Early Critical Illness (and CI) Insurance in Singapore: Guide for 2019
Everyone is talking about critical illnesses in Singapore, be it early or late stage, and the insurance that comes along with it.
Are these really critical?
Today, we take a more objective look at it.
In this ultimate guide, you'll get EVERYTHING you need to know about critical illness insurance (it can be lengthly!), but this would be the only resource you'll ever need to read.
(there are very interesting statistics in the later part of this guide)
So, read on!
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What is Critical Illness (CI) and Early CI?
Call it critical illnesses, dread diseases, critical care, whatever you want...
They mean the same thing but let's stick with critical illness for now.
The Life Insurance Association Singapore has specific definitions of what they are.
In total, there are 37 CIs. And these definitions are standard across all insurance companies.
These definitions were revised in 2014 and the reason why these are standardised is because it provides greater transparency for customers to compare different plans available from the insurers.
It also provides 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.
... however, do note that not all companies provide the full 37 CIs coverage - see the contract.
Although it may seem disadvantageous, it shouldn't be a big issue because of all CI claims, about 95% arise from just 5 CIs - more on that later.
Although there is a standardisation of the CI definitions, there is none with Early CI.
Here are the list of 37 CIs...
For now, let's see what's happening around us. We'll talk more on the insurance part later on...
The 5 Worrying Statistics of Critical Illness in Singapore
You must be wondering... typical scare tactic.
Well fine, let's look at this objectively and start off with the important facts and figures of critical illnesses in Singapore.
1) Critical illnesses may contribute to more than 60% of all death cases
Here are 2 main studies done on the causes of death in Singapore.
The World Health Organization has done a study on Singapore, and the 2 main causes of death - cardiovascular diseases and cancer - contribute to about 61% of total deaths.
To give another perspective, I'm sure you've read about the many injuries that lead to death - horrific car accidents in the news and so on.
But these deaths only contribute to less than 5% of all deaths.
In another statistic produced by the Ministry of Health, the top cause for death is cancer at 29.6%. It is 50% more than the next cause of death which is Pneumonia at 19.3%.
That's the main reason why cancers are the most "hot" topic in recent years (and really, the many years before that). And one that you should really pay attention to.
Taking a deeper dive into cancer, these are most common types of cancer diagnosed in Singapore:
2) Prevalence/Probability of critical illness
The Singapore Cancer Society has publicised that 37 people are diagnosed with cancer everyday.
And everyday, 16 people die from it.
In such a small country, the numbers reflect an alarm sounding off, and it's getting louder day by day.
If you don't see this as a concern, I don't know what would.
3) These 5 critical illnesses contribute to almost 95% of all CI claims
Out of all CI claims from the insurance companies, around 95% come from these 5:
- Major Cancers
- Heart Attack
- Coronary Artery By-pass Surgery
- Kidney Failure
It shows the significance of these 5 compared with the rest.
Detailed claim statistics will be discussed further down this guide (it'll be very interesting).
And if you really do want to improve your health and well-being, specifically cater your diet and exercise to the above to reduce a huge chunk of undesirables happening.
4) Survival rates increase BUT more are getting cancer
The Straits Times have reported that according to a recent study done over a period of 35 years, the number of men who survive a cancer diagnosis by at least five years has gone up from 13.2% in 1973-1977 to 48.5% in 2008-2012.
In that same period, women survivors doubled from 28% to 57.1%.
It's all good news. And one contributing factor would be medical advancement.
... but rate of cancer diagnosis has also increased.
Is it because in this modern age, more of us are eating unhealthier, more stress in our jobs and personal lives, and the lack of time (or the never-ending excuses) to exercise?
The report states that an unhealthy lifestyle like tobacco smoking and obesity not only increases the probability of cancer, but also results in a lower survival rate amongst those who are already diagnosed with cancer.
On a brighter note, survival rates also increased because of screening, early detection and treatments, leading to prolonged lives.
These early screenings can detect pre-cancerous cells, which if removed ASAP, may prevent it from becoming cancerous.
And if it's detected in the early stages, the quick treatment of it increases the chances of survival and recovery.
This gives more importance to the so-called early critical illness plans which provide a lump sum to cover the period away from work for rest and recovery (and still pay the bills), and the financial support to seek care that is outside the scope of hospitalisation insurance (like alternative treatments).
Get a comparison of the early CI plans in Singapore here.
5) Cost of a Critical Illness
With the limited data available, it's difficult to ascertain the average cost of all CIs.
And so I'd rather touch on just the one that has the highest impact so far - once again, drum rolls, cancer.
It's not uncommon to read stories of cancer patients on the news.
By far, they reflect the true costs and more importantly, the raw emotional and physical pains that come with it.
Let's start with the costs...
Costs will invariably depend on the stage and type of cancer one is in. (e.g a stage 4 cancer patient requires more chemotherapy treatments compared to one in the early stages)
Seedly has done a research on the cost of healthcare treatments and cancer in Singapore, and they have estimated the cost of late stage cancer to range from $100,000 to $200,000 which translates to $8,400 to $16,700 monthly.
Given that the median gross monthly income from employment in Singapore is at $4,232 in 2017, how is one ever going to cover for that monthly cost?
(Note: the median gross monthly income is from the Ministry of Manpower. The figure includes employee & employer CPF contributions along with personal income tax, which may not be fully liquidable, and thus, the disposable "take home" income is much lesser.)
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 most 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 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.
- 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 Dependent 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 at the medical side, 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 into her story, check out this link.
Implications of a Critical Illness
From the story above, you would know that it's not just the medical costs that can pose a concern. There are other financial costs to consider too.
