Getting a CI insurance is thus a crucial step in your overall insurance planning. Other than getting suitable insurance, the right amount of coverage is also important to reduce financial stress while one is recovering.
What is critical illness insuranceWhat is critical illness insurance?
CI insurance provides a lump sum payout when the insured is diagnosed with a critical illness. There are about 37 common critical illness which are included in most CI plans. Different insurers offer varying levels of coverage with regards to the severity and type of illness.
Although some argue that hospitalisation plans can provide some coverage for medical fees, there are many other expenses in the wake of a critical illness, so the lump sum payout by a CI policy will come in handy.
When a person is struck by critical illness, there could be a need to stop work, hire a domestic helper, or attend alternative treatments that are not covered under a traditional health insurance plan. With the loss of income, there are also ongoing debts/expenses that must be taken care of – mortgage payments, family expenses, and so on. This is why a lump sum payout can provide some financial cushioning.
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Considerations for critical illness plans. How much coverage?
There is no one-size-fits-all solution when it comes to how much insurance coverage one needs. Bearing in mind that you would most likely use a CI payout to cover medical treatment fees and daily expenses due to the loss of income, this could give you an idea of the amount you need. Most advisors will also recommend a minimum sum that covers 60 months’ worth of living expenses as 5 years is the estimated duration for a person to recover from a critical illness.
You might also want to consider other possible expenses during this period, such as the need to purchase certain equipment or employ help, as well as covering mortgage loans, if any. If in doubt do speak to a wealth planning manager who can advise on the sum assured taking into consideration your personal circumstances. -
Which type of CI plan is suitable?
While a basic CI policy is considered a staple for most individuals to cover medical expenses and loss of income, an early CI or multi-pay plan is a good to have, if you can afford it. Keep in mind that the most important insurance to meet early CI needs is still a comprehensive health insurance plan.
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Examine your family’s medical history
Although a critical illness can strike anybody at any time, having an idea of your family’s medical history can help to estimate your risk propensity for certain illnesses. If, for instance, your family has a history of cancer, a multi-pay plan could be useful as cancer can recur. You can also consider CI plans that specifically cover cancer-related illnesses. Other specialised CI plans include covering women-related illnesses.
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Assess your budget and needs
Insurance policies requires a long-term commitment. You should plan your budget and assess your insurance needs regularly with your advisor to ensure that you can meet your coverage needs and premium payments.
