4 Things You Need to Know When Evaluating on Critical Illness Coverage Needs
According to the Life Insurance Association of Singapore (LIA), economically-active Singaporeans and Permanent Residents (PRs) have a critical illness protection gap of 80% and mortality protection gap of 23%1.
This demonstrates that critical illness protection needs may be neglected by a substantial number of people in Singapore. While critical illness plans are not new in the market, there may be a few reasons why they may be more overlooked than life protection.
Before you get your critical illness insurance coverage, you need to know these 4 things first.
1. What is covered under your critical illness insurance?
Critical illness coverage can be more complex than life insurance coverage. For critical illness coverage, different insurers may offer varying levels of coverage, based on number of critical illnesses, types of critical illnesses and/or stages of critical illnesses covered – whether early, intermediate or major stage critical illness. Another factor that may prevent people from trying to learn more about critical illness insurance is the medical jargon that are commonly used to describe coverage levels.
Rather than avoid the topic, you can spend more time and effort trying to learn more about critical illness plans and which provides the most suitable coverage for your needs.
2. How long does your critical illness insurance provide coverage?
Each of us will have our unique critical illness insurance needs and wants. While there are critical illness insurance plans that offer an option to extend our coverage up till age 100, there are also plans with shorter coverage tenures.
In general, longer-term critical illness coverage can become increasingly valuable on the back of increasing retirement age and life expectancy in Singapore. Even in the scenario you retire or do not have any dependents, you may continue to need a critical illness payout to sustain your current lifestyle, or to hire help to care for yourself. With rising life expectancy, you may also have elderly dependents to care for even after you stop working in the future.
3. How much critical illness insurance coverage do you need?
When deciding how much you need to be covered for, you can refer to the LIA for its benchmark 5-year recovery period for critical illnesses1
While you are recovering from a critical illness, the last thing you want to stress about is going to be how to afford your current lifestyle. At the same time, you may have to continue paying for your home loans, electricity and water bills, mobile and internet bills, children’s allowance and others.
While you may be able to tap on your savings to pay for these expenses, it may put your family’s financial future at greater risk, especially in the worst case scenario where you don’t recover and cannot replenish those savings.
Critical illness plans can help to support your daily expenses or your expenses for medical treatment.
This is because in addition to your current expenses, you may also incur additional expenses from getting the treatments that you want and potentially needing to hire help around the house or to provide care for you.
4. What is the cost of critical illness insurance?
Having a comprehensive critical illness plan can be valuable, but it also costs money. We need to consider the affordability of the plan, while striking a balance between other important expenses, such as our daily living expenses, investing for our retirement and saving for our children’s education.
Speak to your Insurance Specialist or Relationship Manager to explore insurance options.
LIA 2017 Protection Gap Study.
Source: AIA Singapore Private Limited
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