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  • Writer's pictureFinancial Fortress

Do I Really Need a Critical Illness Plan?

Updated: May 9, 2022

Physician works with critically ill patient in hospital

There are different types of insurance plans in the market, such as:

  • Life Insurance

  • Health Insurance

  • Disability Insurance

  • Homeowner’s Insurance

  • Car Insurance, and of course

  • Critical Illness Plan

Each of them has different policies and terms, and your need for it depends on your lifestyle and its affordability. The premium also varies, some are affordable, some aren’t.

We’ve looked into the basic types of insurance in our previous article. Here, we’ll focus on critical illness insurance. Many may wonder if the cost of obtaining a critical illnesses plan outweighs the benefits.


What is critical illness insurance?

While many think that health insurance is sufficient, it doesn’t cover all diseases.

A critical illness plan is a type of medical insurance plan that’s designed for life-threatening illnesses such as cancer, kidney failure, and stroke.

Most importantly, it’s insurance that could protect you from a huge financial debt.

In fact, one should know that the top 5 causes of death in Singapore, according to MOH, are the following:

  1. Cancer

  2. Pneumonia

  3. Heart diseases

  4. Cerebrovascular diseases, and

  5. Death due to accidents, violence, and self-harm

According to the Singapore Cancer Registry,1 in every 4-5 Singaporeans may develop cancer in their lifetime, and 450-550 young adults between 16-39 get diagnosed with cancer each year.

For critical illness coverage, different insurers offer varying levels of coverage, based on the number, types and/or stages of critical illnesses covered.

Insurance for your health concept

For critical illness coverage, different insurers offer varying levels of coverage, based on the number, types and/or stages of critical illnesses covered.

Keep in mind that hospitalisation insurance is not a replacement for critical illness cover due to the fact that the latter often result in much greater medical costs -- which traditional health insurance wouldn’t be able to fully cover.

On the other hand, the policies of critical illness plans help to cover those hefty hospitalisation costs. Its policies can also come at a relatively low cost too. However, this depends on the type of illnesses/emergencies.

Moreover, this lump sum of payout can be used however you like it. For instance, you have a choice to use it to support your dependents, rather than just using it to cover hospital bills.

Lastly, while you may think that having life insurance is sufficient, these only give payouts once the individual has passed on, while critical illness plans are able to stay the payout in the event that the policyholder isn’t able to earn an income any longer.

Why skipping critical illness insurance is a bad idea

Critical Illness Insurance form and stethoscope.

Besides keeping you financially afloat during medical emergencies, there are various reasons why skipping critical illness plans is a mistake.

1. MediSave and MediShield have limitations

Yes, both of these covers hospital stays and treatment. However, government health insurance has limited coverage. For instance, MediSave only covers SGD 550 for the first two days of hospital admission and will decrease to SGD 400/day from the third day onwards.

Similarly, MediShield only covers those who stay in B2/C-type wards in public hospitals or A/B-1 type wards in private hospitals -- but that only covers a small part of the bill if one chooses to stay in a private hospital.

2. You’ll never know when critical illness will strike

While it’s highly unlikely that you’ll make a critical illness insurance claim while you’re young, active, and healthy, this doesn’t assure you of the fact that you won’t suffer from a critical illness when you get older. In fact, CI claims among 31-40 are growing, according to Aviva.

So the best time to start is when you’re young because the older and more medical history accumulates under your name, the more exclusions will be added to your policy - which means you’ll be getting less for a higher premium!

3. Your savings won’t be enough to cover your expenses once critical illness strikes

Critical illnesses are more costly than standard medical emergencies. Not only are these treatments usually long term, critical illness may leave a person with a disability, which usually restricts them from moving about freely and being able to return to their jobs.

Take cancer for example. Even after expensive surgeries to remove the source of tumor, subsequent chemotherapies may still be needed, not to mention other complications that may arise. This is something that’s not usually covered by regular health insurance.

Additionally, setbacks are still unavoidable during the road to recovery, such as not being able to earn an income due to their inability to return to work. This makes it difficult to keep up with personal bills such as the phone, internet, medical supplements, or even your family’s everyday living expenses.

This is where critical illness insurance’s payout can greatly help reduce financial stress. Plus, as was previously mentioned, you’re not limited to what you can do with the money.

Know what Critical Illness Plan to get through a financial advisor

Financial Advisor giving advise

If you’re looking to obtain the right CI plan for you, consider talking to a financial advisor. A financial advisor has the ability to analyse your financial capability, lifestyle and needs, and is then able to direct you to the type of medical insurance plan that suits you.

Reach out to us and we’ll connect you to a licensed financial advisor with the expertise.


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