4 Misconceptions About Critical Illness Insurance: Unveiling the Truth

4 Misconceptions About Critical Illness Insurance: Unveiling the Truth

When it comes to safeguarding your financial future against severe health setbacks, understanding the role of critical illness insurance is paramount. Imagine facing a daunting diagnosis. Not only are you contending with treatment protocols, but also with the potential loss of income and the need to adapt your lifestyle to new challenges.

Critical illness insurance steps in precisely at this juncture, offering financial relief that allows you to focus on recovery, rather than being overwhelmed by bills and expenses. Designed to offer support when you’re most vulnerable, it is an integral part of your financial planning strategy, 

Yet, despite its importance, there’s a lot of confusion and several myths surrounding critical illness insurance. In this article, we address common misconceptions that obscure its true benefits.

Misconception #1: It’s the same as health insurance

Many confuse critical illness insurance with medical insurance, but they are distinct types of coverage designed to protect you in different ways. Medical insurance is a broad category, under which hospital & surgical insurance and GP & specialist insurance fall. It is there to help cover the costs associated with medical care, including hospital stays, surgeries, and prescriptions.

Critical illness insurance, however, is specifically designed to provide financial support following the diagnosis of severe illnesses that the policy lists, such as major cancer, heart attack, kidney failure or stroke. It’s not about reimbursing you for medical bills or ongoing treatments; instead, it provides a lump-sum payment. This can be used to cover lost income, specialised treatments not included in health insurance, or to adapt your lifestyle and home to your health needs.

Misconception #2: Only older adults need critical illness insurance

Only older adults need critical illness insurance

A prevalent myth is that critical illness insurance is only necessary for the ageing population. Based on data from the Singapore Cancer Registry’s Annual Report 2021, the incidence rate of cancer among those under 40 years old has increased at a faster pace than in older age groups. This data underscores the importance of critical illness insurance for adults at every life stage. 

So if you’re in your 20s and wondering if life insurance is for you, it’s best not to ponder for too long. Opting for critical illness insurance early in life can be particularly beneficial, as premiums tend to be lower for younger policyholders. Moreover, securing a policy before any potential pre-existing conditions are diagnosed ensures wider coverage. 

Misconception #3: If you’re healthy, you don’t need it

It’s a common belief that a good health record negates the need for critical illness insurance, but this is a risky assumption. Health is dynamic and unpredictable. The reality is that even the healthiest individuals can suddenly face a critical illness diagnosis. 

According to a report from the World Health Organization (WHO), noncommunicable diseases (NCDs), often silent until advanced stages, are currently claiming approximately 75% of all lives. NCDs include ​​cardiovascular diseases, cancer, diabetes and respiratory illnesses. If the trend continues, NCDs will constitute 86% of the annual 90 million deaths by 2050. 

Investing in a critical illness plan when you’re healthy is not just wise but also cost-effective. It’s the best time to buy insurance because you tend to pay lower premiums when you’re young and in good health. This proactive approach ensures that you’re financially prepared for the unexpected, safeguarding your savings and providing essential support during challenging times.

Misconception #4: It covers all types of illnesses

There’s a common misconception that critical illness insurance is a one-size-fits-all solution that covers any and every ailment. However, this is not the case. Critical illness insurance is designed to provide financial protection against a predefined list of serious illnesses, which are specified in the policy document. Typically, these include major health events like certain types of cancers, major organ transplants, heart attacks, and strokes.

For instance, in Singapore, the Life Insurance Association Singapore has compiled a list of standard definitions for 37 critical illnesses, in order to ensure a degree of standardisation across different insurers. Although there still may be variations in what individual policies cover. For example, some may include coverage for early-stage cancers, while others might not. Moreover, certain chronic diseases or less severe conditions may not be covered at all.

Choosing the right critical illness plan

When searching for a critical illness insurance plan in Singapore, consider your individual needs. How much critical illness coverage do I need? Reflect on your financial obligations and the level of support you’d require if faced with a critical illness. Here are tips for selecting a plan that aligns best with your needs:

  • Assess your risk: Look at your family history and personal health to gauge your susceptibility to critical illnesses.
  • Understand the terms: Know which illnesses are covered and the policy’s definitions of these illnesses. Clarity here is key to avoiding surprises during a claim.
  • Consider the coverage amount: Determine how much money you would need to maintain your quality of life if you couldn’t work for an extended period.
  • Review the policy details: Check the duration of the policy, waiting periods, and exclusions. Ensure they align with your expectations and needs.
  • What type of critical illness plan should I choose: Critical illness is usually added as a rider to a life insurance policy. There are also standalone plans for early stage cover as well as multi-pay cover.

Learn more about critical illness insurance with Diot-Siaci Asia

Diot-Siaci Asia is committed to helping you navigate through the critical illness insurance options to find a policy that provides you with peace of mind and security. Don’t let misconceptions steer you away from making an informed decision about your well-being. Reach out to us today, and let’s ensure you’re prepared for whatever lies ahead.