investing journey and I am quite amazed I've learnt quite a lot ever since I started reading your blog last year. 

I would like to seek your talking to yourself opinion. 

Is it essential to get an early critical illness term insurance? 

The premium is really high.

When we buy insurance to cover ourselves against critical illnesses, it is so that we get paid a lump sum of money if we should be diagnosed with one of the dread illnesses.

The difference between regular and early forms is that the latter will pay the insured once diagnosed with a dread illness even if it should be at an early stage. 

The regular form would only pay if the illness is at an intermediate stage.

I am of the opinion that we need regular critical illness coverage because it could be that we must stop working to undergo treatment. 

We could be too ill to work. 

Critical illness coverage gives us a lump sum payment. 

Now you know why this is necessary. 

We need this in case we have to stop working. 

It provides us with money to continue living our life as if we were still working (for a long while, hopefully) until we get better.

At the early stages of an illness, it is conceivable that we would still be well enough to work and would not have to give up our regular income. 

So, it is my opinion that it is not essential to have early critical illness insurance. 

We don't need it.

Any medical treatment required if we should be diagnosed with a critical illness in the early stage should be covered to a large extent by our H&S insurance. 

Think Medishield Life, for example. 

We don't need early critical illness coverage to pay for our medical treatment.

The early variant of critical illness insurance is also unattractive because it is very pricey. 

How much more does it cost?

For example, 

A 30 year old male might have to pay almost $800 per year for a $200,000 death with regular critical illness benefit till age 65 but he might have to pay more than $2,000 per year if he were to opt for early critical illness benefit.

That is 150% more! 

If it were 10% or 20% more, maybe, but 150% more? 

Mind boggling.

I have blogged about what I feel is the best insurance in life and I feel that the extra money used to pay for early critical illness insurance could be better used towards this project.

If you don't know what I am talking about, see related post #2 at the end of this blog.

Insurance is absolutely necessary against events which we will not be able to recover from easily without financial help.

For all other events, insurance is probably a "nice to have" and not a "must have".

Buy what we know we need and not what sales people want us to think we need.

Related posts:
1. Without CI coverage?
2. Best insurance to have in life.


Spur said...

Hi AK,

My thoughts exactly on early CI .... and the selling point is always about stage 0 or stage 1 cancers cannot claim. BTW, the old CI T&C (before 1994??) do allow for stage 1 cancer claims.

Treatment for early stage cancers is much milder and workwise can be covered by the Employment Act's paid medical & hospitalization leave.

H&S like the various Shield plans is absolutely critical, especially in high-cost S'pore. An appropriate level medical treatment can mostly be covered by relevant Shield plans. Obviously a person can't expect Mt E treatment to be covered by basic Medishield Life but you will still get adequate treatment in C or B2 class. It's a balance between what H&S you can afford (or want to) pay & the kind of treatment you expect.

I previously had colleagues undergoing relatively strong chemo & surgery for stage 2 & 3 cancers, and they could cover using their annual, medical & hospitalization leave, without having to take no-pay leave or quit their jobs. OK different people have different thresholds & responses, but still...

Alternative to CI cover is Disability Income. Good to compare costs & T&C for those interested.

If you have sufficient passive income streams, then insurance such as CI and DI actually may not make sense from an objective view, as they mostly protect you against not being able to continue working for income. OK lah ... some people treat them as (expensive) forced savings for par plans .... and maybe even some secretly hope to strike lucky draw!!

pirate said...

What are your thoughts about CI coverage for beyond 65 years old?

AK71 said...

Hi Spur,

We have the same sentiments and share the rationale for related post #2.

Unfortunately, many people end up paying a lot more for insurance than they really should and in more ways than one too.

The insurance industry is a necessary evil. We must be able to separate the necessary from the evil. ;p

AK71 said...

Hi pirate,

The answer is in related post #1. ;)

cheryl2010 said...

Hi AK, would like to offer a different opinion. While early CI offers payout in early stage in life and not deemed necessary but it is a good option to provide in the event that one is sick and employer retrenches/fires the person esp in this uncertain job environment. Aviva offers NSmen/regulars and their spouses very affordable early CI policy, probably the cheapest in the market. Anyone who is interested can go take a look.

