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Top seven myths Singaporeans believe about critical illness insurance

by SingaporeLife

Here’s a sobering fact. The Life Insurance Association of Singapore (LIA) 2017 Protection Gap Report found that Singaporeans require an average of 3.1 times of their annual income to adequately meet critical illness (CI) protection needs.

This is after accounting for hospital and treatment fees covered by Medisave.

Why are Singaporeans hesitant to acquire enough CI cover? Could it be because of the things they’ve heard about it?

Well, if that’s the case for you, read on as we debunk 7 of the most common myths Singaporeans believe about CI insurance.

Myth 1: CI is difficult to claim

Fact: Like all insurance policies, CI pay outs are subject to fulfilment of conditions.

One of the most common misconceptions Singaporeans have about CI insurance is that it is difficult to make a successful claim. You may have come across stories (or even have first-hand knowledge) of CI claims being rejected by insurers, causing much disappointment and anger.

Commenting on each individual case would be impossible and inappropriate. However, it’s important to note that CI, like any other insurance policy, is bound by carefully defined conditions, and these conditions must be fulfilled before the claims will be accepted, and the benefit paid.

Some of the common reasons why claims are rejected include:

  • Not meeting the policy definitions
  • Not submitting the required medical documents
  • Not declaring pre-existing condition(s) or lifestyle activities that would affect or invalidate your claim (such as social smoking, for instance)

Myth 2: CI takes a long time to pay out

Fact: With Singapore Life, your CI claim is paid by the next business day.

Another common myth around CI insurance is that processing and paying out the claim takes a long time, which creates inconvenience and anxiety for the claimant.

We understand it can be difficult waiting on the results of a claim, especially when you and your family are worried about your health. That is why Singapore Life will be launching our Next Day Critical Illness Claim scheme, which processes your claim by the next business day.

This scheme is available for customers with a valid CI plan that is at least two years old at the time of diagnosis. To successfully receive your benefits by the next business day, the relevant documents must be submitted by 3pm.

With this service, we aim to be quicker in delivering the support you and your family needs, when you need it.

Myth 3: I don’t need CI as I already have Medishield

Fact: Medishield covers your hospital bills, whereas CI helps you meet living expenses while you recuperate.

Many Singaporeans are confused between hospitalisation plans and CI plans, thinking they are one and the same. The presence of Medishield Life can further complicate matters for some.

To help clear up the confusion, here’s a comparison between Medishield, hospitalisation and CI plans:

 

What’s the Difference Between Medishield, Hospital Plans and CI Plans?
Name of planWhat it is forHow to get it
Medishield LifeBasic healthcare plan that covers part of medical fees and hospitalisation costs.Provided by default to all Singaporeans.
Integrated Shield planExpands the coverage of your Medishield Life plan to cover a greater portion of your medical fees and hospital bills.

May provide additional benefits such as cash reimbursement, private hospitals stays, etc.

Purchased from licensed life insurer.
Critical Illness planProvides an additional lump-sum to fund your living expenses while you recuperate from your illness.

This is crucial as it may be difficult or impossible to resume working immediately after surgery or certain types of treatment (such as chemotherapy.)

 

Purchased from licensed life insurer.

As the above table clearly shows, Medishield and Integrated Shield plans can only be used to pay for verified medical bills. However, the lump-sum payout from a CI plan may be used at your own discretion.

This can be useful if you do not have enough in your Medisave to pay your hospital bills completely; the funds from your CI plan can be used to make up the shortfall.

Myth 4: CI can only be bought as a rider on an expensive life plan

Fact: There are standalone CI plans available.

Perhaps because financial planners like to sell CI as an add-on to life plans, many of us think CI policies are available only as a rider. This further causes us to conclude (wrongly) that we must pay for the entire bundle.

But this simply isn’t true. CI policies are available as standalone plans, giving you the freedom to build your protection portfolio using only the plans you need.

Myth 5: CI is not for the young as the chances of making a claim are low

Fact: CI claims among the 31-40 segment is growing.

This next myth is prevalent especially among younger Singaporeans.

As critical illnesses are more commonly seen in the elderly, there’s the perception that young people won’t be afflicted. The logic then follows that CI insurance is useless to the young, as it is extremely unlikely that a claim will need to be made.

Yes, statistically, the chances of being diagnosed with any of the dread diseases is low in our younger years. However, the risk rises with age. (This is also why insurance premiums get more expensive as we get older.)

However, a low chance doesn’t mean no chance at all – you may still experience a dread disease sooner rather than later. Indeed, industry trends indicate that claims among younger Singaporeans are growing.

From 2016 – 17, Aviva saw a 73% increase in CI claims from Singaporeans aged 31 – 40. This corresponds with recent media reports on the rise of cancer in Singapore.

Myth 6: CI is not useful because I’m not likely to survive

Fact: With early detection and today’s medical advances, there’s a good chance of survival.

Another popular – but flawed! – myth is that a CI plan is likely to be wasted, because the chances of surviving a dread disease is not good.

Indeed, the conditions covered in your CI plan are serious, and in many cases are life-threatening or even fatal. However, modern medicine is making breakthroughs and discoveries all the time, as a result increasing the likelihood of survival for many of these conditions.

As survival rates go up, the need for replacement income becomes more pressing. In this aspect, CI plans will become increasingly important as we progress into the future – not less.

Myth 7: CI can only be claimed one time, and will not protect me should my illness recur

Fact: You can opt for multi-pay CI which amplifies your coverage.

CI insurance provides just one layer of coverage, which means that once a claim has been successfully made, the cover terminates, leaving the claimant not eligible for further protection.

Or at least, this used to be the case.

To cater to growing market demand for multiple layers of cover, insurers have begun to provide CI plans that allow multiple claims, effectively expanding the coverage and providing a more reliable flow of funds to fight the disease.

These policies are known as multi-claim or multi-pay CI plans, and provide up to several times more of the original sum assured.

As you’d expect, these policies come with higher premiums than single-claim plans. However, they could prove vital in selected circumstances, such as during prolonged progression of cancer.

Assess your needs carefully to decide if you should pay for this type of plans.

This was first published at SingaporeLife's website, "Top 7 Myths Singaporeans Believe About Critical Illness Insurance".