Critical illness insurance plays an important role in providing a financial safeguard for you and your loved ones. In the event you are diagnosed with a critical illness, you will receive a lump sum payout from the policy.
This payout is typically meant to tide you through daily living expenses during your recovery, at a time when you may not be able to work and earn a salary, as well as give you additional options to seek medical treatments or complementary therapy.
Such lump sum payouts enable you to protect your and your loved ones' way of life without eating into savings and investments earmarked for other important expenses.
For those purchasing critical illness insurance from 26 August 2020 onwards, you will be looking at an updated set of definitions for the standard list of 37 critical illnesses. This was announced by the Life Insurance Association (LIA) on 29 August 2019, under its Critical Illness Framework 2019.
Here are four things you should understand about the changes contained within LIA's Critical Illness Framework 2019.
1. Changes effective from 26 August 2020
While all critical illness insurance sold in Singapore will have to comply with the new set of definitions from 26 August 2020, this is the cut-off date, rather than a starting date.
This means that insurers cannot sell critical illness policies with the old definitions after 26 August 2020, which were last defined in 2014. However, some insurers may have already started providing critical illness insurance adhering to the new definitions before 26 August 2020.
You should look at your policy documents and/or speak to your financial services consultant to understand which definitions are used in your critical illness insurance plan.
2. What are the changes made to critical illness definitions?
Under the new Critical Illness Framework 2019, definitions of 21 critical illnesses were revised, while the names of 14 critical illnesses were enhanced to better reflect the intent of the coverage.
Here's the list of changes to the standard list of 37 critical illness under the Critical Illness Framework 2019:
|No.||Critical Illnesses||Name Changed?||Definitions Changed?|
|2||Heart Attacks of Specified Severity||No Change||Yes|
|3||Stroke with Permanent Neurological Deficit||Yes||Yes|
|4||Coronary Artery By-pass Surgery||No Change||No Change|
|5||End Stage Kidney Failure||Yes||No Change|
|6||Irreversible Aplastic Anaemia||Yes||Yes|
|7||End Stage Lung Disease||No change||No change|
|8||End Stage Liver Disease||No change||No change|
|10||Deafness (Irreversible Loss of Hearing)||Yes||Yes|
|11||Open Chest Heart Valve Surgery||Yes||No Change|
|12||Irreversible Loss of Speech||Yes||Yes|
|13||Major Burns||No Change||No Change|
|14||Major Organ/Bone Marrow Transplantation||No Change||No Change|
|15||Multiple Sclerosis||No Change||Yes|
|16||Muscular Dystrophy||No Change||Yes|
|17||Idiopathic Parkinson's Disease||Yes||Yes|
|18||Open Chest Surgery to Aorta||Yes||No Change|
|19||Alzheimer's Disease / Severe Dementia||No Change||Yes|
|20||Fulminant Hepatitis||No Change||No Change|
|21||Motor Neurone Disease||No Change||Yes|
|22||Primary Pulmonary Hypertension||No Change||No Change|
|23||HIV Due to Blood Transfusion and Occupationally Acquired HIV||No Change||Yes|
|24||Benign Brain Tumor||No Change||Yes|
|26||Severe Bacterial Meningitis||Yes||No Change|
|27||Angioplasty & Other Invasive Treatment for Coronary Artery||No Change||No Change|
|28||Blindness (Irreversible Loss of Sight)||Yes||Yes|
|29||Major Head Trauma||No Change||Yes|
|30||Paralysis (Irreversible Loss of Use of Limbs)||Yes||No Change|
|31||Terminal Illness||No Change||No Change|
|32||Progressive Scleroderma||No Change||Yes|
|33||Persistent Vegetative State (Apallic Syndrome)||Yes||No Change|
|34||Systemic Lupus Erythematosus with Lupus Nephritis||No Change||Yes|
|35||Other Serious Coronary Artery Disease||No Change||Yes|
|37||Loss of Independent Existence||Yes||No Change|
You can examine the details of each of the 37 critical illnesses on the Critical Illness Framework 2019, comparing to the 2014 version, on LIA's website.
3. Updating of definitions under LIA's Critical Illness Framework 2019 can lead to better industry outcomes
Standardised Critical Illness definitions provides greater transparency for consumers to assess and compare different insurance plans.
It also reduces discrepancies in claim assessments, where one insurer may provide a payout while another rejects a payout. This way, consumers can rest assured that claims assessment will be similar regardless of their chosen insurer.
Nevertheless, insurers can continue to set their products apart by extending coverage for more medical conditions and stages of illness progression, beyond the standard list of 37 critical illnesses, so you still need to fully understand the full benefits of any critical illness insurance you are purchasing.
For example, plans such as AIA Absolute Critical Cover (ASCC) offers wide coverage for 187 conditions that go beyond critical illnesses, including 150 multi-stage critical illnesses.
4. New definitions under the Critical Illness Framework 2019 can benefit policyholders
While the majority of changes made was to provide clarity to the definitions of coverage to severe stages, some changes led to expanded benefits for the insured. This includes:
- Allowing claims under "HIV Due to Blood Transfusion and Occupationally Acquired HIV" for those who suffer from Thalassaemia or Haemophillia to be fair to the group, as these groups were previously denied claim.
- Adjusting the "Blindness (Irreversible Lost of Sight)" condition to the legal definition of blindness of 6/60, from previously 3/60
Review your critical illness coverage requirements – and don't rush to buy
The latest critical illness definitions offer both pros and cons for policyholders. Check with your insurer on coverage options available to you.
Before purchasing critical illness insurance, you should also understand how much coverage you need. You can look to LIA's 2017 Protection Gap Study – Singapore as a guide, which recommends having enough coverage to last for an assumed critical illness recovery period of five years.