Your insurance protection gap – how different insurance policies bridge the gaps in your insurance needs

Critical illness policies should not be confused with health insurance policies. A critical illness plan pays out a lump sum when you are diagnosed with a covered illness, regardless of whether you are hospitalised or require costly treatment.

This should be put towards replacing your income and sustaining the family’s living standard for approximately five years. The set figure of five years isn’t random either, this is usually how long it takes to recover or succumb to a critical illness. After which, you would either continue working or your family will receive your life insurance payout.

You can either opt for standalone policies such as AIA Power Critical Cover or purchase additional critical illness coverage via riders on other insurance policies such as the above-mentioned AIA Guaranteed Protect Plus (II). Doing either is fine. You need to decide which is best for you to achieve critical illness coverage.

Given the recent publicity on CareShield Life, many might mistake it as the policy that will take care of your disability insurance needs. This isn’t the case and you can read more about this government-administered policy in this article.

In short, CareShield Life provides long-term care support for Singaporeans and PRs in cases where they are severely disabled. This should not be confused with a disability insurance from private insurers, which is meant to complement CareShield Life, rather than be treated as a similar or additional insurance policy.

If you find yourself with a disability that prevents you from working, you will require a source of income to continue sustaining yourself and your family at a similar standard of living. This income will come in the form of payouts from your disability income insurance, such as AIA Premier Disability Cover.

Such policies cover you even in cases where you can continue working with your disability by providing top-ups if your earning power is reduced. You also stand to receive lump sum payouts in instances of severe disability rendering you unable to work, which may also be supplemented by payouts from CareShield Life, as well as rehabilitation benefits and premium waiver with continued protection.

As you can see, there are diverse insurance policies you can use to plug your insurance protection gaps. They are meant to complement one another to cover different components of your total insurance protection gap. It’s not really a matter of choosing which insurance policies you want, but finding a holistic solution that caters to your specific needs.