Is critical illness (CI) insurance necessary? When you’re young and healthy, there seems to be little need for it – especially when you have a private hospitalisation plan or MediShield Life with an Integrated Shield Plan.
The thing is, a major illness comes with expenses that extend well beyond surgery and hospital stays. According to the Life Insurance Association (LIA), it takes about 5 years for a person to recover from a critical illness1. Going through recovery also means dealing with exorbitant costs related to prolonged treatment, medication, or loss of income.
During a big health emergency, CI insurance protects you from financial trouble and keeps you financially afloat while you recover.
As the name suggests, a CI plan kicks in when you get diagnosed with a major critical illness, such as a heart attack, stroke, and major cancers.
After the diagnosis, you’ll receive a lump sum payout that you can use however you wish. Some use it to pay for medical expenses that aren’t covered by their hospital plan or MediShield Life. Others use it to cover non-medical costs related to the illness, such as transportation, childcare, or a domestic helper.
CI plans are not meant to replace other health insurance plans. Rather, the CI plan makes up for the shortfall in your savings or MediSave, so can focus on recovering without worrying about the bills.
If you’re lucky, you’ll live the rest of your life without getting seriously ill. But without the right coverage, just one critical illness can be a massive financial burden for you and your family. Here’s why skipping out on CI insurance is a big mistake.
The odds of getting critically ill are high
Most CI plans in Singapore cover you for 37 critical illnesses. What are the odds of actually making a claim, especially when you’re young, active, and healthy?
No matter how healthy a lifestyle you live, there’s no telling when critical illness will strike. Industry trends show that CI claims among adults age 31 – 40 are growing2, and that the risk of getting a major illness increases with age. (This is also why insurance policies cost more as you get older.)
Additionally, the National Registry of Diseases Office estimates that 1 in every 4-5 Singaporeans have a lifetime risk for developing cancer3. Breast cancer accounts for 1 in 3 cancers among women in Singapore, while 1 in 7 men in Singapore get prostate cancer4.
The good news is early detection and better treatments result in higher survival rates. The payout from a CI plan helps you afford ongoing treatments and the related costs that come with cancer recovery.
There are limits to MediSave and MediShield Life coverage
Most Singaporeans think that CI plans aren’t needed when MediSave and MediShield Life can cover all medical expenses. While these can soften the financial blow of hospital stays and outpatient treatment, there are limits to what government health insurance can cover.
For instance, MediSave can cover up to $450 for daily hospitalisation charges, or $300 per day surgery stay5. However, hospitalisation fees can cost more, depending on the hospital and ward class. Anything greater than a B2 or C ward needs to be paid out of pocket.
While MediShield Life helps pay for longer hospital stays and outpatient treatments like chemotherapy, it only covers a part of your total bill5. To meet the balance, you need to withdraw from your MediSave account or use your savings.
When you’re recovering from a serious illness, being unable to afford the full cost of your treatment is the last thing you need. This is where a CI plan becomes useful. The payout can be used to cover the shortfall in your MediSave account, or make up for the limits of your MediShield Life payout.
Similarly, a private hospital plan can cover hospitalisation stays and surgeries, and some outpatient treatments like kidney dialysis or chemotherapy. However, critical illnesses require multiple costly treatments, especially during the disease’s early stages. Because there are limits to its coverage, a hospital plan alone can’t cover all tests, treatments, and consultation fees.
A CI plan can make up for what hospital insurance can’t cover – and not just in terms of medical fees. Because you’re free to use the payout as you wish, a CI plan lets you make up for lost income, or pay for things like day care for your kids while you recover.
Critical illnesses are more expensive than the average medical emergency, and not just because there’s more treatment involved. These diseases often leave you with impairments that restrict your mobility and require long-term rehabilitation.
A stroke, for example, requires costly surgical procedures to help you return to your daily life. But even after surgery, a stroke can make it difficult to walk or do basic routines like showering or dressing yourself7. Completing your recovery requires a team of stroke specialists or help from private nurses, which health insurance does not cover.
Another cost to consider is the loss of income if you take time off work to recover, or are unable to return to work. Not only will you have difficulty paying your medical bills; you might be unable to take care of your living expenses or your family’s needs.
Realistically speaking, savings alone can’t keep up with all the long-term costs related to a critical illness.
The real value of a CI plan comes from its flexibility. Unlike health insurance, you’re free to use the CI payout for expenses beyond medical treatment. Whether it’s paying for household bills or long-term rehabilitation fees, a CI plan lets you take care of your financial obligations so you can focus on recovering.
It seems strange to get a CI plan while you’re young, healthy, and have no immediate need for it. If that’s where you are, now is the best time to get CI insurance. Not only are premiums more affordable the younger and healthier you are; you’ll also get full coverage for the plan’s illnesses.
Getting a CI plan is trickier once you’ve been diagnosed by a health condition. While it’s still possible, you may end up paying higher premiums, or get less coverage that excludes the illness you were diagnosed with.
Given the high chance of getting critically ill in your lifetime, and the costs that come with it, a CI plan provides a valuable safety net when you need it the most.
The great thing about CI plans is that they’re not a one-size-fits-all product. We can help you find a CI plan that suits your needs and your budget. Learn how to choose a critical illness plan for yourself, or speak to a Manulife Financial Consultant to know more about how a CI plan can protect you.
These insurance products are underwritten by Manulife (Singapore) Pte. Ltd. (Reg. No. 198002116D). This advertisement has not been reviewed by the Monetary Authority of Singapore. Buying health insurance products that are unsuitable for you may affect your ability to finance your future healthcare needs. This article is for your information only and does not consider your specific investment objectives, financial situation or needs. It is not a contract of insurance and is not intended as an offer or recommendation to purchase the plan. You can find the full terms and conditions, details, and exclusions for the mentioned insurance product(s) in the policy contract.
This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the LIA or SDIC web-sites (www.lia.org.sg or www.sdic.org.sg).
We recommend that you seek advice from a Manulife Financial Consultant or its Appointed Distributors before making a commitment to purchase a policy.
1. Tan, L. (2018, April) Working Adults Have Inadequate Cover if Critical Illness Strikes, Says Study. Retrieved from The Straits Times. https://www.straitstimes.com/business/banking/working-adults-have-inadequate-cover-if-critical-illness-strikes-says-study
2. (2018, October) Top 7 Myths Singaporeans Believe about Critical Illness Insurance. Retrieved from The Online Citizen. https://www.theonlinecitizen.com/2018/10/17/top-seven-myths-singaporeans-believe-about-critical-illness-insurance/
3. (2017, June) Singapore Cancer Registry: Annual Registry Report 2015. Retrieved from the National Registry of Diseases Office. https://www.nrdo.gov.sg/docs/librariesprovider3/Publications-Cancer/cancer-registry-annual-report-2015_web.pdf?sfvrsn=10
4. (2017, June) Breast, Prostate Cancers Rising Sharply in Singapore. Retrieved from The Straits Times. https://www.straitstimes.com/singapore/health/breast-prostate-cancers-rising-sharply-in-spore
5. MediSave. Retrieved from Ministry of Health. https://www.moh.gov.sg/cost-financing/healthcare-schemes-subsidies/medisave
6. MediShield Life. Retrieved from Ministry of Health. https://www.moh.gov.sg/cost-financing/healthcare-schemes-subsidies/medishield-life
7. (2019, February) Physical and Emotional Conditions After a Stroke. Retrieved from Health Hub. https://www.healthhub.sg/a-z/diseases-and-conditions/677/stroke-impact-of-stroke