Early Critical Illness & CI Insurance in Singapore: Guide for 2020

Everyone is talking about critical illnesses in Singapore – early, intermediate and late – and the insurance plans that are available.

Are they really critical?

Today, we’ll look into it more objectively.

In this ultimate guide, you’ll get EVERYTHING you need to know about critical illness insurance in Singapore.

Read till the end because this would be the only resource you’ll need. There are also very interesting statistics included.

So, read on!

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What is Critical Illness (CI) and Early CI?

early critical illness definition

Call it critical illness or dread disease…

They mean the same thing but let’s stick with critical illness for now.

The Life Insurance Association in Singapore has defined definitions for them.

In total, there are 37 standard critical illnesses (CI). Their definitions are towards the later stages of an illness and are standardised across all insurance companies.

Here’s the list of the 37 Critical illnesses:

list of 37 Critical illnesses

These definitions go through several revisions to provide greater transparency and clarity for consumers.

These revisions also provide additional reassurance that if you’ve made a claim from one company, a claim from another company shouldn’t be rejected as the definitions are the same.

The previous revision was in 2014 but there will be a new revision taking effect on 26 Aug 2020.

NOTE
Early Critical Illness or Early CI generally relates to the early and/or intermediate stages of an illness. Although there is a standardisation of the CI definitions, there is none with early critical illness (ECI).

For now, let’s look at what’s happening around us. 

The Statistics on Critical Illness

While Singaporeans now have a longer average lifespan at 83.2 years, we spend longer time in ill health – 10.6 years.

There are chronic diseases like high blood, high cholesterol, high BMI, and diabetes, but when compared to critical illnesses, they’re less severe.

I’ve written a more in-depth article on critical illness statistics in Singapore.

But here’s a snippet of the important facts and figures:

  1. Critical Illnesses Contribute to More Than 60% of All Deaths
  2. 1 in Every 4 to 5 Singaporeans May Get A Critical Illness
  3. The Cost of Treating a Critical Illness Can Cost $100,000 to $200,000 per Year
  4. Critical Illness Accounts for 49.7% of All Life Insurance Claims
  5. More than 90% of CI Claims Come From Only 5 Illnesses
  6. Most CI Claims Happen From Age 51 to 55
  7. The Average Critical Illness Claim is $52,343.37

Out of the 37 CIs, one particularly stands out. And that’s cancer…

The Statistics on Cancer

Likewise, I’ve also written another article on cancer statistics in Singapore.

Every day, 38 people are diagnosed with cancer. And the lifetime risk of contracting it is one in every four to five.

15 people are dying from it every single day and it’s the number one cause of death in Singapore with it accounting for 28.8% of all deaths.

We also analysed 36 months of life insurance claims statistics in Singapore.

Not only does cancer represent the most deaths claims..

causes of death claim

It also accounted for the highest number of critical illness claims by a huge margin.

causes of critical illness claims

So topics on critical illness almost always include cancer.

The Costs of Treating Cancer

Contracting a critical illness like cancer is just one of the worries.

With medical costs increasing at 10% every year, you can expect the average hospital bill size in Singapore to balloon up over time.

The next worry we have then is whether we can pay for the cost of cancer treatments.

Cancer treatments are usually a combination of surgeries, radiotherapy and chemotherapy, but there are also alternative treatments out there.

The treatment can take years and even so, there isn’t really a cure for it because it can come back.

Because of these reasons, cancer treatments are expensive and late-stage cancer can cost $100,000 to $200,000 yearly.

cancer treatment cost singapore

A Story…

Apart from the financial costs, there are emotional and physical costs that come with cancer.

I’d like to touch on a particular story

Tam Chek Ming is a Singaporean single mother with a 5 year old son. She is battling with stage 4 cancer and has since sold off everything to fund for her treatments, and sadly, for her impending funeral. She is appealing for donations.

It started with her undergoing a major surgery to remove a cyst. She then needed to go under chemotherapy which made her vomit in bed and was unable to play with her son.

Tam was relieved when the treatment stopped but it didn’t last long…

The cancer cell grew aggressively to stage 4.

Costs:

  • Immunotherapy: $139,000 a year
  • Medicine: Between $6,500 and $8,000 per dose (thrice a week)

She doesn’t have any private health insurance, and is not even under the CPF Dependants’ Protection Scheme.

She’s living in a small 45-sqm flat and skips meals so that her son would have food on the table.

The costs needed do not stop there, Tam says that money raised would also go to pay off household bills, basic necessities, bank debts, daily living expenses, upcoming funeral expenses, etc.

Her most pressing concern would be to provide care and support for her 5 year old son when she’s not around anymore.

