Often, I get this question from the people i meet for financial planning. “I already have a hospital plan, do i really need to get critical illness plan to cover myself?”
There is a need for everyone to understand the difference between a hospital plan and a critical illness plan. Hospital plan which is your integrated private shield plans cover your medical expenses incurred during your hospital stay and the costs incurred before and after your hospital stay such as your follow up costs for doctor visits and medication as well as tests such as X-Ray, Ultrasound, CT scan, MRI etc. It covers the immediate expenses incurred and there is a limitation on the follow up expenses you can claim for as it depends on the number of days stipulated by your insurer.
Critical Illness is a cover that provides for 37 major critical illnesses as per listed by Life Insurance Association (LIA) with standardized definitions. There are now 2 types of Critical Illness policies available in the market- Critical Illness (Stage 3-4) & Early Stage Critical Illness (Stage 0-2).
Critical Illness Plan Covers:
1) Prolonged Follow Up Treatment
When your follow up treatment exceeds the timeline you can claim for your pre & post hospitalization expenses, you will need to fork out cash out of your own pocket.
Long-Term Care: Be rich, Be poor or Be insured.
2) Income Replacement
When you are critical ill, chances are most likely you will not be able to work anymore and this means that you will experience loss of income. Your household expenses dont stop together with the loss of income. You will still need to pay for your monthly bills such as utilities, child care fees, loans, groceries.
With Critical Illness cover, one need not worry about such expenses anymore as you will have the lump sum payout from your plan to pay for these instead of depleting your hard earned savings which you have saved up for your dreams, childrens’ education & your retirement.
3) Maintaining Family Lifestyle
Luxury once enjoyed become a necessity. A family’s lifestyle can be compromised if one is not insured sufficiently. Are you willing to downgrade your house? How about your car? What about your childrens’ enrichment classes? Delaying their education because you cannot afford it anymore?
With Critical Illness Coverage, you can preserve your assets and not shortchanged the lifestyle and plans you have made for your loved ones.
Insurance policies dont make you rich. They prevent your families from becoming poor
The next question some would ask me would be, so how much do i need to be covered for?
In times of critical illness, economically active Singaporeans and permanent residents are only covered for a year of their expenses – or 20 per cent of what is needed should they be out of the workforce for five years.
The average employed person here has about S$60,000 worth of critical illness coverage, but requires about five times the amount to ensure their families are well taken care of, according to the Life Insurance Association (LIA)’s 2017 Protection Gap Study.
Life Insurance Association Singapore recommends that economically active individuals have CI coverage of approximately 3.9 times their annual income to be adequately insured and financially supported in their recovery journey, so as to ensure that their family’s needs continue to be well taken care of during this period.
Staying Insured after an illness Claim
With early illness plan, one can now remain insured after they have activated a claim & should it escalates to critical stage, the remaining sum insured will be paid out. There are also plans in the market that now covers for multiple critical illnesses and one need not worry about what if he or she contract another illness & they are no longer insured anymore.
Hope this helps you to understand the difference between a critical illness plan & hospital plan. Leave me a comment or share it around if this had benefited you and you want more people to benefit from it too. Lets spread the importance of getting yourself covered so that no one will be shortchanged due to crisis.