Critical illness insurance: Should you get a standalone plan or a rider?

Health insurance is one of the most important investments we can make — after all, what are we without our health? While health insurance such as a hospitalisation plan can cover you for the costs of a hospital stay, a lump-sum payout from other types of health insurance — such as a critical illness (CI) plan — may offer flexibility to use the payout however you need it.

Critical illness insurance is typically offered as a standalone plan or as a rider that can be added onto other insurance plans like life insurance or health insurance. In Singapore, a typical CI plan covers you for the 37 severe stage critical illnesses listed under the Critical Illness Framework 2019 by the Life Insurance Association of Singapore (LIA)*.

To ensure you choose the best CI plan that suits your needs, here’re a few things to keep in mind.

How does critical illness insurance work?

The idea behind critical illness insurance is to provide coverage for the most serious and costly illnesses such as major cancers and cardiovascular diseases (ie heart diseases or stroke), which might not be covered by other health or life insurance plans. Late-stage cancer treatments, for example, can cost between SGD100,000 and SGD200,000 per year^. Having a CI plan in place to cover medical expenses and disruptions to your income can alleviate the financial stress, letting you focus on your recovery.

What is the difference between a standalone CI plan and a CI rider?

Standalone critical illness insurance plan

A standalone critical illness plan is just that: standalone. This means it stands apart from your health or life insurance policies and is a plan in its own right. 

Not all standalone CI plans have the same payouts and coverage. Some cover a critical illness only once while others provide continual protection against multiple critical illnesses or diagnoses. Once you receive the full sum assured for your CI claim, the plan will terminate. On the other hand, a standalone multiple-coverage critical illness insurance offers coverage for more than one CI diagnosis such as re-diagnosed cancer, recurrent heart attack and stroke.

Critical illness rider or add-on

A CI rider is an add-on that you can attach to other insurance plans such as health or life insurance.

For instance, suppose that you’re at high risk of a critical illness like cancer and you’ve purchased HSBC Life Term Protector life insurance.  In this case, you might consider adding a CI rider like HSBC Life Super CritiCare rider to your Term Protector policy.

Should you get a standalone plan or a rider?

It all comes down to your protection needs and budget. 

For instance, if you’re the primary income earner in your household providing for your family, having life insurance may be your priority as the payout can offer financial support for your loved ones when you’re no longer around to provide. In such a scenario, you might want to consider a CI rider to have comprehensive coverage.

On the other hand, suppose that you have a family history of gender-specific critical illnesses such as ovarian cancer or prostate cancer. You might also consider a standalone CI plan that offers coverage for gender-specific critical illnesses. 

Keep in mind that insurance is a long-term financial commitment. It’s important to ensure that you’re able to finance your premiums continuously to avoid a policy lapse. To understand your protection needs better and find a solution suitable for your specific circumstances, leave your details below to speak to one of our financial planners today!

Sources:

*Life Insurance Association Singapore, Critical Illness Framework 2019

^Average Cost of Cancer Treatment in Singapore, ValueChampion

Disclaimer:

This article is for general information only and does not take into account the specific investment objectives, financial situation or needs of any particular person. The views expressed herein do not necessarily reflect the views of HSBC Life (Singapore) Pte. Ltd. and should not be construed as the provision of advice or making of any recommendation. There is no intention to distribute, offer to sell, or solicit any offer to purchase any product. We recommend that you seek the advice of a qualified financial advisory professional before making any decision to purchase an insurance or investment product. Whilst we have taken reasonable care to ensure that all information provided was obtained from reliable sources and correct at the time of publishing, information may become outdated and opinions may change. We are not liable for any loss that may result from the access or use of the information herein provided.

Information is correct as at 1 February 2023.

This advertisement has not been reviewed by the Monetary Authority of Singapore.