Critical Illness Insurance

How it works

• The Life Insurance Association, Singapore (LIA) has standard definitions for 37 severe-stage critical illnesses, used by all insurers.
• Multi-stage critical illness plans also cover early and intermediate stages, paying a proportion or the full amount by stage.
• Plans are either standalone (claims do not affect the life cover) or accelerated (claims reduce the life sum assured).
• Some products offer multiple claims or an increased sum assured up to a certain age.

Key concepts

Concept	Meaning
Waiting period	Certain illnesses such as cancer and heart disease diagnosed within a period after the policy starts (commonly 90 days) are not covered.
Survival period	Some terms require the insured to survive a number of days after diagnosis before a claim is paid.
Accelerated benefit	After a critical illness claim, the life sum assured is reduced accordingly.
Multi-stage	Early, intermediate and severe stages are defined separately, with different payout proportions.
Level or stepped premiums	Some premiums are locked at the entry age; others are adjusted with age.

Usually suitable for

• Working people whose family relies on their income
• People with a family history who want to prepare early
• Self-employed people or those with irregular income

Usually not suitable for

• Reimbursing actual medical bills (this is the role of medical insurance)

Risks to note

• Claims are only paid if the contract definitions are met.
• Diagnoses during the waiting period are not covered.
• With accelerated plans, the life sum assured is reduced after a claim.
• Policies without guaranteed renewal may have their rates adjusted.

Questions to ask

• Which stages are covered?
• Is it standalone or accelerated?
• How long are the waiting and survival periods?
• How many times can I claim?