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Insurance is an essential part of financial planning, yet it’s usually not something we openly discuss with loved ones. Whether it’s due to discomfort or simply putting it off to another day, the topic often takes a backseat in our conversations.
However, avoiding a topic doesn’t make it any less essential. Like investing, insurance is a critical part of our personal finance planning and understanding the topic well and making good decisions can significantly help secure our future and that of our loved ones.
Different Insurance Policies Cover Us In Different Areas
One misconception that some may have is that since they already have basic coverage from MediShield Life, which is enough. However, this isn’t necessarily true.
To be clear, MediShield Life is important and plays a vital role in ensuring that all Singaporeans and Permanent Residents have access to affordable healthcare treatment for bills incurred at public hospitals.
However, it’s important to recognise that different types of insurance policies are designed to protect various aspects of our health and finances, working together to ensure comprehensive coverage.
Think of it like cooking: we use various spices and seasonings—such as salt, pepper, garlic and chili—for specific purposes, ultimately creating a delicious dish. Similarly, various insurance policies serve specific roles in safeguarding our well-being:
For instance:
- MediShield Life provides basic coverage for hospital bills.
- Term life insurance provides our dependents with a payout in the event of our passing, ensuring they are financially supported
- Disability income insurance policy offers monthly payouts if we are unable to work due to a disability.
- Critical illness (CI) insurance offers a lump sum payout upon diagnosis of a severe illness, helping with medical costs and lost income.
Each of these policies serves a specific purpose, but together, they provide comprehensive coverage, addressing different aspects of our financial and healthcare needs.
How Critical Illness Coverage Works
One area of our lives that we should not neglect is critical illness. As defined by the Life Insurance Association (LIA) Singapore, these critical illnesses include major cancer, heart attack, stroke, liver failure and many others. Regardless of how young and healthy we are, they can affect anyone, and at any point in our lives.
When a critical illness occurs, hospital treatment is often necessary. MediShield Life, along with private Integrated Shield Plans if we have them, can cover a significant portion of hospitalisation and treatment costs. However, the financial impact of critical illnesses goes beyond just medical bills.
Recovering from a critical illness frequently requires time away from work, resulting in a temporary loss of income. Additionally, patients may need extra support at home, such as caregiving services or household help. There may also be ongoing medical costs, such as medication or therapy, that hospitalisation insurance may not cover. These additional expenses can accumulate quickly, placing a significant financial burden on individuals and their families.
Critical illness insurance helps bridge this gap by providing a lump sum payout upon diagnosis. This financial support offers individuals and families the flexibility to manage unforeseen expenses without depleting their savings. Whether it’s replacing lost income, covering extra costs, repaying debt or handling living expenses, critical illness insurance provides a financial safety net. With this support, families can navigate challenging times with less worry and greater peace of mind, allowing the focus to remain on what matters most – recovery.
Why Critical Illness Plans Are Important For Working Adults
For working adults, critical illness is more than a financial safety net. Unlike children or retirees who are not actively part of the workforce and can afford the time to rest and recover, working adults often support households, pay off debts and plan for future milestones. While critical illness coverage is important for everyone, it is particularly crucial for working adults. According to LIA, working adults should have critical illness coverage of approximately four times their annual income.
A critical illness can disrupt not just health but also career and finances. Earning an income is often a primary responsibility for working adults, and taking time off work to recover from a critical illness entails significant opportunity costs, including a temporary loss of earnings. At the same time, household bills, car expenses, caregiving for parents and children and medical treatments continue to accumulate. This creates a difficult trade-off between prioritising one’s health and maintaining financial stability.
Critical illness coverage helps address this dilemma by providing a financial cushion. It allows working adults to prioritise their recovery without sacrificing their financial commitments. By addressing this dilemma, it ensures that working adults can focus on their recovery without the added stress of income loss, enabling them to make health-focused decisions without compromising their financial security.
Why Consider An Early-Stage Critical Illness Plan
With the advancement of medical technology, recovering from critical illnesses is possible. According to the Singapore Cancer Registry Annual Report 2022, from 1973-1977 to 2018-2022, the five-year relative survival rate had improved significantly for both males and females (increased from 13.2% to 56.6% and 28.0% to 63.7% respectively).
When illnesses are diagnosed early, the chances of recovery are significantly higher. This is why a policy that covers early-stage critical illness, such as the Singlife Comprehensive Critical Illness plan, is so important.
Unlike traditional critical illness policies that typically provide a payout only when the illness has progressed to an intermediate or severe stage, the Singlife Comprehensive Critical Illness provides a lump-sum payout upon diagnosis of any of the 132 covered conditions even at early stages. By providing financial support at the onset of the illness, it gives policyholders the best chance to focus entirely on their treatment and recovery without the added stress of financial concerns.
In addition to the lump-sum payout upon diagnosis of the critical illness, the Singlife Comprehensive Critical Illness also provides coverage in other areas such as hospitalisation support. This is in the form of an additional 20% of the sum assured (up to $25,000 per life) if the policyholder spends 4 days or more at the ICU. There are also 27 covered conditions under the Special Benefit, which provides an additional payout of up to $25,000 per life per condition.
Source: Singlife Comprehensive Critical Illness Product Brochure
If you are seeking extended protection that covers multiple diagnoses and stages of critical illness, the Singlife Multipay Critical Illness plan is worth considering. As highlighted in our previous article, unlike plans with a one-time payout, this plan provides multiple payouts across different stages of critical illnesses and medical conditions, offering greater flexibility and support. Based on your preferences, these early-stage critical illness policies are worth considering as viable options.
Get Critical Illness Coverage As Soon As Possible
When it comes to early-stage critical illness, purchasing it sooner rather than later offers two key benefits:
Young policyholders typically benefit from lower insurance premiums, making coverage more affordable. Additionally, purchasing insurance while in good health ensures guaranteed coverage, helping individuals avoid potential exclusions or higher premiums that may arise due to pre-existing conditions.
Read Also: Why I Decided To Insure Myself With A Multipay Critical Illness Plan After Becoming A Parent
Photo Credit: iStock/champpixs
The post Why We Think Working Adults In Singapore Should Consider Purchasing Early-Stage Critical Illness Policies appeared first on DollarsAndSense.sg.
