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Since I have hospitalisation, why do I need Critical Illness coverage?

Not protecting yourself with critical illness cover because you already have a hospitalisation plan can leave you vulnerable to protection gaps. Here's why.

Many people make the mistake of thinking that since they have hospitalisation insurance, they no longer need to worry about their finances if they fall ill. This causes them to overlook critical illness insurance, which might actually be necessary to fill the gaps in their protection.

Why you need critical illness insurance even if you already have hospitalisation insurance

Now, you might be thinking, since I already have hospitalisation insurance, do I still need critical illness insurance?

The answer is, probably yes. According to a 2018 reportthe average Singaporean is only covered for 20% of their critical illness needs.

Understanding the differences between hospitalisation and critical illness insurance is the key to figuring out if you need both.

What is hospitalisation insurance?

Hospitalisation insurance reimburses your medical bills when you are hospitalised. It can also pay for certain outpatient expenses that are linked to the condition which requires hospitalisation, such as fees for consultations leading to diagnosis and follow-up visits after getting discharged.

This kind of insurance is essential for anyone living in Singapore as it offers protection against high hospital bills.

Singaporeans and Permanent Residents who already have the basic coverage provided by MediShield Life can boost their protection with an Integrated Shield Plan (“IP”), an optional   health coverage provided by private insurance companies designed to complement with MediShield Life.

Additional hospitalisation insurance frees you from having to worry about your medical bills and can also give you access to private healthcare as well as Class A and Class B1 wards at public hospitals, none of which can be sufficiently covered by MediShield Life.

As MediShield Life payouts are pegged at the cost of Class B2 or Class C wards2, they can only cover a small fraction of bills for Class A and Class B1 hospital stays. The remainder of the bill must be footed by hospitalisation insurance or by the patient.

What is critical illness insurance, and how does it differ from hospitalisation insurance?

Critical illness insurance offers financial support when you are diagnosed with a serious illness, but functions very differently from hospitalisation insurance.

Getting afflicted by a serious illness often leaves people unable to work, leading to great financial insecurity for themselves as well as their families. Critical illness insurance is designed to provide much-needed financial support in such difficult times.

How Critical illness insurance works

When you are diagnosed with a critical illness covered by your insurance plan:

  • you receive a payout based on the policy terms in the contract.
  • the payout can be used in any way you wish.
  • for example, to replace your lost income, support your household or pay for medical expenses.

Unlike hospitalisation plans, critical illness insurance does not reimburse your hospital bills, although you can choose to put some or all of your payout towards paying medical expenses.

Critical illness protection can be obtained either by purchasing a standalone critical illness insurance plan, or by purchasing another form of insurance that also offers critical illness protection, such as life insurance with critical illness coverage. Some insurance plans also give you the option to add supplemental critical illness insurance protection by purchasing an optional rider.

Certain plans also give you the option of decreasing critical illness cover, such as in the case of mortgage insurance. As more and more of your home loan gets paid off, any critical illness coverage you are receiving through the plan is progressively reduced.

Talk to our financial consultant today!

 

Hospitalisation insurance

Critical illness insurance

What kind of bills you can reimburse?
Reimburses your medical bills when you are hospitalized

 

Does not reimburse your hospital bills.
What expenses you can pay for?
It can pay for certain outpatient expenses that are linked to the condition which requires hospitalisation
You will receive a payout which can be used in any way you wish, whether to replace your lost income, support your household or pay for medical expenses, when you are diagnosed with a critical illness covered by your insurance plan

 

If you are suffering from a serious illness that requires a long period of hospitalization or expensive treatment.
You might have to co-pay a portion of your medical bills.
Critical illness insurance payouts can be channeled into payment of medical bills if needed.

 

Why should you buy critical illness insurance together with hospitalisation insurance?

If you do not have any form of medical insurance, hospitalisation insurance should be your priority. When you already have hospitalisation insurance, you can then go on to consider the need for critical illness insurance.

When assessing whether you need critical illness insurance, think about the financial consequences of a serious illness. If you are currently working, lost income is one of the biggest financial setbacks you and your family could suffer. If your savings are insufficient to support you and your family should you no longer be able to work, that is a big sign that you need critical illness insurance.

Even if your household can make ends meet without your income, you should consider critical illness insurance if the loss of your income would nonetheless have an impact on your family’s way of life. Being diagnosed with a serious illness is stressful enough without having to worry about making big lifestyle downgrades.

In addition, even if you have hospitalisation insurance, you might have to co-pay a portion of your medical bills. IPs require co-payment of a certain percentage of your bills, which can really add up if you are suffering from a serious illness that requires a long period of hospitalisation or is expensive to treat.

This co-payment portion is at least 10%, with a deductible of $1,500 to $3,500 per year if you do not purchase an optional rider to lower it. With an optional rider, the minimum co-payment portion is 5%, and up to 95% of the deductible can typically be covered by the rider. In the event of a serious illness, critical illness insurance payouts can be channelled into payment of medical bills if needed.

 

Case studies

Example 1

William has hospitalisation insurance but not critical illness insurance. He gets diagnosed with late-stage cancer and as a result has to stop working.

  • His hospitalisation insurance and rider will cover 95% of his medical bills, which adds up to S$120,000.
  • His family falls into great financial difficulty when he is no longer able to work to support them.
  • To make matters worse they also have to put up S$175 for his hospitalisation insurance plan’s deductible and S$6,000 as co-payment for his medical bills.

