Is critical illness (CI) insurance necessary? When you’re young and healthy, there seems to be little need for it – especially when you have a private hospitalisation plan or MediShield Life with an Integrated Shield Plan.
The thing is, a major illness comes with expenses that extend well beyond surgery and hospital stays. Going through recovery also means dealing with exorbitant costs related to prolonged treatment, medication, or loss of income.
During a big health emergency, CI insurance protects you from financial trouble and keeps you financially afloat while you recover.
As the name suggests, a CI plan kicks in when you get diagnosed with a major critical illness, such as a heart attack, stroke, and major cancers.
After the diagnosis, you’ll receive a lump sum payout that you can use however you wish. Some use it to pay for medical expenses that aren’t covered by their hospital plan or MediShield Life. Others use it to cover non-medical costs related to the illness, such as transportation, childcare, or a domestic helper.
CI plans are not meant to replace other health insurance plans. Rather, the CI plan makes up for the shortfall in your savings or basic protection, so can focus on recovering without worrying about the bills.
If you’re lucky, you’ll live the rest of your life without getting seriously ill. But without the right coverage, just one critical illness can be a massive financial burden for you and your family. Here’s why skipping out on CI insurance is a big mistake.
The odds of getting critically ill are high
What are the odds of actually making a claim, especially when you’re young, active, and healthy?
No matter how healthy a lifestyle you live, there’s no telling when critical illness will strike. Industry trends show that CI claims among adults age 31 – 40 are growing, and that the risk of getting a major illness increases with age. (This is also why insurance policies cost more as you get older.)
The good news is early detection and better treatments result in higher survival rates. The payout from a CI plan helps you afford ongoing treatments and the related costs that come with cancer recovery.
There are limits
Most think that CI plans aren’t needed when the public system and employee benefits can cover all medical expenses. While these can soften the financial blow of hospital stays and outpatient treatment, there are limits to what government can cover.
For instance, the government or employee benefits can cover up to a certain amount for daily hospitalisation charges or surgery stay. However, hospitalisation fees can cost more, depending on the hospital and ward class. More than often, it only covers a part of your total bill, when there are longer hospital stays and outpatient treatments like chemotherapy.
When you’re recovering from a serious illness, being unable to afford the full cost of your treatment is the last thing you need. This is where a CI plan becomes useful.
Hospitalisation insurance won’t cover all your expenses
Similarly, a private hospital plan can cover hospitalisation stays and surgeries, and some outpatient treatments like kidney dialysis or chemotherapy. However, critical illnesses require multiple costly treatments, especially during the disease’s early stages. Because there are limits to its coverage, a hospital plan alone can’t cover all tests, treatments, and consultation fees.
A CI plan can make up for what hospital insurance can’t cover – and not just in terms of medical fees. Because you’re free to use the payout as you wish, a CI plan lets you make up for lost income, or pay for things like day care for your kids while you recover.
Your savings won’t last long in the wake of a critical illness
Critical illnesses are more expensive than the average medical emergency, and not just because there’s more treatment involved. These diseases often leave you with impairments that restrict your mobility and require long-term rehabilitation.
A stroke, for example, requires costly surgical procedures to help you return to your daily life. But even after surgery, a stroke can make it difficult to walk or do basic routines like showering or dressing yourself7. Completing your recovery requires a team of stroke specialists or help from private nurses, which health insurance does not cover.
Another cost to consider is the loss of income if you take time off work to recover, or are unable to return to work. Not only will you have difficulty paying your medical bills; you might be unable to take care of your living expenses or your family’s needs.
Realistically speaking, savings alone can’t keep up with all the long-term costs related to a critical illness.
The real value of a CI plan comes from its flexibility. Unlike health insurance, you’re free to use the CI payout for expenses beyond medical treatment. Whether it’s paying for household bills or long-term rehabilitation fees, a CI plan lets you take care of your financial obligations so you can focus on recovering.
Critical illness plans are affordable – especially while you’re young
It seems strange to get a CI plan while you’re young, healthy, and have no immediate need for it. If that’s where you are, now is the best time to get CI insurance. Not only are premiums more affordable the younger and healthier you are; you’ll also get full coverage for the plan’s illnesses.
Getting a CI plan is trickier once you’ve been diagnosed by a health condition. While it’s still possible, you may end up paying higher premiums, or get less coverage that excludes the illness you were diagnosed with.
Given the high chance of getting critically ill in your lifetime, and the costs that come with it, a CI plan provides a valuable safety net when you need it the most.
Critical illness plans are designed to meet your needs
The great thing about CI plans is that they’re not a one-size-fits-all product. We can help you find a CI plan that suits your needs and your budget. Learn how to choose a critical illness plan for yourself, or speak to a Manulife Financial Consultant to know more about how a CI plan can protect you.