
Did you know that the average Singaporean spends a tenth of his life in ill health?1 With increasing life expectancy and rising rates of chronic illnesses, it is therefore worrying to note that Singaporeans are 80 per cent underinsured for critical illnesses. With the definitions of the 37 standard critical illness by Life Insurance Association (LIA) set to change no later than 26 August 20202, here are the possible impact that these changes could have on you.
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#1 Increased transparency
With the new LIA definitions for critical illnesses designed to increase transparency, this has resulted in stricter and more specific definitions. Addressing ambiguities, the new definitions outlines the scope of coverage clearly thus reducing the possibility of disputes in the event of a future claim.
Take for example heart attack of specified severity. To reflect the intent to cover Type 1 MI and Type 2 MI to include the coverage of Type 1 MI and Type 2 MI, the definitions have been changed from "obstruction of blood flow" to "ischaemia".
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#2 Stricter definitions and increased exclusions
Under the new definitions, an increased emphasis is made on the need to prove permanency of a critical illness. Some examples include the permanent and irreversible loss of hearing, speech, aplastic anaemia, end stage kidney failure and stroke with permanent neurological deficit. A detailed comparison of the new and old LIA definitions can be found here.
Do note that the new definitions are meant to provide greater clarity to the applicable coverage with no changes to the intended scope of coverage for the 37 standard critical illnesses. However, while these changes will not affect the scope of coverage for the 37 standard critical illnesses, insurers may make changes to their early and intermediate critical illness conditions to align with the new critical illness definitions.
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What is Critical Illness insurance?
Meant for income replacement, critical illness insurance provides a lump sum pay-out in the event of a critical illness. These pay-outs can then be used to supplement your medical treatments, outpatient care or for your daily expenses during your recovery period.
There are generally two types of critical illness insurance: basic and early critical illness insurance with the difference being the extent of coverage. For instance, a basic critical illness insurance typically covers for just the 37 LIA critical illness definitions while an early critical illness insurance could comprise of up to 119 medical conditions. Early critical illness insurance therefore allows pay-outs to commence at an earlier stage.
If you are looking to get critical illness coverage but have yet to purchase any, consider getting your critical illness insurance before the new definitions are applied. This allows you to take advantage of the older plans that are still following the more lenient 2014 definitions.
(See "Do You Really Need Early Critical Illness Insurance?")
Critical illness insurance is suitable for:
Critical illness insurance is not suitable for:
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2Source: https://www.lia.org.sg/media/2163/media-release.pdf
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