If you’d like to read more or make a donation, check out this link

The Implications of a Critical Illness

From the story above, you would know that it’s not just the medical costs that can pose an issue, it’s also the cost of not being able to work to earn an income.

How would you find the money to replace the income that is lost during that period or when you’re not around anymore?

Here are some of the typical commitments, goals, and expenses:

Liability Curve

To list down the few essentials:

  • Supporting parents
  • Household expenses
  • Providing for kids
  • Food
  • Housing loan
  • Saving for retirement
  • …etc

So on top of the medical costs incurred from the illness, don’t forget…

You still have these other commitments and goals to cater for, and this could be a hefty amount.

Why Most Singaporeans Need More CI Cover

critical illness insurance cover singapore

A lot has been said about the prevalence and the implications when a CI happens. 

However…

What has the majority of Singaporeans done to address it?

There was a study done in 2017 by the Life Insurance Association Singapore (a lengthy 88 page report). It was also reported in Straits Times and Today.

I’m sure most of you are not going to read that report so I’m just going to pick out the important points.

The average working adult in Singapore has about $60,000 of CI cover.

In fact, from the study we did, the average CI claim is $52,343.37.

average ci claim

Think for yourself: is it enough to last for 5 years? (rule of thumb)

And how much does one need?

The association recommends a cover of $316,000, which leaves a protection gap of $256,000.

So that means most are under-insured.

Now, those figures are just a general guideline and the needs of everyone are different.

I’ll touch on the estimated amount to cover, but first, let’s look at some solutions.

The 3 Insurance Plans That Cover Critical Illness

If you wish to beef up on your critical illness cover, what are the options?

There are mainly 3 types:

  1. Hospitalisation Plan
  2. Critical Illness Cover
  3. Early Critical Illness Cover

The hospital plan addresses the concern of having to pay huge medical bills. And the critical illness and early critical illness cover addresses the concern of not being able to work.

By having these 3, you’ll get a very comprehensive coverage for CIs.

Let us go through what each one can do for you…

1) Hospitalisation Plan 

hospitalization plan singapore

What’s the purpose?

The main objective of a hospitalisation plan is to cover for hospital and surgery bills, and selected outpatient treatments.

If you’re under just the MediShield Life and can afford to upgrade to an Integrated Shield Plan (with or without the cash rider), I highly encourage you to do so.

The plan would be one of the most fundamental type of insurance you can have.

You can choose to compare the shield plans out there.

But in my opinion, all the plans offer the core benefits and are thus quite similar. You wouldn’t go wrong if you just approach any one company. 

Is a hospital plan enough?

The hospital plan usually only covers items that occur at the hospital. 

But what happens when you’re back home and unable to work?

Those daily expenses and commitments still exist and are not covered.

This brings us to the 2nd option…

2) Critical Illness Coverage

What does it do?

A CI coverage will provide a lump sum payout when one of the 37 CIs happen.

This payout can then be used as an income replacement to pay for your ongoing expenses during the period that you’re unable to work.

Is critical illness insurance necessary? 

Why buy critical illness insurance?

I believe if you’ve gone through this guide, you can already see the importance for this particular type of insurance.

But to add on..

Yes, critical illness coverage is pricier but the probability of it happening can be higher.

Here’s a breakdown of life insurance claims:

life insurance claims

Although it may seem like the number of CI claims are only slightly higher than Death claims, if you dive deep, critical illnesses caused a majority of these Death claims too.

Summary: CI not only leads to CI insurance claims but to death claims eventually (when it’s “time”). And thus, should be the reason for an even larger chunk of life insurance claims.

How much to cover?

The premiums for CI insurance are usually higher when compared to death and TPD as the probability of occurrence is higher – one still has to watch their budget.

There’s no one magical number since income and needs are different.

As a general rule of thumb, it can be your annual income * 5 years. Reason behind it: either you recover within the 5 years or the worst happens.

Estimate out how much critical illness coverage you need with our calculator.

Can you go crazy and get all the CI cover you want?

No, there’s an industry cap on the amount of CI cover you can get. Generally, it’s at $3,000,000.

You probably don’t need that much and it can get really expensive.

How to get covered for CI?

There are various ways to get critical illness coverage.

You can add a CI rider to a term insurance or a whole life insurance. (Check out the differences between the both of them.)

Or.. through a standalone CI plan (the next section).

3) Early Critical Illness Cover

early critical illness plan singapore

What is an early stage critical illness plan?

A typical early CI plan pays out a lump sum when an early, intermediate, or late stage illness occurs. 

