5 common misconceptions you may have about critical illness and protection

In addition to major cancers, other critical illnesses and leading causes of death include heart attacks, stroke, lung issues and others. The Life Insurance Association of Singapore (LIA) defines 37 critical illnesses in its 2019 framework.

Critical illnesses are challenging to both the patients and their caregivers too. According to a recent Great Eastern consumer survey, over 50% of CI patients and their caregivers depend on insurance payouts to manage their financial expenses.  Almost 1 in 3 (30%) of them incur over S$250,000 in medical and hospitalisation bills for their entire recovery duration with nearly 2 in 5 (40%) with no income for at least 12 months. Over 50% of them believe that they will be hit by CIs more than once.

With regular health screenings, CIs can be detected even in their early stages while we are still working. Furthermore, we are living longer with better rates of survival due to technological advances in medicine and healthcare.

With that in mind, it is alarming that most Singaporeans do not have adequate CI coverage.

According to the LIA 2017 Protection Gap Study – Singapore, the policies of an average working adult cover only a measly 20% of the total cost of CI, if we assume a CI recovery period of 5 years with inclusion of expenses, outstanding debt payments and lifestyle maintenance.

With the growing occurrence rate of CIs, it is important to have adequate CI coverage. This is in line with the Great Eastern consumer survey which found that 73% of those who had previously suffered from a CI are willing to pay higher premiums for more protection against various CIs or recurrences in the future, and over 80% regretted not getting more coverage.

Perhaps it’s time to review your CI coverage and assess how prepared you are if you *touch wood* were struck by a CI. Let us debunk some misconceptions you may have about your CI protection:

1. You feel your coverage is sufficient (but is it, really?)

What are the real costs to be incurred if CI strikes? It is hard to say. Every CI condition is different, and everyone’s recovery process (up to 5 years) and family situation vary. If you’re an unfettered singleton, the only person you will need to worry about is yourself (and maybe, your parents). But if you’re the sole breadwinner supporting a household of young children and the elderly, the level of stress can be even more daunting.

Going back to the 2017 LIA Protection Gap Study, the average protection needed for an economically active adult is S$316,603. The average CI protection that a Singaporean has is about S$60,000, leaving a protection gap of 80%. That is 3.1 times of the average annual income in Singapore.

Depending on the severity of the CI, the patient might not be able to return to work. This loss of income compounded with outgoing expenses (mortgage, bills, medical, children’s needs, groceries, education, etc) could further add to the family’s financial burden. In the worst case scenario, the patient is permanently unable to return to work and requires continuous treatment with little chance of survival.

One such plan that can help cover your medical costs and address your living expenses is GREAT Life Advantage. This whole life investment-linked plan provides the flexibility to increase the basic sum assured to meet your changing needs at life’s eight milestone events, like the third policy anniversary, the birth of a child or a child entering school, without the need for medical assessment. It also has an optional CI rider that provides up to 3 times of 100% payout for CI.

2.  I have MediSave/MediShield/Integrated Shield Plan and that’s enough (Hint: it’s not)

We do have government schemes such as MediSave and MediShield, as well as private insurance in the form of Integrated Shield Plans that help cover medical and hospitalisation costs.

However, these only cover one aspect of CI costs to be incurred.

What about the other additional costs? Apart from a potential loss in income during recovery, you might also need to spend on a live-in nurse/helper and home improvement expenses (to aid the patient’s recovery or to fit his or her lifestyle changes due to the CI). There are also other costs to be incurred such as household expenses (utilities, rent, etc), transportation costs (taxi or ambulance to and fro the hospital for follow-up visits, emergency admission, rehabilitation) and so on.

As a result, the patient might be unable to fully focus on recovery due to financial stress. He might even attempt to return to work earlier than advised.

Hence, it is important to have a comprehensive CI plan like GREAT Life Advantage and its Complete MultiPay CI Plus Advantage Rider that provides a lump sum payout to help manage these costs.

3. Many CIs have clear signs and symptoms

Not all CIs have obvious signs and symptoms. Take cancer for example. Some cancerous tumours may form and grow undetected for 10 years or more before detection. The individual may also feel physically fine until the cancer is at a very advanced stage.

Some cancers that are not so easily detected in the early stages include testicular cancer, cervical cancer, pancreatic cancer, ovarian cancer, colon cancer and kidney cancer.

Signs such as obvious lumps, bleeding, pain, breathing difficulties and unexplained weight loss may only manifest in the late stages of the disease where treatment is more drawn-out, and full recovery may be difficult.

