Life Insurance

Why A Critical Illness Plan Is More Important Than You Think

critical illness

Joanne Poh

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This post was written in collaboration with Manulife. While we are financially compensated by them, we nonetheless strive to maintain our editorial integrity and review products with the same objective lens. We are committed to providing the best recommendations and advice in order for you to make personal financial decisions with confidence. You can view our Editorial Guidelines here.

So, you’ve built up a nice nest egg and investment portfolio after years of careful planning. But you can’t say you’re financially sound in Singapore unless you are properly insured.

You probably already know how important it is to have a good hospitalisation insurance plan. But don’t be like most Singaporeans and make the mistake of neglecting another key component of a good financial plan: Critical illness insurance.

 

Why you need a critical illness plan

According to a 2018 study conducted by the Life Insurance Association, Singaporeans are woefully underinsured for critical illness, with economically-active Singaporeans and PRs being covered for only 20% of what they would need if a critical illness were to force them out of the workforce for five years.

This means there is a huge 80% gap between what the average person should be insured for and what he or she is currently getting. It also means that the majority of Singaporeans could potentially find themselves in financial trouble when critical illness strikes.

What is more, due to increased life expectancy and sedentary lifestyles, more and more Singaporeans are expected to be diagnosed with critical illnesses in the coming decades.

Critical illness insurance fills in the gaps left by MediShield Life and other hospitalisation insurance plans.

When you fall ill, MediShield Life and hospitalisation plans enable you to make claims for your medical bills.

However, they do not protect you from loss of income if you stop working. Don’t forget that in Singapore there is no state unemployment insurance, which means that if you stop working, your income from employment instantly dries up. And if you are indeed critically ill, it is unrealistic to assume you will be able to go on working.

A critical illness plan gives you a lump sum payout when you are diagnosed with a critical illness. This payout can be used in any way you want, including to pay for your living expenses if you stop work.

If you are a parent to young children or are supporting your own aged parents, it is particularly important to have critical illness protection as the payout can be used to support your dependents.

 

But is it affordable?

Many people shy away from critical illness insurance because they think it is expensive. But is it really?

When assessing the affordability of critical illness insurance, it is important to consider it in context. Skipping critical illness insurance represents an opportunity cost in terms of loss of income should you fall critically ill.

To cite an example, the annual premium for a 30-year-old male non-smoker with a Manulife Ready CompleteCare (cover me again) plan, sum assured $75,000 and policy termed to age 75 will be $1,106.55. That amounts to less than $100 a month. Those premiums don’t look so high when you compare them to the potential loss of five years’ worth of income, now, do they?

When choosing a critical illness policy, it is a bad idea to sign up for the cheapest one you can find. Not all critical illness plans are structured in the same way, so it’s important to examine the features of a policy in order to understand what kind of coverage you’re getting, and why it’s so important to have it.

 

Manulife Ready CompleteCare

Manulife offers some of the most comprehensive critical illness coverage available—to be precise, you are covered for 106 conditions and critical illnesses for all stages. Early-stage diagnosis entitles you to payouts of up to $250,000, while intermediate stage diagnosis entitles you to up to $350,000.

The plan also comes with the option of Manulife’s exclusive “cover me again” feature, which restarts your coverage after a claim of up to 500% of the sum insured. This ensures you continue to stay protected after a first critical illness diagnosis.

You can also opt for the Additional Major Critical Illness Benefit, which pays 200% of the sum insured for six major advanced stage critical illnesses, and the Recurring Cancer Benefit, which offers 100% payout of the sum insured if you are subsequently diagnosed with advanced stage major cancer conditions.

Here’s an illustration of what that might look like in terms of how these different benefits work together:

critical illness

The plan also offers a full refund of premiums upon your death, less any claim payouts.

As you can see, you really can’t do without critical illness insurance in Singapore. A critical illness plan enables you to support yourself and your loved ones no matter what happens.

Get the critical illness protection you need today. Click here or talk to one of Manulife’s financial advisors to find out more.

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.