What You Need to Know About the Critical Illness Redefinition for Life Insurance Policies

Critical Illness Redefinition for Life Insurance Policies
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Last Updated on by Tree of Wealth

The Life Insurance Association made a number of changes to critical illness insurance policies back in August of 2020. These revisions were made in order to accommodate new medical technologies and techniques, which have a huge impact on treating and managing many different critical illnesses. As well as clarifying names and the definitions of the 37 main critical conditions on the Life Insurance Association’s list.

How will this impact you and do you need to worry about these new policy changes if you have a pre-existing condition? The short answer is, if you are a policy holder with pre-existing conditions before the change, then no, you will not be impacted. However, everyone else should pay close attention to the new definitions.

So, what is critical illness insurance and why should you pay attention to it? Basically, this is an insurance policy that will provide a lump sum in the event that you are diagnosed with a serious or critical illness, from early to advance stages of it. This is a crucial policy because not only is treating these kinds of diseases extremely expensive but you never know when you may become afflicted. These policies offer a safety net that is better to have and never need, than to need and not have it. But more than that, the purpose of a critical illness plan is for income protection.

Studies show that over 90% of claims involve cancer, heart attack, kidney failure, stroke, and coronary artery bypass surgery. These are not cheap and many of them require long term care and replacement of income. Having a proper hospitalisation insurance policy will make sure that you have the resources to only get the treatment you or a loved one needs. A critical illness plan however, will cover your income for the years that you planned for and not find yourself bankrupt afterwards.

However, to make things a bit more easier and to improve the effectiveness of critical illness insurance plans. The Life Insurance Association redefined these policies to improve clarity. So, what were the changes made?

Critical Illness Changed Definition Changed Name
Major Cancer Yes Yes
Heart Attacks of Specified Severity Yes No Change
Stroke with Permanent Neurological Deficit Yes Yes
Coronary Artery Bypass Surgery No Change No Change
End Stage Kidney Failure No Change Yes
Irreversible Aplastic Anaemia Yes Yes
End Stage Lung Disease No Change No Change
End Stage Liver Disease No Change No Change
Coma Yes No Change
Deafness (Irreversible Loss of Hearing) Yes Yes
Open Chest Heart Valve Surgery No Change Yes
Irreversible Loss of Speech Yes Yes
Major Burns No Change No Change
Major Organ/Bone Marrow Transplantation No Change No Change
Multiple Sclerosis Yes No Change
Muscular Dystrophy Yes No Change
Idiopathic Parkinson’s Disease Yes Yes
Open Chest Surgery to Aorta No Change Yes
Alzheimer’s Disease/Severe Dementia Yes No Change
Fulminant Hepatitis No Change No Change
Motor Neurone Disease Yes No Change
Primary Pulmonary Hypertension No Change No Change
HIV Due to Blood Transfusion and Occupationally Acquired HIV Yes No Change
Benign Brain Tumor Yes No Change
Severe Encephalitis Yes Yes
Severe Bacterial Meningitis No Change Yes
Angioplasty & Other Invasive Treatment for Coronary No Change No Change
Blindness (Irreversible Loss of Sight) Yes Yes
Major Head Trauma Yes No Change
Paralysis (Irreversible Loss of Use of Limbs) No Change Yes
Terminal Illness No Change No Change
Progressive Scleroderma Yes No Change
Persistent Vegetative State (Apallic Syndrome) No Change Yes
Systemic Lupus Erythematosus with Lupus Nephritis Yes No Change
Other Serious Coronary Artery Disease Yes No Change
Poliomyelitis Yes No Change
Loss of Independent Existence No Change Yes

As you can see the definitions and names of various critical illnesses have been changed. This is to make it easier to understand the kind of coverage you can expect when you have a critical illness policy. You can check out the full list of details here.

Interested to learn more?

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Notable Changes 

Here are few of the notable changes that you will want to take into account:

  • Heart Attack of Specified Severity:

The original definition is “death of heart muscle due to obstruction of blood flow” will be changed to “death of heart muscle due to ischemia”, This is to provide clarity that both Type 1 and Type 2 Myocardial Infarction will be covered.

  • Stroke with Permanent Neurological Deficit:

The name of the illness was revised to “Stroke with Permanent Neurological Deficit”. This is to make it clearer when making a claim for critical illness when a stroke has occurred. As permanent neurological deficit was a debated topic before.

  • Coma:

Medically included coma is no longer considered a critical illness and you no longer can put in a claim for it.

  • Benign Brain Tumour:

Abscess, Angioma, and Tumours at the base of the skull have been added as exclusions.

  • Blindness (Irreversible Loss of Sight):

The condition for the legal definition of blindness has been changed to 6/60, from the original 3/60.

  • Irreversible Aplastic Anaemia:

The original name was only “Aplastic Anaemia”. Irreversible was added to make it clear that only permanent aplastic anaemia is covered under critical illness. This may be a con for patients who have treatable forms but they still have access to other options.

  • Poliomyelitis:

The diagnosis must be confirmed by a consultant neurologist or specialist in the relevant medical field” has been included to make it clear that this condition can be diagnosed by other medical professionals, rather than only just neurologists.

