Many Singaporeans understand that it is important to get critical illness (CI) insurance to protect themselves against, well, critical illness.
However, most fail to realise that their coverage is only for mid to late-stage critical illness. Upon diagnosis of early-stage critical illnesses, they realise that they do not receive any compensation from both their health insurance and CI insurance.
That’s where it’s important to know the differences between early critical illness (ECI) and CI insurance.
The difference between Early Critical Illness and Critical Illness Insurance
Early Critical Illness Insurance
Early critical illness insurance is insurance that covers all the early stages of the 37 different types of critical illnesses registered by the Life Insurance Association Singapore (LIA).
It can be additional support that will be with you during your tough times for the short term or even for your whole life, depending on your policy.
Depending on the ECI policy, you will be covered for the following:
- Payments for critical illnesses diagnosed at an early stage. Notice that we use diagnosed. Unlike hospitalisation or CI plans, the moment you get diagnosed with an ECI, you get your cash benefits to help you recover.
- Numerous insurance claims in times of continuous deterioration of health. This depends on your policy. Some policies allow you to make multiple ECI claims while others only provide it once and your policy terminates.
Critical Illness Insurance
Critical illness insurance offers cash benefits when you have been diagnosed with an intermediate to late-stage critical illness. The insurance plans differ from company to company. However, LIA at Singapore gives a brief definition of all the 37 critical conditions listed with them.
As you can see from the differences between both plans, ECI protects you in the early stages, while CI covers you only in the intermediate to late stages.
The issue with CI insurance is that by the time you reach the intermediate stage of a critical illness, it might be too late to recover or will take a prolonged period. Having ECI coverage ensures that you have the cash to assist you in recovery or expenses you incur due to the early critical illness.
Remember, health insurance only covers you for when you are hospitalised. ECI covers you for when you are diagnosed with early critical illness and when you are not hospitalised.
CI insurance provides coverage from when you need cash to treat your illness when you are not hospitalised and require money to pay for additional expenses such as hiring help.
Types of Early Critical Illness Insurance Plans
These are the types of ECI plans available in Singapore
Term Plan with ECI Riders
Insurance companies offer policies that cover early critical illness through early critical illness riders attached to their term plans.
As your coverage is limited, this is usually the cheapest plan available. Take note that your term plan’s sum assured will be reduced if you use up your ECI coverage.
Whole Life Plan with ECI Riders
An early critical illness rider can be added to whole life insurance policies to provide this type of coverage. This is usually more expensive than the term option because a whole life plan covers you until age 99 and provides cash value too.
As with the term plan with ECI rider, the sum assured for your whole life policy will be reduced if you use the ECI coverage.
Standalone ECI Plans
Standalone has two types of early critical illness plans, i.e., single and multiple claim plans. According to the list issued by the Life Insurance Association (LIA) of Singapore, you can select either coverage for cancer alone or full range.
In the case of a single–claim plan, you will be able to claim only once, whereas, for the multi-plan claim, you can claim more than once or multiple times.
Advantages of an Early Critical Illness Plan
Due to advancements and development in technology in modern technology, the healthcare sector is seeing higher costs for consumers. Additionally, inflation is causing everything else to become more expensive as well.
One of the main advantages of getting yourself covered against early-stage critical illnesses is that it will help you provide financial security when you undergo regular treatments.
As previously mentioned, ECI coverage ensures that you have the cash to assist you in recovery or expenses you incur due to the early critical illness. This is something that your hospitalisation plan will not cover if you’re not hospitalised.
So if you’re not hospitalised but still need to hire helpers, transportation to and fro hospital appointments, and any other extra expenditure required to recover from your ECI, having ECI coverage can prove to be beneficial.
With the help of insurance, you will have the opportunity to recover without worries, have various treatment options, and even stop working to focus on recovery.
Is Early Critical Illness Insurance Necessary?
Though ECI insurance occupies an essential space in providing holistic insurance coverage, it becomes more necessary for some.
Given below are some of the groups that are usually recommended to get them.
| Family members diagnosed with any of the critical illnesses: | It will be an excellent decision to buy early critical illness insurance if any of your family members suffer from a critical condition. Your risk of facing the same CI/ECI is higher and thus you should have coverage. |
| Single Individuals: | Single individuals should obtain ECI coverage as you can use the cash benefits to obtain care services for yourself. |
| Self-Employed Individuals: | Those who are self-employed will generally experience fluctuations in their income due to the nature of work.
This becomes a bigger issue when you have to stop work and there’s no income coming in. Furthermore, self-employed individuals do not have insurance protection as employees. Thus, are highly recommended to obtain ECI protection. Read our guide to financial planning for self-employed individuals. |
| Sole Breadwinners: | If you’re a sole breadwinner and have parents, spouse, and children relying solely on your income, you should get ECI coverage. |
Important points to remember while buying Early Critical Illness Insurance
Coverage of Illnesses
Some companies might have more or fewer types of ECI covered under their plans.
So it becomes essential for you to go through the list to select the coverage that is suitable for you.
In other words, it is more important to choose the policies that provide an adequate number of critical illnesses based on your risk of getting them and not the highest number of critical conditions. This way, you will be able to pay lesser premiums for this coverage.
For some individuals, you may want to opt for the highest number of ECI conditions. If you’re doing on this basis, make sure the definition across the plans you’re looking at is the same and you can compare based on pricing.
Coverage Amount
For ECI insurance, the recommended coverage amount is minimally 1 year of your annual income. However, 2 years worth of annual income is best if you can afford it.
Having 2 years of annual income coverage allows you to opt for more treatment alternatives and gives you more time to recover without worrying about running out of funds.
Here’s our take on determining the amount of early critical illness coverage you’ll need.
Should you recover earlier and have excess funds, you can use them to pay off loans, obtain new policies, or even invest it!
Single-Pay or Multi-Pay
Depending on the policy, you might be able to make multiple claims for multiple ECIs – whether it’s a repeated or a different condition.
For single-pay ECI plans, you can only claim once as it terminates upon a successful claim made.
A multi-pay ECI plan allows you to make multiple claims, usually up to 900% of your insured sum. Payments are made monthly and can last as long as you want or until you reach the age limit (similar to a term plan). Of course, this option is more expensive compared to the single-pay option.
The procedure in claiming your benefits
To not face difficulties in making claims, you need to be well prepared. You should keep all the necessary documents and learn the formalities that are essential for claiming your benefits. Talk to your financial advisor about this.
Check the maximum age coverage
You should examine the insurance plan’s full age coverage to avoid future issues when making claims.
Best Early Critical Illness Insurance
The best early critical illness insurance is Aviva My Early Critical Illness Plan II or Tokio Marine’s Early Cover, depending on whether you want to get covered for the most number of ECIs or have a higher sum assured, respectively.
However, you can get multi-pay plans as well, which covers both ECI and CI.
Read our guide on the best critical illness insurance in Singapore to help you understand better.
Conclusion
I hope this post explains more about early critical illness insurance in Singapore, helped you determine if you should need one, and what you should consider when getting it.
However, note that online information only serves as a guideline for your financial planning.
Ultimately, what you need depends on your unique situation. If you’re overwhelmed by information and need guidance, it’s always best to talk to a financial advisor that can accurately guide you.
You don’t want to be overpaying for premiums or getting overinsured.
