I was quite surprised to come across an article with the polar opposite of our title, published by a highly reputable personal finance site in Singapore.
In it, were reasons for not buying Critical Illness insurance, an expansion of views from an ex-Insurance CEO, who eschewed (deliberately avoids) buying CI cover to a large degree.
I was aghast at the title until I read between the lines to understand the author’s intentions – to show and demonstrate a certain set of conditions under which CI insurance need NOT be bought.
That’s all and well, if a reader examined the article closely. But I suspect the nature of the title itself would have skewed the perception about CI cover negatively.
Running a site that is a proponent of Life Insurance, I was understandably upset.
But hey! What’s life without a few differing opinions?
Give me a few minutes – and allow me to explain why CI insurance is bloody important.
And no, you don’t have to read between my lines.
The likelihood of CI is increasing – so is the Survival Rate
It’s no secret. We are living longer – and dying more frequently to disease because of that.
The average life expectancy of males in Singapore is 80 years (up from 73 in 1990).
For females, it is 84 years (up from 78 in 1990).
The top five causes of death in 2011:
Cancer – 28.5%
Heart Disease – 23.5%
Pneumonia – 15.7%
Stroke – 8.4%
Lung Disease – 2.5%
All in they account for nearly 80% of all deaths. We are living longer due to improvements in medical science, but living longer also exposes us to a greater chance of disease.
How does that work?
As we live longer, we expose ourselves to more unhealthy lifestyle factors (stress, lack of exercise, bad diets, even the foaming agent in our shampoos is a carcinogen).
Good news is, every other day there are new breakthroughs being made in cancer research, new vaccines being discovered, new ways of treating diseases. Translation: a higher chance for cures and a more optimistic future.
Doesn’t that mean a greater emphasis should be placed on CI Insurance?
CI Insurance is meant for Income Replacement – and a Whole lot more
Detractors of CI Insurance will proclaim loudly: Your Medishield Life and Integrated Shield Plan will take care of your hospitalization and treatment bills. Why else would you need to have CI insurance?
My answer to that is: Would those very same detractors think it is enough the moment they receive a diagnosis?
Shield Plans are good – we think they are essential.
Because it covers hospitalization bills alone. Shield plans do not compensate you for lost income, neither will it pay out any meaningful sum of money for other essential needs other than medical treatment.
There might be a need to engage a helper after the treatment.
Special dietary needs.
Long term medication.
Inability to work while recuperation.
Experimental Treatment, even. (Might not be covered under the Shield Plans)
Long story short, the payout provided by CI Insurance can be used in any way you see fit, which is a great option to have. Like a parachute to be carried on you.
Wouldn’t you want to have this parachute in case Life suddenly pushes you out of the plane?
CI Insurance is not an Investment – You always want it to have 0 Returns
Another bizarre gripe we hear all the time about CI insurance is that it provides a low rate of return. Supposedly, the chance of a claim is a mere 5%. (We don’t have the stats to prove or disprove that, but we don’t need it)
So some of us might think: Isn’t that money down the drain? I could be making so much more returns if I invested this money into something else, like stocks, ETFs, property, etc.
A variant of this gripe is that CI cover usually tags along with another plan like Whole Life insurance, which has a low rate of return. But the idea is still the same – money is “lost”.
To that, we say: Curiouser and Curiouser!
Insurance is an expense. Always has been, always will be. And it should be an important one too.
We never buy insurance in the hopes of making a claim – do you? We just hope that it stays there unused, gathering dust. Till the end of our days, if we are lucky.
For those who are keen to make insurance a sound investment, we know exactly how to go about it.
Just purchase all the Life Insurance you can afford, wait for a year until the suicide exclusion clause is not in effect. Then jump off the tallest building you can find. Or if you can’t wait that long, find a friend and arrange for a fatal “accident”.
57,400% returns, easily. Imagine what you could do with that money.
CI Coverage is “expensive” – But contracting CI without Cover is Catastrophic
There is plenty of stuff out there that can be considered “expensive” or “optional” but we buy or consume them anyway.
The Latest Phone/Gadget.
Tuition for the children.
You get the gist. But why draw the line when it comes to CI insurance? A cuppa a week sets us back by $28 a month. Believe me, you can get some substantial CI cover for that money.
Coffee over Cover? Really?
And how much of a financial catastrophe is a Critical Illness?
There was a man who spent his final days trying to get that message across, we wrote about it here.
Assuming that Medshield Life (and your Integrated Shield Plan) takes care of all medical bills, there is still a prospect of being discharged – but yet unable to resume working.
How long can that limbo period be? A survey of 100 CI patients survivors indicated an average recovery period of 3.5 years.
How many coffees will 3.5 years of income buy you?
Go out there and buy Critical illness cover.
Buy it with a term plan.
Buy it with Whole Life.
Buy it as a stand-alone.
Buy Early Stage CI if you like.
Its up to you really – just make an informed decision. One that is grounded with reason and fortified with common sense.
Because at the end of the day, you are the at the receiving end if anything untoward happens.
Would you want to face that ordeal alone, or with a financial guardian angel?
PS. This has got to be one of the most emotionally draining articles I have ever written. The importance of CI cover cannot be understated, and I hope that I have done adequate justice to the topic.
www.ClearlySurely.com aims to eradicate the knowledge gap between consumers and Life Insurance. Our Vision is that one day, every Man, Woman, and Child will be properly insured.