It’s best to go for regular health screenings to nip any issues in the bud. While not all insurance plans cover all CI stages (once again, review your existing plans!), GREAT Life Advantage with its Complete MultiPay CI Plus Advantage Rider covers all stages of CIs for maximum protection.

It offers 100% payout for each admitted CI claim for up to 3 times. When you’re able to detect and treat the CI in its early stages without worrying about the cost of treatment, this leads to higher survival rates, a quicker recovery period and an overall better quality of life.

4. The sum assured for my insurance plan and CI rider is high so I do not need to worry

Have you actually read and understood the terms and conditions of your CI plan and rider? Not all CI plans in the market provide 100% payout for a claim, so always read the fine print and/or check with your insurance agent.

Sometimes, the CI rider payout is shared with the basic sum assured. An individual may have bought a S$500,000 life insurance policy which gives a S$300,000 CI payout. After the full CI payout has been made, should the individual pass away, the family will only receive S$200,000 from the life insurance plan payout.

With GREAT Life Advantage and its Complete MultiPay CI Plus Advantage Rider, insured individuals receive 100% payout for each CI claim which is admitted, up to 3 times. The payout for CI claims will not reduce the basic sum assured. GREAT Life Advantage also includes death, total and permanent disability, and terminal illness benefits. It will pay out the account value or (after factoring in any ad hoc payments of premium and any withdrawals made) the basic sum assured, whichever is higher, upon the occurrence of death, total and permanent disability or terminal illness.

The plan’s Complete MultiPay CI Plus Advantage Rider also offers up to 300% lifetime coverage against 120 critical illness conditions across different stages, including subsequent cancers, subsequent heart attacks and subsequent strokes. The life assured is able to claim again and again. This is unlike typical CI riders/plans that get terminated once the first payout is made, which can make it difficult for the person to get another CI plan due to existing medical conditions.

5. I just need to buy one CI plan and it will last me for life

Do not assume that your existing CI plan enables you to have continued coverage for life. Always review your existing CI plans as the newer plans in the market are constantly being updated according to evolving health needs.

Also, some CI protection plans/riders will terminate automatically after the first CI claim, and may not cover you against multiple CI occurrences. Can you imagine finding out that you’re actually not covered if you have a CI and need financial help? You do not need to worry with GREAT Life Advantage and its Complete MultiPay CI Plus Advantage Rider that offers you lifetime coverage.

Here’s how GREAT Life Advantage with Complete MultiPay CI Plus Advantage Rider works:

Source: Great Eastern Insurance

Now that we’ve debunked 5 misconceptions about CIs and CI protection, it’s time to cover CI protection gaps that you may have missed.

Find out more about GREAT Life Advantage and Complete MultiPay CI Plus Advantage Rider here.

Notes and Disclaimers:

¹ Subject to a maximum increase in the basic sum assured of S$100,000 or 50% of the basic sum assured as at the date of commencement of the policy, whichever is lower, for each exercise of this option to adjust your coverage. Other terms and conditions apply. The annual premiums may be revised upon increasing the basic sum assured.

² Child Cover Benefit covers children of the life assured up to age 18 only.

*Coverage restores to 100% after 12 months from the date of diagnosis for critical illness (excluding subsequent cancer, subsequent heart attack or subsequent stroke) and after 24 months from the date of diagnosis of the immediately preceding cancer, immediately preceding heart attack or immediately preceding stroke for subsequent cancer, subsequent heart attack or subsequent stroke respectively.

^Potential payout is illustrated based on 50% GreatLink Global Equity Fund and 50% GreatLink Diversified Growth Portfolio, at an illustrated investment rate of return (IIRR) of 8% p.a.. At 4% p.a. IIRR, the payout is illustrated to be S$100,000. The two rates of return used (4% p.a. and 8% p.a.) are purely illustrative and do not represent upper and lower limits on the investment performance. The actual benefits payable will depend on the actual performance of the underlying assets of the funds. The performance of the funds is not guaranteed and the surrender value may be less than the total premiums paid.

Terms and Conditions apply.

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 please contact us or visit the Life Insurance Association (LIA) or SDIC websites (www.lia.org.sg or www.sdic.org.sg).

Investments in this plan are subject to investment risks including the possible loss of the principal amount invested. The value of the units in the Fund(s) and the income accruing to the units, if any, may fall or rise. Please refer to Fund Details and Product Highlights Sheet for the specific risks of the Fund(s). Past performance is not necessarily indicative of future performance.

This Article is written in conjunction with MoneySmart.