Is My Policy Affected by These Changes?

 If you already have a policy before 26 August 2020 then you will not be affected. Your insurance will follow whatever is stated in your contract. If you get a CI (Critical Illness) insurance policy after 26 August 2020, then you will be included in the new definitions. However, for Increase in Sum assured to existing policies, the new definitions will be applied to the policy upon top-up. Also, the new definitions will be applied when you renew or reissue a policy. This also includes pre-existing conditions.

If you renew or get a group policy after August 2020, then it will include the new 2019 definitions. Also, if you get a critical illness after August, you will be included in the new definitions. If you get a critical illness before August 2020, then you will still be under the 2014 definitions.

Interested to learn more?

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Why Did the Life Insurance Association Make These Changes?

 There are two main reasons why these changes were made. The first is to deal with the recent health trends and advancements in medical technology and techniques. The population of Singapore is living longer, which means there is currently a rise in chronic and critical illnesses in the country. By changing the definitions, the LIA believes that they will be able to keep policies relevant.

The second reason for these changes is to simply make things easier to understand. The old definitions created confusion with policyholders and insurance providers. The new definitions will allow people to know what they can expect when they make a claim, while reducing the chances of being rejected. This will streamline the process and hopefully make it less frustrating for individuals who are looking to get a payout.

Will My Premiums Change?

 Will the new definitions make my premiums go up or even down? The quick and easy answer is no. You should not expect your premiums to change due to the revised definitions.

Will These Changes Improve My Situation?

 Yes, it will. The new definitions are not only designed in a way to reduce confusion and make it easier to understand when it is possible for a policy holder to make a claim but also they remove a number of conditions, making it easier to put in a claim in general for certain illnesses.

A good example is “HIV Due to Blood Transfusion and Occupationally Acquired HIV”. In the 2014 definition, people afflicted with HIV were only able to make a claim if they did not have Haemophilia or Thalassaemia Major and they needed to report it within 30 days of contracting the disease. With the new definitions, if the patient got HIV through their occupation or blood transfusion, they are able to get a cash payout.

Another example is “Major Cancer”. Before, many people who got cancer would put in a claim but were rejected. The new definition makes it clear that you can only make a claim if there is an uncontrolled growth of malignant cells leading to the destruction and invasion of normal tissue.

The new definitions will also help reduce discrepancies between various insurance providers. As one provider may be willing to provide a payout, while another may not for the same illness. With the revised definitions, this is less likely to occur. Giving policy holders peace of mind that they can put in a claim when they need to.

Conditions Beyond the 37 Critical Illnesses

 There are still many different critical illnesses that are not part of the 37 listed by the Life Insurance Association. And this is where you need to be careful and do your research when choosing an insurance provider and policy.

In order to get a leg up on the competition, insurance providers will offer different kinds of benefits such as improving coverage for additional conditions on top of the 37, as well as including the various stages of a disease.

Depending on your needs, budget, and even your family health history. It is important to find an insurance provider that is capable of providing payouts for conditions you are likely to get due to occupation, health history, or because of age.

Interested to learn more?

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Which Critical Illness Definitions Do I Fall Under?

  • Individual Policyholder:

You will fall under the critical illness definitions that were present when you purchased your plan. You can check which definitions you have in the policy contract.

  • Group Policies:

Your claim will be determined from the date of the critical illness diagnosis. If the illness was diagnosed on or after 1 July 2020, then you will fall under the new 2019 definitions. If the condition was diagnosed before 1 July 2020, then you will be included in the old 2014 definitions.

Should I get Health Insurance or a Critical Illness Policy?

 Studies show that the average Singaporean only has critical illness coverage for around a year of expenses. This is only 20% of what they actually need. This leaves a worrying gap of 80%. If you fall ill to a critical illness, you will not only be dropping out of the workforce losing income but also you will be faced with a wall of expenses for treatment.

This will put the livelihood of your family at risk. We never know when we will fall victim to a heart attack or have cancer but it is important to be prepared. So, the answer is yes. Having a good critical illness policy that is tailored to your needs can be quite literally a life saver. You never know when you will need it but you will definitely be grateful when you do.

Is It a Good Time to Get a Critical Illness Plan?

It has never been a better time to get yourself and your family a critical illness policy. The new 2019 definitions are already firmly implemented. This means that when you need to make a claim, you can rest easy knowing your insurance provider will honor it. Just make sure to shop around and do your research! There are an assortment of plans out there and some are better than others. Find something that works for you, your budget, and the conditions you may be predisposed to.

In Conclusion

The critical illness redefinition by the Life Insurance Association definitely has its pros and cons. They both redefined illnesses and conditions to make it clearer to understand and in many cases easier to get a claim, without worrying that you’ll be rejected because your insurance provider interpreted the definitions wrong. However, they also changed some conditions as well, which could make it more difficult for patients with certain illnesses.

Make sure to stay prepared and look at the complete list of changes here to find out if you have coverage or if you need to adapt your policy for predisposed conditions.

If you have any inquiries on getting critical illnesses coverage and/or would like to find out more, do reach out below and our partner FA advisors will get in touch with you:

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