Heading into the unknown with your health can be terrifying, especially when you consider how expensive medical treatments are these days.
Trust me, it’s worth taking the time to understand it.
In this post, you’ll learn:
- What critical illness insurance covers in Singapore
- How much coverage you should get
- The different types of policies available
- How to choose the right plan for your needs
Keep reading!
What is critical illness insurance?
Critical illness insurance is a type of insurance that pays out a lump sum when you’re diagnosed with a serious health condition covered by the policy.
These conditions typically include illnesses like heart attacks, strokes, late-stage cancers, and other life-threatening diseases.
The payout is designed to support you financially during a tough time when your focus should be on recovery, not worrying about mounting bills.
It doesn’t just cover your medical bills – which is what health insurance typically does.
It can cover various expenses, including medical costs not fully paid by health insurance and income loss during treatment.
It serves as a safety net for unexpected illnesses, helping with home modifications, travel for treatment, and easing financial pressures related to childcare or education.
In worst-case scenarios, it can assist with funeral expenses, alleviating financial burdens on loved ones.
What does critical illness insurance cover in Singapore?
Critical illness insurance covers 37 critical illnesses as defined by the Life Insurance Association Singapore (LIAS), including the “Big 3” illnesses: cancer, heart attack and stroke.
Here’s the list for your reference:
- Major Cancer
- Heart Attack of Specified Severity
- Stroke with Permanent Neurological Deficit
- Coronary Artery By-pass Surgery
- End Stage Kidney Failure
- Irreversible Aplastic Anaemia
- End Stage Lung Disease
- End Stage Liver Failure
- Coma
- Deafness (Irreversible Loss of Hearing)
- Open Chest Heart Valve Surgery
- Irreversible Loss of Speech
- Major Burns
- Major Organ / Bone Marrow Transplantation
- Multiple Sclerosis
- Muscular Dystrophy
- Idiopathic Parkinson’s Disease
- Open Chest Surgery to Aorta
- Alzheimer’s Disease / Severe Dementia
- Fulminant Hepatitis
- Motor Neurone Disease
- Primary Pulmonary Hypertension
- HIV Due to Blood Transfusion and Occupationally Acquired HIV
- Benign Brain Tumour
- Severe Encephalitis
- Severe Bacterial Meningitis
- Angioplasty & Other Invasive Treatment for Coronary Artery
- Blindness (Irreversible Loss of Sight)
- Major Head Trauma
- Paralysis (Irreversible Loss of Use of Limbs)
- Terminal Illness
- Progressive Scleroderma
- Persistent Vegetative State (Apallic Syndrome)
- Systemic Lupus Erythematosus with Lupus Nephritis
- Other Serious Coronary Artery Disease
- Poliomyelitis
- Loss of Independent Existence
Why is critical illness insurance necessary in Singapore?
High medical costs and potential loss of income
Singapore is known for its excellent healthcare system, but quality care comes at a price.
Even with basic health insurance, there are still significant out-of-pocket expenses, especially if you opt for treatments at private hospitals.
On top of that, if you’re unable to work, you’ll need to think about how you’ll replace your income.
Critical illness insurance provides a lump sum payout that can replace lost income, giving you the breathing room you need to focus on your recovery without the added stress of falling behind on bills.
Supporting your family
Critical illness insurance ensures that your family will still have enough to support themselves while you’re going through treatment and recovery.
The lump sum payout from critical illness insurance can help cover essential living expenses, such as rent, mortgage payments, childcare, and school fees, ensuring that your family’s lifestyle remains stable during a difficult period.
Covering health-related and non-health-related expenses
The lump sum payout from the critical illness insurance can be used however you see fit.
You might need it for medical costs that aren’t covered by your health insurance, such as specialist treatments or alternative therapies.
Or, you might decide to use it for non-health-related expenses, like paying off debts, home modifications (if your condition requires changes for accessibility), or even travel costs if you need to seek treatment abroad.
I know a few people who have recovered from critical illness who choose to invest their CI payouts instead too.
So it’s pretty flexible.
Whether it’s keeping up with daily expenses or ensuring that your family’s future is secure, this type of insurance can bridge the financial gap caused by a major illness.
Types of critical illness policies in Singapore
Single claim/single pay policies
As the name suggests, single claim or single pay policies offer a one-time lump sum payout when you are diagnosed with a covered critical illness.
Once you make a claim, the policy ends, and no further payouts will be made.
These policies are straightforward and typically more affordable than their multiple-claim counterparts.
Comprehensive multiple-claim policies
If you’re looking for more comprehensive coverage, multiple-claim policies allow you to make claims more than once, even for different critical illnesses.
This type of policy provides protection across multiple stages of illnesses, from early-stage conditions to more advanced stages.
Unlike single claim policies, they continue to cover you even after an initial claim, ensuring that you’re protected if you suffer from a different critical illness in the future.
Some policies even allow for multiple claims for the same illness, provided they occur at different stages.
For example, you might receive a payout for early-stage cancer, and then make another claim if the cancer progresses to a more severe stage.
Rider to a term life policy (single or multipay)
A term life insurance policy provides coverage for a specified period, such as 10, 20, or 30 years.
If you attach a critical illness rider to your term life policy, you gain coverage for critical illnesses during that term.
The rider can be structured in 2 ways:
- Single-Pay Rider: With this option, the policy pays out a one-time lump sum upon diagnosis of a critical illness. After the payout is made, the rider terminates, and only the base term life coverage continues.
