CRITICAL ILLNESS INSURANCE
The critical illness insurance is designed to provide for a lump sum payment when a person is diagnosed with any of the critical conditions in his policy. To provide more clarity to the policy cover, Life Insurance Association of Singapore (LIA) has significantly defined Critical illness on its members’ policies to provide a wider coverage and clarity to the consumers.
However, it is important to understand that despite that insurers follows the guidelines of LIA, many insurers further the coverage of their policies so as to distinct themselves from their peers.
37 Critical Conditions Covered
- Heart attack with a specific severity
- Kidney failure
- Major cancers
- Coronary artery bypass surgery
- End-stage lung disease
- Aplastic anaemia
- End-stage liver failure
- Deafness (loss of hearing)
- Heart valve surgery
- Major burns
- Loss of speech
- Multiple sclerosis
- Major organ/bone marrow transplantation
- Muscular dystrophy
- Surgery to aorta
- Parkinson’s disease
- Fulminant hepatitis
- Alzheimer’s disease/severe dementia
- Primary pulmonary hypertension
- Motor neurone disease
- Benign brain tumour
- HIV due to blood transfusion and occupationally acquired HIV
- Bacterial meningitis
- Viral encephalitis
- Blindness (loss of sight)
- Angioplasty & other invasive treatment for coronary artery
- Paralysis (loss of use of limbs)
- Major head trauma
- Progressive scleroderma
- Apallic syndrome
- Terminal illness
- Other serious coronary artery disease
- Systemic lupus erythematosus with lupus nephritis
- Loss of independent existence
Accelerated vs Additional Benefits
In a Group Employee Benefits Insurance, Critical Illness is usually a rider to a Term Life Insurance. This means that you will need to have a Term life Insurance, before you can have a Critical Illness Cover. There are 2 types of covers: Accelerated or Additional
With Accelerated Cover, the policy will pay out the sum insured when the insured is diagnosed with any of the 37 critical conditions. With the payout, the Term Life cover will be reduced by the amount paid under the Critical Illness Cover.
Chris has a $500,000 Term Life Cover with $100,000 Accelerated Critical Illness Cover. Chris was diagnosed with a major cancer and has successfully claimed on the Accelerated Critical Illness Cover. With that, the Critical Illness cover under his Term Life policy will cease and he is only left with $400,000 Term Life Cover.
With Additional Cover, the payout for Critical Illness will not affect the Term Life Sum Insured. The Term Life Sum Insured will remains the same after the Critical Illness payout was made.
Chris has a Term Life Insurance of $500,000 and a Critical Illness Cover of $100,000 on Additional basis. Chris was diagnosed of a major cancer and has successfully claimed $100,000 on his Critical Illness policy. Despite making the claim, the sum insured of his Term Life policy remains at $500,000 since the Critical Illness Payout is in addition to the Term Life policy.
It would sounds logical that the Additional Basis is better and why would anyone choose the Accelerated cover? One reason is that the premium for Accelerated is relatively lesser as compared to Additional Basis.