It usually comes as a standalone plan. Meaning there’s negligible coverage for death and TPD. And so, it shouldn’t form the sole life insurance component in a portfolio.

A unique feature of such plans is that is can be claimed multiple times. And when late stage CI happens, it can payout a multiple of the basic sum assured.

Purpose of it?

The main objective of such a plan is to allow yourself to have a full recovery. The payout allows you to deal with expenses when you take a short break from work.

It also allows you to afford additional medical costs not covered in the hospital plan like alternative treatments.

Critical Illness Insurance VS Early Critical Illness Insurance

CI CoverEarly CI Cover
PurposePrimarily for the loss of incomeRecovery + a smaller loss of income
CoverageJust the late stage 37 CIsCovers early, intermediate and late stage
PayoutsJust one-time payoutCan claim multiple times depending on the plan
PremiumsExpensiveEven more expensive

Is early critical illness insurance necessary? 

“Should I get early CI?”

That’s the question most people are asking.

There are no right and wrong answers – it really boils down to your personal preference and your budget.

I know you may not be satisfied with that answer so there are some key considerations later on.

How much to cover?

As the premiums for early CI are even higher than CI, you might not need a high coverage (cost vs benefit).

As a general rule of thumb, it can be your annual income * 1 to 2 years. Reason behind it: early stage CIs generally take lesser time to treat, and have a higher survivability rate.

Estimate how much early critical illness coverage you need with our calculator.

There’s also a cap to how much cover you can buy.

Although it varies, it’s around $250,000 sum assured per company. And the $3,000,000 CI limit per life still applies (inclusive of CI and early CI). And there may be other caps.

How do I get covered for early CI?

Like the CI cover, you can get coverage for early CI through a rider attached to a term plan or a whole life plan.

But it’s mainly through a standalone plan. 

5 Key Considerations for Early Critical illness Insurance

considerations for early critical illness insurance

1) Are you already going for regular screenings?

There’s a growing popularity of regular screening in Singapore. 

Here are two reasons why you should get early CI cover if you’re one of them:

  1. Regular screening leads to a higher chance of discovering early stage CI, and if you’re able to claim for it, an early treatment can be administered which leads to better chances of recovery and survivability.
  2. If you’re going for these regular screenings, conditions like high blood/cholesterol and minor illnesses may come out. All these will affect your chances of getting any form of insurance, especially early CI. Chances are that these will be excluded or applications will be declined. You’ll then find yourself in no man’s land. So be sure to get it when you’re healthy

2) Concerns with CI recurrences

survey done by AIA in 2016 indicated that nine out of ten Singaporeans find it difficult to get another critical illness plan after getting diagnosed with critical illness. 

And that’s when early CI plans come into the picture…

They allow multiple claims (subjected to terms and conditions) which can be very useful to a diagnosed patient because chances of another occurrence are much higher. 

3) Are you already insured with the basic coverage?

Apart from medical insurance (which you should already have), do you already have the 3 main coverage – death, TPD, and CI? 

These 3 forms the basis of proper insurance planning because they cripple the ability to work.

It wouldn’t make sense if you want to cover for early CI without having those 3 catered for first. 

Early CI coverage is usually seen as a bonus.

4) What’s your budget?

The premiums for early CI is one of the most expensive forms of life insurance (because of a higher chance of occurrence).

If you’re young, the premiums for this would be cheaper.

If you’re older, the premiums for an early CI may not be justifiable (do a comparison to know). 

But… if you do have the budget to allocate, go ahead. 

5) How’s your family medical history looking?

Illnesses like heart diseases and cancer may be hereditary.

If you know that your family members or relatives have such illnesses, the chances of you getting said illnesses may be higher.

It’s like standing in the middle of the road and seeing a truck coming at you (although relatively far).

It may or may not hit you…

So, be sure to have a contingency plan.

Conclusion

That’s a really long read.

To summarize everything:

The implications of a critical illness could cause your whole world to crumble down – financially, emotionally, and physically.

…not just on yourself, but the people around you (who matter the most).

While there may be no real solutions for the emotional and physical pain that comes with it, the financial pains can be prevented.

With critical illness and early critical illness insurance, you can have a greater peace of mind that if a dreaded illness were to occur, you can still be in safe hands.

Critical illness insurance is usually the main course, and early critical illness insurance is the dessert.

The main course is needed to satisfy your needs (hunger), but the dessert may be optional.

However…

If you have the budget to spare and went through the key considerations, then take the first step to compare the various early CI plans in Singapore.

Abram Lim

With over 7 years of experience in the financial advisory industry, and previous stints in Citibank and UOB, Abram eagerly shares his knowledge by publishing research-backed articles. Learn more about Abram