Last Updated on by Tree of Wealth
Critical Illness Insurance: Financial Security during Challenging Health Journeys
When faced with a serious illness, the inability to work can create significant financial insecurity for both individuals and their families. Critical illness insurance offers a valuable solution by providing essential financial support during these difficult times. Unlike hospitalisation plans, critical illness insurance does not focus on reimbursing hospital bills. Instead, it offers a lump sum payout, ensuring that you and your loved ones can maintain financial stability throughout the recovery period.
With critical illness insurance, you have the flexibility to allocate the payout according to your needs, including using it to cover medical expenses if desired. This comprehensive coverage empowers you to prioritize your well-being while ensuring that financial burdens are alleviated, allowing you to focus on your recovery journey with peace of mind.
Understanding How Critical Illness Insurance Works
When facing a critical illness covered by your insurance plan, you’re entitled to a payout determined by the policy terms outlined in your contract. This payout provides crucial financial assistance during your recovery stage, offering flexibility to address various needs.
The funds can be utilized in multiple ways, such as replacing lost income, supporting household expenses, or covering medical costs. Whether you opt for a standalone critical illness insurance plan or choose an insurance policy that includes critical illness coverage, like life insurance with critical illness benefits, the aim is to ensure comprehensive protection.
Additionally, some insurance plans offer the option to enhance critical illness coverage by adding an optional rider. This allows you to customize your coverage according to your specific requirements, providing an extra layer of security against potential financial burdens arising from a critical illness diagnosis.
Critical illness insurance offers valuable protection when you are diagnosed with a covered critical illness.
Here’s how it works:
- Payout Based on Policy Terms: Upon diagnosis, you receive a payout determined by the terms outlined in your insurance contract. The amount may vary depending on the severity of the illness and the policy coverage.
- Additional Support during Recovery: The payout serves as a financial safety net during your recovery stage. You have the flexibility to use the funds according to your needs, such as replacing lost income, supporting household expenses, or covering medical costs.
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Obtaining Critical Illness Protection:
- Standalone Critical Illness Insurance: You can purchase a dedicated critical illness insurance plan that focuses solely on providing coverage for critical illnesses.
- Combined Insurance Plans: Another option is to choose an insurance policy that includes critical illness protection as part of its coverage, such as life insurance with critical illness benefits. These plans offer comprehensive coverage for both life and critical illness events.
- Optional Riders: Some insurance plans allow you to enhance your coverage by adding supplementary critical illness insurance protection through an optional rider. This gives you the flexibility to tailor your coverage based on your specific needs.
By securing critical illness insurance, you can gain financial peace of mind, ensuring that you have the necessary support to navigate the challenges that arise from a critical illness diagnosis.
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Understanding Hospitalisation/Health Insurance: Comprehensive Coverage for Medical Expenses
Hospitalisation/health insurance plays a crucial role in reimbursing your medical bills during hospitalisation and can even cover certain outpatient expenses related to your condition. This includes expenses for consultations leading to diagnosis and follow-up visits after discharge, ensuring comprehensive financial support.
For Singaporeans and Permanent Residents, MediShield Life1 provides a basic health insurance scheme that assists with large hospital bills and selected costly outpatient treatments like dialysis and chemotherapy for cancer. If you require additional coverage beyond MediShield Life, upgrading to an Integrated Shield Plan (IP)2 offered by private insurance companies is a viable option. These plans work in tandem with MediShield Life to provide enhanced benefits and coverage.
Despite having MediShield Life and possibly an Integrated Shield Plan, it is crucial to avoid the misconception that your financial worries are entirely eliminated in case of illness. This misconception often leads individuals to overlook the importance of critical illness insurance, which serves as a vital safeguard to bridge any potential gaps in protection.
Scenarios Illustrating the Difference for Individuals with and without Critical Illness Insurance
Example 1
Sarah has MediShield Life with an Integrated Shield Plan. She is the sole breadwinner in her family and she is diagnosed with late-stage cancer, rendering her unable to work. Sarah undergoes treatment, incurring a total of $120,000 in medical bills. With her MediShield Life and Integrated Shield Plan coverage, she manages to cover up to 95% of the medical bills. However, she still has to co-pay 5% ($6,000) of the expenses. This financial burden, combined with the loss of income, creates significant challenges for her family.
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Example 2
Ryan has MediShield Life with an Integrated Shield Plan and additional critical illness insurance. Similar to Sarah, he is the sole breadwinner and receives a diagnosis of late-stage cancer, causing him to be unable to work. Like Sarah, Ryan’s MediShield Life and Integrated Shield Plan coverage cover 95% of the medical bills. However, unlike Sarah, Ryan also receives a lump sum payout of $100,000 from his critical illness insurance. He uses this payout to co-pay the remaining 5% of the medical bills and to support his family financially during his recovery. This comprehensive coverage alleviates the financial strain on his family and allows them to focus on Ryan’s healing process.
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Which Critical Illness Plan Should You Choose?
When it comes to selecting a critical illness plan, finding the right one is crucial for your financial well-being. With numerous options available, our experienced financial advisors are here to guide you through the process and help you make an informed decision.
Key Features of an Ideal Critical Illness Plan:
- Comprehensive Coverage: Look for a plan that offers protection against a wide range of major critical illnesses and age-related conditions.
- Inclusive Eligibility: Regardless of your age or existing health conditions, there should be options available to cater to your specific needs.
- Affordable Premiums: Finding a plan that provides the necessary coverage without straining your budget is essential. Our financial advisors can help you compare different plans to find one that fits your financial goals.
Don’t navigate the critical illness insurance market alone. Our dedicated team of financial advisors is ready to assist you in evaluating various options, understanding the terms and conditions, and finding the plan that suits your requirements best.
Get in touch with our financial advisors today to start comparing critical illness plans or and ensure your financial security.
After the no-obligation chat with our experienced financial consultant, they will provide personalized guidance based on your unique needs and circumstances.
Footnotes:
1. https://www.moh.gov.sg/cost-financing/healthcare-schemes-subsidies/medishield-life
2. https://www.moneysense.gov.sg/articles/2018/10/integrated-shield-plans
3. https://www.straitstimes.com/business/banking/working-adults-have-inadequate-cover-if-critical-illness-strikes-says-study
7. Between 40 to 70 years old and pass the underwriting questions to qualify.
8. Premium is based on 40 year old, non-smoker, male with sum insured of S$25,000, paying annual premiums.