AK71 said...

Hi Cheryl,

If you are buying early CI insurance instead of regular CI insurance because you not only afraid of contracting a dread illness but because you are also afraid of being retrenched, I think you are confused as to what CI insurance is supposed to do.

If you are afraid of being retrenched and losing your earned income (and if you need your earned income), there is another insurance product for that. It is a bad reason to buy early CI insurance instead of the regular version because of this fear.

Buy something that is fit for the purpose.

As for Aviva group insurance, you have to remember that the premium is not guaranteed, the terms can be changed without your consent and coverage can be cancelled at any time. So, it is prudent not to depend solely on group insurance.

tippytim said...

Consider SAF early CI term. f you are eligible. That is one of the cheapest early CI insurance

AK71 said...

Hi tippy,

Definitely no harm getting it since it is much cheaper but like I told Cheryl, we have to be aware of the negatives in group insurance.

Sy said...

hi ak

normally we can get cheaper price from group insurance.
and i am having a term group insurance from ntuc income & critical illness insurance both also group insurance.
i really blur blur & don't understand what u mean by "negatives in group insurance"
i would love to heard u talking to yourself on what is the "negatives" please...

because this is the cheaper insurance i can get, if really group insurance is really not so good. can u please give me some advice which insurance can i get which is cheap for term insurance & CI ... i am not high income earner so i really appreciate your help on this... please talking to yourself...

many many thanks


AK71 said...

Hi sy,

Please refer to the last paragraph of my reply to Cheryl higher up in this comments section. ;)

It would be prudent not to rely solely on group insurance for coverage.

Getting a personal term and CI insurance to complement the group insurance would be prudent, in my opinion. :)

Teo said...


I remembered that you mentioned stand alone CI policy before, the other day I visited AXA, NTUC, Aviva, they only have death + CI, or early CI + CI policies. AXA must add 100k death if I am going for 100k CI.

I have no dependent at the moment, hence no need term life, plus my CPF already has DPS, should be more than enough to bury me (choi!). It will be great if you can name some companies that have stand alone CI policy, thanks!

AK71 said...

Hi Teo,

Unfortunately, they are all bundled now. :(

Fortunately, most of us still need term life insurance.

So, bundling term life with CI is not a bad idea. :)

DesperateFI said...

Hi AK, hope you are well. :) thanks for always sharing your knowledge with us and it has certainly help me plenty in my journey to planning financial independence.

I read somewhere in your comments that you have three $100k CI policies and one $400k term insurance. Can you share why three separate CI policies and not one $300k CI? Is it to spread the risks among different insurers? Or is it because in an event of critical illness, you will just make a claim on one of the three, while keeping the other two in force?

Thanks! :)

AK71 said...


The three CI plans have different lengths of coverage.

One till 55. One till 65. One till 75.

This is to help manage costs and also get the higher coverage we need in our younger years.

We need higher coverage in our younger years because we have probably many more years ahead of us.

A CI plan that covers $300K till 75 would be very costly compared to what I have done. ;)

Unknown said...

Hi AK,

Would like to understand why do you still continue to pay for 3 CI plans when you already have the passive income which covers your expenses.

AK71 said...

Hi BK,

It is for if things were to go horribly wrong.

It is the same reason why I still maintain an emergency fund when some tell me I don't need one anymore.

However, I admit that I tend to overcompensate as I grew up a worrier.


AK71 said...

Siew Mun Kwan says...

Same here AK. I continue to subscribe to Eldershield. I am looking into getting a rider to cover Long Term Care to cover 2 ADLs instead of 3 in Eldership. I dont want to be a burden to my family and see my wealth dwindle by paying forward

WTK said...


I am reaching 40 soon this year. I have a Medishield Life Shield and SAF Group Term Insurance. The monthly premium is less than $50. I do not have any other insurances which includes critical illnesses.

I am of view that the above coverage is good enough as I am comfortable with B2/C wards with Government subsidies.


