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I already have Critical Illness Coverage. Do I still need another Cancer Insurance Policy? [You ask, We answer]

Posted 21 May, 2020 by Clearly
in Educate Yourself

The age of the lockdown (known as Circuit Breaker, in local parlance) has produced innumerable hours of helplessness about the present, anxiety about the future, and net browsing late into every night.

These 3 factors combined have spawned far more insurance-related discussions than usual, and we chanced upon something interesting here:

 

FB Group: Insurance Questions SG

 

As questions go, this one is pretty relevant as there are tonnes of Cancer-Only Protection plans out there right now. This spawns a subsequent question as to: Are these Cancer-Only Protection plans useful, given that we already have our traditional Critical Illness plans in the market?

Grab a pair of sunglasses as we shed some bright light on this.

 

First things first: Understanding the basics

 

Simi si Critical Illness Cover?

A frequent reader of this blog would already know about Critical Illness (CI) Cover vs Cancer-Only Protection, but if you are new to the scene, some clarification is in order.

Critical Illness Cover is widely known as the (pre-specified) amount of money paid to someone should he be diagnosed with at least one critical illness within a standard list. That list, which co-incidentally a surefire cure for stubborn insomnia, can be found here:

 

https://www.lia.org.sg/media/1463/lia-ci-framework-2014_lia-definitions-for-37-cis.pdf

 

This is the latest list published by the Life Insurance Association of Singapore, but there are older variants of this list in use, especially with older policies. (think: ok, boomer)

 

Then simi si Cancer protection?

Similar concept to CI Cover, except this time the list applies to cancers ONLY. Every insurer has somewhat a similar list, but we’re pretty sure there are some obscure differences embedded somewhere in their policy descriptions.

Take a look at two examples from 2 different insurers:

 

 

 

Hope that clarifies.

Before we proceed further, it is of utmost importance to note that we are not licensed by MAS in any way, shape, or form as it pertains to Financial Advisory. (They’re too fuddy-duddy for us, tbh)

We’re providing content that is free for all with a focus on education. (but we have more than 20 years of industry experience combined, and I myself held a practicing license for a number of years)

Do consult your Financial Planner because it lets the fuddy-duddies breathe a little easier at night.

 

On to the business end of things

 

When does it make sense to add Cancer-Only Protection atop your existing Critical Illness Cover?

Cancer-Only protection exists because bulk of the Critical Illnesses today are cancer-related, as shown below.

 

https://www.nccs.com.sg/patient-care/cancer-types/cancer-statistics

https://www.moh.gov.sg/resources-statistics/singapore-health-facts/principal-causes-of-death

 

So someone that does not have adequate CI cover can supplement it with Cancer-Only cover (it could be cheaper, but only a price comparison can tell).

Or someone could feel really finicky about his health situation and decide to load up more on Cancer-related protection. (Perhaps with a family history of cancer occurrence, or a chain smoker that eats charred bbq meat daily and lives near an asbestos mine.)

 

When does it not make sense?

Assuming a person is already well covered with CI Cover (common amounts range from 3-5 years of a person’s annual income as CI cover), then it might not make sense financially to get Cancer cover too.

Because if we think of CI cover and Cancer Cover as blankets, CI cover is bigger blanket compared to Cancer cover*.

(*assuming both cover the same stages of occurrence – early or late)

Check out this eloquent pictorial explanation provided by (Captain) Jack Sparrow:

 

Mine’s bigger

 

If you are wondering why 3-5 years of CI cover is considered adequate, that is because most CI patients recover within that time frame (or die), so that sum of money is meant to replace their income throughout the recovery process.

FYI: Life Insurance Association of Singapore (LIA) recommends cover of 3.9x your annual salary. Source: LIA Protection Gap study 2017

 

Pricing Check:

If Cancer Cover is a smaller blanket compared to CI cover, then how much price difference is there?

As much as we would like to do an apple to apple comparison, it is not easy as each insurer throws in that slightest bit of variation of perks/claim conditions to “differentiate” themselves from the competition.

But with brave, stout hearts, we plunge into the depths of the interwebs and found 2 some what comparable options for the quintessential male, aged 30 who does not smoke and is in good health ($100k coverage):

1) Cancer Insurance from FWD

 

 

Annual Premium: $148
Coverage: All stages of Cancer (early to late)
Fixed Premium?: No, it could change yearly

 

2) Critical Insurance (Only) from HL Assurance

 

 

Annual Premium: $229.26
Coverage: Policy Specific CI, all Stages (Does not follow the standard 37 items set out by LIA)
Fixed Premium?: Unclear

 

Wrapping it all up

 

 

Over the course of all this discussion, there should be a realization that there are individualistic situations and concerns that govern the purchase (or nonpurchase) of any policy.

Sometimes price is an issue. Health conditions. Employee benefits at the workplace.

Preference plays a huge part in all of this. At the end of the day, as long as you are able to sleep in peace knowing that you are as well covered as possible, that would be the best possible outcome.

So go right ahead, tally up all your existing policies. Have a look at the myriad of options out there, then drop a message to your trusty financial advisor to arrange a zoom call.

 

Informed action is the best action you can take.

 

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.

We are also in the midst of building a top-secret new platform that will change the way people view financial planning. PS. It does not contain lame hyperboles like “fintech” or “insurtech” or “machine-learning” or “AI”.

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