Example 2

Bruce has both hospitalisation insurance and critical illness insurance.

When he gets diagnosed with late-stage cancer, he drops out of the workforce.

  • 95% of his medical bills of S$120,000 are covered by his hospitalisation insurance and rider.
  • In addition, he receives a lump sum payout of S$100,000 from his critical illness policy.
  • He sets aside S$175 for his deductible and S$6,000 for the co-payment portion of his medical bills.
  • The remaining sum of S$93,825 is put towards supporting his family so they can concentrate on getting Bruce the treatment he needs.

Manulife’s Critical SelectCare  and Ready CompleteCare  are critical illness plans that provide financial security over and above what hospitalisation insurance can offer.

 

Table 2

Do I need Critical SelectCare?

Without Critical SelectCare

With Critical SelectCare

Scenario 01

I might not have enough savings to fund for my recovery if I suffer from a leading Critical Illness (CI) or an age-related conditions at the later stage of my life.
    Withdraw from my own emergency or retirement savings to fund for recovery.
    Hospitalisation plans including Integrated Shield Plans do not cover you for lost income, neither  it will pay out any sum of money for other essential needs other than eligible expenses related to hospitalisation treatment.
Lump sum pay-out for selected leading critical illness such as cancer and stroke and age-related conditions such as Osteoporosis with Fracture and Severe Rheumatoid Arthritis which can be used to cover expenses for other essential needs like engaging a helper after treatment, special dietary needs or long term medication

Scenario 02

I've pre-existing medical conditions and I may not be able to buy any insurance plans. 
Straight through approval upon passing 3 simple health questionswith no premium loading on existing health conditions.

Scenario 03

I'm above 40 years old and have some health conditions. I am worried that I may not be able to buy into a plan with CI coverage or such a plan may impose a high premium loading. 
Premium starts is about S$1per day for S$25,000 coverage.

Scenario 04

What if I outlive my policy? Any returns?
-
Receive 25% of your Total Premiums Paid at the end of your policy term if no claim is made.

Table 2 Footnotes

1  You must be between 40 to 70 years old and pass the underwriting questions to qualify.

Premiumis based on male non-smoker, age last birthday 40 with sum insured of S$25,000. Rate per day is calculated based on annual premium divided by 365 days.

Talk to our financial consultant today!

 

In addition, Ready CompleteCare’s exclusive “Cover Me Again” option restarts* your coverage over and over again even after you have made a claim, so you continue to enjoy protection if you suffer a relapse or are diagnosed with another critical illness. Click here to find out more.

* Coverage will be restarted to 100% of basic sum insured after 12 claim-free months from the last critical illness claim. Subject to maximum payout of 500% of basic sum insured.

 

Table 3

Do I need Ready CompleteCare?

Without Ready CompleteCare (Cover Me Again)2

With Ready CompleteCare (Cover Me Again)2

Scenario 01

I’ve to quit my job as a result of weaken health condition after suffering from Critical Illness (CI).
Withdraw from my own cash savings for loss of income.
Lump sum payout for 106 critical illness across all stages and additional 200% payout for 6 major CI conditions1.

Scenario 02

I need to pay for outpatient treatments/ alternative treatments not covered by MediShield Life/ Private Integrated Shield Plan.
Withdraw from my own cash savings to fund for recovery.
Lump sum payout for 106 critical illness across all stages and additional 200% payout for 6 major CI conditions1.

Scenario 03

I’ve just made an early claim and hope my insurance can continue to cover me.
Cannot purchase any CI insurance plan after a claim.
The plan will continue to cover you again and again up to 900%2.
500% for different CI conditions
    200% for Recurring Cancers3
    Additional 200% for 6 major CI conditions
Waive off premium in event of early critical illness across all stages with optional Early Critical Care Rider.

Scenario 04

Early detection result in higher survival rates. But health screening is expensive.
Pay for your own health screening.
Offers free health check every 2 years.

Scenario 05

My children are my main priority in life.
Need to come out with additional cash to get a new plan.
Comes up with free coverage4 for your child
Pays S$10,000 lump sum per child up to 2 children in the event that the child / children of the Life Insured is diagnosed with any of the 36 advanced stage CI.

Table 3 Footnotes

1 The 6 major CI conditions are: Advanced stage of major cancer, heart attack, stroke, Alzheimer’s disease, multiple sclerosis and Parkinson’s disease.

2 Coverage will be restarted to 100% of basic sum insured after 12 claim-free months from the last critical illness claim. Subject to maximum payout of 500% of basic sum insured.

3 Additional 100% of basic sum insured is payable upon diagnosis of subsequent advanced stage major cancer, capped at 200% of basic sum insured, subject to terms and conditions. Please refer to product summary for more details.

4 Please refer to product summary  for more details.

Protect yourself with Ready CompleteCare, a critical Illness policy that covers you again and again, even after you have made a claim.

Talk to our financial consultant today!

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    Disclaimer:

    Ready CompleteCare and Critical SelectCare 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 websites (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.

    Information is correct as of 12 December 2020

     

    Content Sources

    1 https://www.straitstimes.com/business/banking/working-adults-have-inadequate-cover-if-critical-illness-strikes-says-study
    2 https://www.moh.gov.sg/cost-financing/healthcare-schemes-subsidies/medishield-life#:~:text=MediShield%20Life%20is%20sized%20for,small%20proportion%20of%20your%20bill.


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