Along with Death and Total & Permanent Disability, critical illness can take away the ability to work.
How would you find money to replace income that is lost during that period? (some may never recover from a critical illness).
Here are some of the typical commitments, goals, and expenses that one has throughout his lifespan:
To list down the few essentials:
- Supporting parents
- Household expenses
- Providing for kids
- Housing loan
- Saving for retirement
So on top of the medical costs incurred from the CI, don't forget...
You still have these other commitments and goals to cater for, and this could amount to an hefty amount.
Why most Singaporeans (including YOU) need CI Cover
A lot has been said about the prevalence and the implications of a CI happening.
What has the majority of Singaporeans done to address it?
I'm sure most of you are not going to read that report so I'm just going to pick out the important points and give a summary of it.
The average working adult in Singapore has about $60,000 of CI cover.
Think for yourself: is it enough to last for 5 years? (rule of thumb for CI recovery)
And how much does one need?
The association recommends a cover of $316,000.
This leaves a protection gap of $256,000 and their cover only represented 20% of their total needs.
So if most people are only covered with just 1 year of income, what happens to the other 4 years?
You're not receiving an income but expenses are continuing on or even at a higher amount.
Now, those figures are a general guideline and everyone is different.
So the next section would allow you to determine a rough cover for yourself.
Critical Illness Cover Calculator: "How Much Do I Need?"
So you've got your number.
Now, it's time to look at how you can mend this gap.
The 3 Insurance Plans that Deal with Critical Illness
If you wish to beef up on your critical illness cover, what are the options?
There are mainly 3 types:
- Hospital plan
- Critical Illness Cover
- Early Critical Illness Cover
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) Hospitalization Plan
The main objective of a hospitalization plan is to cover for hospital & surgery bills and some 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 foundational plans 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 it enough?
The hospital plan usually only covers things that happen in the hospital.
But when you're back at home and unable to work?
Those daily expenses unrelated to medical costs are not catered for by the policy.
This brings us to the 2nd option...
2) Critical Illness Coverage
What does it do?
A CI cover 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 worth it or necessary?
You ask: "Why buy critical illness insurance?"
I believe if you've gone through this guide, you can already see the need for this particular type of insurance.
To further provide greater proof that critical illness insurance is important, here are some statistics from real claims:
NTUC has provided valuable information on their claims statistics which are broken down monthly.
You can see the details of claims that were settled: the type, the cause of it, age of the insured and the claim amount.
Zooming in to a particular month, May 2018...
There were 156 Death claims, 162 Critical illness claims, and 2 Total & Permanent Disability claims.
Although it may seem that CI claims are only slightly more than Death claims, if you take a closer look, a majority of the death claims stem from CI.
And 2 causes always appear - cancer and heart attack.
CI can lead to not only CI insurance claims but death claims eventually (when it's "time"). And thus, is the reason for a huge chunk of all life insurance claims.
Can I go crazy and get all the CI cover I want?
The premiums for CI insurance are usually higher when compared with death and TPD as the probability of occurrence is higher - one still has to watch their budget.
Having said that, there's a $3,000,000 industry cap on the amount of CI cover you can get.
You probably don't need that much and it can get really expensive.
So, how much critical illness coverage do you need?
As a rule of thumb, it should be your annual income * 5 years. (scroll up to use the calculator if you haven't done so)
How do I get covered for CI?
And now we move on to the last solution...
3) Early Critical Illness Cover
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.
Purpose of it?
The main objective of such a plan is to allow yourself to have a full recovery.
The lump sum payout allows you to afford additional medical costs not covered in the hospital plan like alternative treatments.
And to deal with expenses when you need a break from work to recover (after no-pay leave is exhausted).
Critical Illness Insurance VS Early Critical Illness Insurance
Early CI Cover
Primarily for loss of income
Full recovery and loss of income
Usually just late stage
Cover up to 37 CIs
Covers early, intermediate and late stage
May be able to cover up to 100 CIs
Just one-time payout
Can claim multiple times depending on the plan
Even More Expensive
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 as a standalone plan.
If you have yet to cover for death or TPD (or you're lacking those coverage), you can consider getting a term policy. If you have those covered already, then a standalone policy might be more suitable.
There's also a cap to how much early critical illness coverage 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).
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.
I know you may not be satisfied with that answer so here are some key considerations to help you decide...
5 Key Considerations for Early Critical illness Insurance
1) Are you already doing regular screening?
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:
- Regular screening leads to a higher chance of discovering early stage CI (duh!), and if you're able to claim for it, an early treatment can be administered which leads to better chances of recovery.
- If you're going for these regular screening, conditions like high blood/cholesterol and minor (or not) 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 multiple illnesses
A 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 is 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, CI?
These 3 forms the basis of everything because they take away the ability to work.
It wouldn't make sense if you want to cover for early CI without having those 3 catered for first.
The premiums for early CI is one of the most expensive forms of life insurance (high 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?
If you notice your family members or relatives having such illnesses, 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...
And because the illnesses may be hereditary, it automatically puts you on that road, rather than on the pavement.
So, be sure to have a contingency plan.
That's a really long read.
To summarize everything:
The implications of 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 solutions for the emotional and physical pain that comes with it, the financial pains can be prevented.
Through 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.
If you go and eat at a "insurance" restaurant, you'd be served critical illness insurance as a main course, and the early stage plan as the dessert.
The main course is needed to satisfy your hunger (or cravings), but the dessert may be optional.
if you're one of the lucky few that have the budget, or perhaps satisfy some of key considerations in deciding whether early CI plans are for you (see above), then take the first step to compare the various early CI plans in Singapore.