While not as necessary as life, hospitalization, or medical insurance, critical illness insurance is regarded as a good idea in Singapore. The next kind of insurance you might want to think about is critical illness insurance if you and your loved ones are already covered for these necessities.
Table of Contents
A Critical Illness Insurance Plan: What Is It?
If you are diagnosed with a serious disease, a critical illness insurance policy is specifically made to pay you a lump payment. Heart attack, stroke, and advanced cancer are nearly always on the list of covered illnesses, even though every critical illness insurance policy maintains a fixed number of eligible diseases, and each list differs from insurer to insurer.
How does it benefit me, and is it required?
It’s better to have coverage against any serious illnesses and high medical costs because you never know when you might get sick. You can avoid major financial constraints, like taking out short-term loans with expensive repayments to cover your critical illness medical bills, by being able to claim for significant medical and hospital costs related to your critical illness.
How can you determine whether an insurer’s critical illness plan is sufficiently comprehensive given the wide variety of critical illness plan options available? This is the time to review the Life Insurance Association Singapore’s (LIA) list of conditions that are sufficiently considered serious and contrast the plans offered by different insurers with the LIA’s list.
How Does an Insurance Plan for Critical Illness Operate?
Coverage
The majority of critical illness insurance plans cover late-stage diagnoses, but it’s good to know that many plans also pay out at early or intermediate stages. However, because these insurance plans cover earlier sickness diagnoses, they will cost more.
Early-stage critical illness plans, as their name implies, pay out a lump sum when a critical illness is discovered early. Only if you can afford it and manage to lay away some money for it over time is early critical illness coverage beneficial.
Guaranteed pay out (upon diagnosis of sickness)
You will often receive a lump sum payment if you are diagnosed with one of the conditions listed in LIA’s Critical Illness Framework and covered by your critical illness insurance plan. You can choose the “sum assured,” another name for that one-time pay outs amount. To demonstrate the fundamental workings of a standard critical illness plan, let’s look at an example. If having a heart attack is one of the circumstances for which your plan provides complete coverage and you have a $300,000 sum assured, you will be eligible for a $300,000 lump sum pay out.
A multi-pay feature, for example, allows you to make many claims and earn more than 100% of your sum assured. Other plans offer more complicated payout terms in different scenarios. Therefore, these plans cover more ground than just the fundamental process. Riders Critical illness insurance protection is sometimes offered as an add-on to term or life insurance plans.
Its purpose is to increase the protection of your current term or whole life insurance policies by allowing you to receive the sum assured of your policy, which was previously only payable in the event of your death or total and permanent disability should you be diagnosed with an addressed critical illness.
These critical illness riders have the advantage of frequently being less expensive than stand-alone critical illness coverage. The drawback is that your policy can stop covering death or permanent impairment once you get this payout.
It is important to carefully review the terms and conditions of the critical illness rider to understand how it may impact your overall coverage. Additionally, consider consulting with a financial advisor to determine if adding a critical illness rider is the best option for your insurance needs.