The ultimate guide to critical illness insurance in Singapore

What is critical illness insurance?

Critical illness refers to serious or debilitating illnesses that affect your quality of life. Critical illness (CI) insurance generally refers to a type of insurance that pays out a lump sum if you're diagnosed with a critical illness covered by the policy. CI insurance is designed to help support you and your family in your time of need, so you can focus on recovering instead of worrying about your financial needs.

The Life Insurance Association (LIA) of Singapore details an industry-accepted list of 37 Critical Illnesses*. However, 90%** of the advanced-stage claims received by life insurers are for the following five CIs:

• major cancers
• heart attack of specified severity
• stroke with permanent neurological deficit
• coronary artery bypass surgery
• end-stage kidney failure

Why is critical illness insurance important?

In Singapore:

• 21 people die from cardiovascular disease (ie heart disease and stroke) every day^
• 1 in 3 deaths are due to heart disease or stroke^
• 39 people are diagnosed with cancer every day and 15 die from it^^
• chronic diseases among both the young and old are on the rise*^

Over the average recovery period for a CI, a working adult would need coverage worth SGD316,0006 based on the average income in Singapore but most adults only have SGD60,000 in coverage — a shocking 80% protection gap^*. Purchasing a CI plan can help soften the financial blow arising from hospitalisation, surgeries and outpatient treatments.

Do I still need a CI plan if I already have a hospitalisation plan and life insurance?

The payout from a CI plan can be used for expenses beyond medical treatments. The payout can help you:

• replace your income if you have to take time off from work, experience a reduction in earnings or unable to return to work entirely.
• pay for long-term care and rehabilitation expenses such as medication, prolonged treatment, purchase of home-based medical equipment or special assistance such as hiring a nurse, domestic worker or even childcare.
• manage regular living expenses and financial obligations which may include household bills, home mortgages, car instalments, credit card bills and student loans.
• keep your savings intact for the intended purpose whether it’s retirement, children’s higher education, investment or other long-term financial goals.
• take care of your dependants and preserve your family’s current standard of life.

What does critical illness insurance cover?

CI plans come in many shapes and forms depending on the insurer. Most plans should cover the 37 illnesses listed under LIA Critical Illness Framework 2019 while some niche plans can also include gender-specific coverage for cancers and major illnesses that are more prevalent in one gender over another (eg cervical cancer and prostate cancer). HSBC Life CritiCare for Her and HSBC Life CritiCare for Him are examples of such plans designed to cover gender-specific CIs.

Some CI plans allow you to receive a payout in the event of an early diagnosis. It’s generally advisable to opt for such early-stage critical illness (ECI) insurance as receiving treatment in the early stages of a CI can mean better treatment outcomes and better peace of mind.

Dealing with a critical illness may not be a one-time affair. It’s worth looking into a CI plan that offers multiple lump-sum payouts in case of recurrence. For recurrent cancer coverage, HSBC Life Cancer ReCover will help protect cancer survivors from the cost incurred from any further relapse or new diagnosis. Alternatively, consider a plan like HSBC Life Super CritiCare which offers multiple lump sum payouts for early, intermediate, and advanced stages of your ailment. The plan also includes relapse coverage for critical illnesses with high recurrent rates such as cancer.

How long does critical illness coverage last?

Some CI plans allow you to extend the coverage until a certain age (eg 65, 75, or 100 years old) while others offer shorter coverage periods of 10, 20 or 30 years depending on the plan and the insurer.

What does critical illness insurance not cover?

If you have a pre-existing illness, your insurer may provide you with one of the following coverage options:

• full coverage including your pre-existing conditions — no exclusions
• coverage for your pre-existing condition at a higher premium
• coverage for your pre-existing condition after a moratorium period (ie a length of time, usually between 1-2 years, where you cannot make any claims for your pre-existing conditions)
• coverage for pre-existing conditions after a moratorium period but with a lower limit on claims related to the condition after the waiting period is over
• standard medical insurance that excludes coverage for your pre-existing conditions

In addition, most CI plans will not cover genetic medical conditions that run in your family.

How can I purchase a critical illness plan?

Depending on your coverage need and budget, you can consider purchasing a standalone CI plan or as a rider to your term policy or whole life policy. A standalone CI plan is usually more expensive than a rider as it may also offer more extensive coverage.

How much critical illness coverage do I need?

Any amount of coverage is better than none. However, it is recommended that you have a coverage amount of at least 3.9 times your annual salary6. For more information on how you can stay protected against CIs, check out our full suite of critical illness plans or leave your details below to get in touch with one of our financial planners for a chat.

To find out more about critical illness insurance and plan for your future financial needs, leave your details below to get in touch with one of our financial planners.

Sources:

*LIA Critical Illness Framework 2019

**www.lia.org.sg/media/2163/media-release.pdf

^Singapore Heart Foundation: Heart Disease Statistics

^^www.singaporecancersociety.org.sg/learn-about-cancer/cancer-basics/common-types-of-cancer-in-singapore

*^The Straits Times: Life insurers to change definitions of critical illnesses, published 29 August 2019

^*The Straits Times: Working adults have inadequate cover if critical illness strikes, says study, published 26 April 2018

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, or 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 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.