- Multipay Rider: This option allows you to make multiple claims across different stages of an illness, or even for different illnesses, while still maintaining your term life coverage. If you’re diagnosed with a critical illness early, you can claim and still be covered if the condition worsens or if you’re diagnosed with another illness later on.
Rider to a whole life policy (single or multipay)
A whole life insurance policy provides lifetime coverage, meaning it doesn’t expire as long as you continue paying your premiums.
When you attach a critical illness rider to a whole life policy, you’re adding the benefit of critical illness coverage for a specified term.
The rider can be structured as:
- Single-Pay Rider: Similar to the term life option, this provides a one-time lump sum payout when you’re diagnosed with a covered critical illness. Once the payout is made, the critical illness rider terminates, but your base whole life policy remains active.
- Multipay Rider: With a multipay rider, you can make multiple claims for different illnesses or various stages of the same illness. This rider provides more comprehensive protection, ensuring that you remain covered for critical illnesses throughout your life.
How much critical illness insurance coverage should you get?
A good rule of thumb for critical illness coverage in Singapore is to aim for 3 to 5 years of your annual income.
This ensures that if you’re diagnosed with a critical illness and unable to work, you’ll have enough money to support yourself and your family while you recover.
But while this guideline is helpful, it’s not a one-size-fits-all solution.
Here’s my take on how to calculate the right coverage for you.
How to select a critical illness insurance plan?
Here are the main factors you should focus on when selecting your coverage in Singapore:
1. How much should you be covered for?
As mentioned before, a common rule of thumb is to aim for 3 to 5 years of your income.
This ensures that you have enough financial support if you’re unable to work due to a critical illness.
But don’t stop there – calculate your needs based on factors like monthly living expenses, outstanding debts, and future costs like your children’s education or long-term healthcare.
This is why I created the critical illness coverage calculator, available in The Financial Toolkit.
The calculator factors in your monthly needs by assessing your current expenses, liabilities, existing assets, and, of course, the impact of inflation.
This approach ensures you’re not simply relying on generic rules of thumb, which may not suit your unique situation.
Instead, it tailors the calculations to every aspect of your personal circumstances.
2. What conditions are you covered for?
Not all policies are created equal, and it’s crucial to check which illnesses are covered.
The Big 3 (cancer, heart attack, stroke) are typically covered by most policies, but you should ensure the policy also covers the full 37 critical illnesses defined by the Life Insurance Association Singapore (LIAS).
Additionally, some plans provide coverage for early critical illnesses or offer additional payouts for recurrent conditions.
Some even just provide cancer insurance coverage if you’re stuck on a budget, but it’s better to get at least a CI plan that covers all 37 conditions.
Make sure to choose a plan that suits your personal or family medical history.
3. How long are you covered for?
Some policies offer coverage for a fixed number of years, while others cover you up to a certain age, such as 65 or 75.
The longer the coverage, the more secure you’ll be.
4. Number of payouts
You’ll also need to decide between a single-pay policy or a multipay policy.
A single-pay policy gives you a lump sum payout upon diagnosis of a critical illness, but the policy terminates after that.
A multipay policy, on the other hand, allows you to make multiple claims for different illnesses or at different stages of the same illness.
5. What are the survival and waiting periods?
The waiting period refers to the time you must wait after purchasing the policy before you can make a claim.
Most critical illness plans in Singapore have a waiting period of 90 days.
The survival period, on the other hand, is how long you need to survive after being diagnosed with a critical illness before the payout is made.
This is typically around 7 to 30 days.
Read more about how to choose critical illness insurance here.
Is it worth buying critical insurance coverage?
The short answer: Yes, for many people, critical illness insurance is worth it.
While basic health insurance may cover only part of medical expenses, a critical illness policy provides a lump sum payout upon diagnosis, helping to manage substantial out-of-pocket costs for serious conditions like cancer or heart disease.
It also offers financial support during periods when you may be unable to work, covering living expenses and ensuring your family’s financial stability.
The flexibility of the payout allows you to use the funds for various needs, from medical treatments to home modifications.
Ultimately, having this insurance offers peace of mind, allowing you to focus on recovery without the burden of financial stress.
How do I buy critical illness insurance?
The first way to purchase critical illness is through buying it online.
1. Online purchase
I only know of one insurer that allows you to purchase critical illness insurance online, and even then, it’s limited.
For example;
- Tiq by Etiqa has their cancer insurance policy
- They also have the 3 Plus CI, which covers the big 3 CIs + 3 more.
The reason for these limited options is that critical illness insurance can be a bit complicated with many options to choose from; it’s not something you typically buy online with a few clicks.
Instead, it’s essential to get the right policy that fits your personal needs and financial situation, which is why buying it through a financial advisor is the best route (and more options, too).
2. Consult with a financial advisor
A financial advisor can help you understand the complexities of critical illness insurance.
They’ll explain how different policies work, what illnesses are covered, and whether you should opt for a single pay or multipay policy.
With their guidance, you can find a plan tailored to your specific health risks, lifestyle, and long-term financial goals.
Conclusion
Critical illness insurance can be a lifesaver when you need it most, but choosing the right plan can feel a bit overwhelming.
We’ve covered the essentials, from understanding how much coverage you need, to knowing what illnesses are covered, how long your policy lasts, and whether you should opt for a single or multipay plan.
We’ve also discussed why it’s worth considering and how to get the right coverage with the help of a financial advisor.
If all of this still feels a bit complicated, don’t worry – you’re not alone!
It’s always a good idea to get personalised advice to make sure you’re making the best decision for your needs.
Feel free to talk to one of our financial advisor partners.
They’ll be happy to walk you through the process, answer any questions, and help you find the right coverage – at no cost to you.
