Critical Illness Insurance Definitions Will Change in 2020 – How This Could Affect New Policies

Life Insurance Association's new definitions for critical illness change from 26 Aug 2020 may affect your insurance policy

When a friend or schoolmate you haven’t heard from for more than a decade contacts you out of the blue, there can only be two reasons: they’re trying to recruit you to MLM or they’re trying to sell you insurance.

While you should most definitely reject any MLM ‘opportunities’ they’re generously trying to share with you, you might want to give them a chance if you don’t have all the insurance you need just yet. Since you already need to buy insurance, why not get it from someone you know?

But before you buy all the policies your long-lost friend suggests, take note that the definitions of critical illness are set to change from 26 August 2020.

 

Critical illness definition will change from 26 August 2020

The Life Insurance Association (LIA) Singapore has announced that there will be changes to the definitions of the term ‘critical illness”, as well as certain terms and conditions used in critical illness policies. These changes will take effect on 26 August 2020.

The objective of the changes is to express more clearly what is and is not covered. Previously, there might have been some gray areas which made it unclear to policyholders whether they would be covered or not in certain situations.

The changes do not alter the scope of coverage. In other words, everything you could previously make a claim for, you can still make a claim for in the future… in theory anyway. The difference is that the definitions are now less vague, so it’s easier to see when a claim would be valid.

The new definitions do not affect anyone who already had critical illness coverage prior to 26 August 2020. The new definitions will apply to all policies purchased on or after 26 August 2020.

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What are the changes to critical illness definitions?

Research shows that the vast majority of all severe stage claims received by life insurers are for the following five conditions:

  • Major cancer
  • Heart attack of specified severity
  • Stroke with permanent neurological deficit
  • Coronary artery by-pass surgery
  • End-stage kidney failure

Bearing that in mind, we’ll look at the 10 most common critical illnesses whose definitions have been changed. (FYI, “CI Framework 2014” refers to the previous definitions in force prior to 26 August 2020; “CI Framework 2019” indicates the new headings that will take effect on 26 August 2020.)

Words that have been newly added within an existing clause are bolded.

CI Framework 2014 CI Framework 2019 Changes to definition (w.e.f. 26 Aug 2020)
Major Cancers Major Cancer – Change in definition of “major cancer”: “Major cancer is not limited to leukemia, lymphoma and sarcoma”

Definition of “major cancer” has been made narrower: “Major cancer diagnosed on the basis of finding tumour cells and/or tumour-associated molecules in blood, saliva, faeces, urine or any other bodily fluid in the absence of further definitive and clinically verifiable evidence does not meet the above definition

– Definitions of the following exclusions have been expanded: carcinoma-in-situ (Tis) or (Ta); all grades of dysplasia, squamous intraepithelial lesions (HSIL and LSIL) and intra epithelial neoplasia; non-melanoma skin carcinoma; neuroendocrine tumours; gastro-intestinal stromal tumours; bone marrow malignancies

Heart Attack of Specified Severity Heart Attack of Specified Severity – Change in definition of “heart attack of specified severity”: “Death of heart muscle due to ischaemia” replaces the previous “Death of heart muscle due to obstruction of blood flow”
Stroke Stroke with Permanent Neurological Deficit – The following exclusion has been added: “Secondary haemorrhage with a pre-existing cerebral lesion”
Kidney Failure End Stage Kidney Failure No change
Aplastic Anaemia Irreversible Aplastic Anaemia – Change in definition of irreversible aplastic anaemia: “Chronic persistent and irreversible bone marrow failure”

– Details added to definitions of the conditions that must require treatment: “bone marrow stimulating agents” and “bone marrow or haematopoietic stem cell transplantation”

Coma Coma Exclusion expanded: “For the above definition, medically induced coma and coma resulting directly from alcohol or drug abuse are excluded.”
Deafness (Loss of Hearing) Deafness (Irreversible Loss of Hearing) Definition of “irreversible” added: “Irreversible means “cannot be reasonably restored to at least 40 decibels by medical treatment, hearing aid and/or surgical procedures consistent with the current standard of the medical services available in Singapore after a period of 6 months from the date of intervention.”
Loss of Speech Irreversible Loss of Speech Definition of irreversible loss of speech expanded upon: “Total and irreversible loss of the ability to speak”
Benign Brain Tumour Benign Brain Tumour Exclusions added or expanded: “Abscess” and “Angioma”, “Tumours of the pituitary gland, spinal cord and skull base
Blindness (Loss of Sight) Blindness (Irreversible Loss of Sight) Definition of blindness expanded: “The blindness must not be correctable by surgical procedures, implants or any other means.”

As far as the top five illnesses claimed for are concerned, there was no substantive change to the definitions of Coronary Artery By-pass Surgery and End Stage Kidney Failure.

Want to read about all the changes in detail for yourself? You can find them on LIA’s Critical Illness Framework.

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3 things to look out for when choosing a critical illness policy

Critical illness insurance gives you a payout, usually in a lump sum, if you get diagnosed with a serious illness.

But I already have health insurance, you say. Isn’t that enough?

Well, health insurance covers most of your medical bills if you get hospitalised. But there’s still a cash portion that must be paid out-of-pocket. In addition, unless your family can support themselves and you if you are unable to work while ill or recovering, you will need to find cash for your day-to-day expenses. This cash can come from critical illness insurance payouts.

If you don’t have either medical insurance or critical illness insurance, your first priority should be medical insurance. The most economical option for Singaporeans and PRs would be an Integrated Shield Plan that doesn’t duplicate your existing MediShield Life coverage. You can then consider critical illness insurance if you’ve got cash left over.

When choosing critical illness insurance, the three main things to look out for are:

1. Which types of illnesses the policy covers

A critical illness insurance policy only protects from the illnesses listed in the policy document. This usually includes the usual suspects like cancer, heart attack and stroke. But beyond that, different policies might have different lists of conditions.

2. Does it cover early stages?

Many critical illness policies will only protect you for late-stage illnesses. If you want protection from early- and mid-stage illnesses as well, you’ll have to read the policy documents to check which ones offer such coverage.

3. How much sum assured you will receive if diagnosed

Check the percentage of the sum assured you’ll receive for an early- or mid-stage diagnosis.

While some policies will give you 100% of the sum assured so long as you are diagnosed with an illness on the list, others will only pay out a fraction if you receive an early- or intermediate-stage diagnosis or only pay you the balance of the full sum assured if you later get diagnosed with a terminal illness.

If you haven’t yet been covered, you may wish to check out some policies.

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Are you planning to get critical illness insurance? Let us know which ones you’re considering in the comments below!

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