AK71 said...

Hi Ben,

You currently have coverage on your life (in case you die) which is for your dependents and for H&S (covering your hospitalisation costs).

Without CI coverage, if you must stop working due to a CI, if you have the resources to continue your lifestyle without any help from having insurance, then, OK.

You have to remember that CI coverage is not about whether you are comfortable with B2/C wards.

AK71 said...

Ng Cheekoon says...

SAF group insurance can have CI, TPD n accident component. I'm sure he would have gotten that.

However, at 50 a month, seems to be quite low. AK might be right and he most probably does not have ci etc. Could do review n get those as well.

WTK said...

Hi AK71,

To be specific, I am covered for the following SAF Group related Group Insurance coverage:

1) Term Life - $100,0000
2) Personal Accident - $100,000

I pay about $6 per month for the above coverage.

I pay about $40 per month for the Medishield Life coverage.

That adds up to less than $50 per month which is a peasant's aspect.


AK71 said...

Hi Ben,

Thanks for sharing the specifics.

Do take some time to review your insurance coverage and if you still feel that it is sufficient, then, OK.

AK71 said...

Reader says...
I just graduated this year and a friend who became an insurance agent is helping me with my insurance needs. He is recommending that I get early critical illness coverage. I am asking you for advice on this because it seems to cost a lot.

AK says...
You must be new to my blog as this is something I have blogged about before but thanks to you I have just included the link to this blog in the right side bar for easy reference.
I like that your friend is helping you with your insurance needs but please remind him to stick to needs and not throw in a few wants. So sneaky. ;p

AK71 said...

Winston Wisdom Koh says...
Lucky you are around to educate. If not, so many carrot heads kanna chop by insurance agents 😂

Harvey Huang says...
I Kenna chop before, when I was in army, young and stupid

AK71 said...

Kor Chin Wee says...
Critical illness is expensive, early critical illness is even so. If there is no family history of critical illness, I would think chances are one wouldn't need it.

However, many years ago, a certain lady by the name of Theresa Tan bought 4 policies (I think) as her family has a history of breast cancer, only to find that she couldn't claim anything for anyone of them after her diagnosis. (imagine her frustration)

It's been too long since i read her post (she also wrote a book about it) but don't just take agent's word for it that it covers what you think they do. The contract terms are in black and white:

- terms for claims are specific, amount is also specific.
- find out all the definitions and terms (chances are you wont be able to fully understand the jargons and need to rely on a competent/trustable agent) e.g. carcinoma refers to cancer and there are many types.
- if you don't understand any terms, better not sign on the dotted line
- Medishield upgrade may be more useful, since it still covers hospitalisation.

Anyway, i just talking to myself :P If you don't agree with me can ignore me.

AK71 said...

From my YouTube channel.

Reader asks AK:
Hi Ak, understand from one of yr blog that we shouldn’t buy life insurance for the kids(as they have no dependents). But should we at least buy at term plan to cover death, tpd and CI?

AK says to reader:
I am pretty consistent when it comes to the subject of insurance. For kids, the most important would be medical insurance. Hospitalization & Surgery. So, they should at least have Medishield Life tagged to their parents', I believe. Critical illness coverage for kids? Hmm. If we are super kiasu, maybe.😅 They don't have dependents and don't need death benefits and benefits in case they are temporarily disabled. They don't have earned income to replace. 🙂
Some relevant blogs:



Link to AK's YouTube channel:
Comment in this YouTube video.

Hongjin said...

hi ak

being busy for a while rotating my funds, its me again/ hope you are doing great.

What do you think about the recent changes to hos plans
"From 1 April 2023, all Integrated Shield plans (IPs) will only cover cancer treatments from a government-approved cancer drug list (CDL)."

the thing about this is so frustrating because we tot we may be quite well equipped to handle misfortunes but now it changes again.

AK71 said...

Hi Hongjin,

I think anything that helps to reduce the cost of insurance while ensuring we have adequate coverage is a good thing.

Cancer treatment is still covered.

Excluding expensive non-approved or experimental drugs is not a tragedy. :)

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