Critical illness plans — sounds intense but don’t worry, it’s not as scary as it sounds. In fact, it could be one of the smartest investments you make for peace of mind. So, what exactly is a critical illness plan, and why should you care? Let’s break it down.
What’s the Deal with Critical Illness Plans and How Do They Work?
A critical illness plan is a type of insurance that provides a lump sum payout if you're diagnosed with an illness covered by the plan.
Think of it as a safety net — it offers financial support not only for treatment costs but also for non-medical expenses like daily living costs or income replacement during your recovery. This flexibility helps you focus on getting better without the added stress of bills, filling the gap that health insurance alone doesn’t fully cover.
So, how exactly does a critical illness plan differ from health or life insurance?
- Health Insurance (e.g., Integrated Shield Plans): Typically covers medical bills such as hospitalisation, surgery, and treatment costs incurred due to illness or injury. However, health insurance doesn’t offer cash payouts to replace lost income while you’re recovering. It’s focused on covering medical expenses but not on providing financial support for daily living.
- Life Insurance: This provides a lump sum payout to your beneficiaries in the event of your death or if you become permanently disabled. It’s designed to help your family financially after you’re gone, covering things like funeral costs, debts, or ongoing living expenses for your dependents. However, life insurance doesn't provide funds for managing medical costs or your recovery if you fall ill.
What’s Covered?
Critical illness plans usually cover major conditions like cancer, heart attack, stroke, kidney failure, and organ transplants. These are some of the key illnesses that could trigger a payout. It’s a backup plan for your health — to make sure you're financially covered when life’s unexpected challenges hit.
That said, some plans may offer coverage for additional conditions beyond the 37 core illnesses. If you're looking for more extensive coverage, it’s a good idea to speak to an advisor who can help tailor a plan that best suits your needs.
When Does a Critical Illness Plan Make Sense?
Who really needs this kind of coverage? The answer: pretty much everyone.
Whether you're in your 20s, 50s, or anywhere in between, life is unpredictable, and a critical illness can strike at any time. In fact, statistics show that 1 in every 4 to 5 Singaporeans will develop a critical illness during their lifetime, with cancer alone accounting for 26.4% of all deaths in the country.
The financial impact can be significant — the average critical illness claim in Singapore is around $52,343.37, a hefty sum that most people can't easily pay out of pocket.
If you have dependents relying on your income or work in a high-risk job, a critical illness plan ensures you have the financial security to cover lost income and protect your family without dipping into savings.
Protecting Yourself, Just in Case
While we all hope we never need to use it, having a critical illness plan can be a huge relief when life takes an unexpected turn. With the right coverage in place, you can focus on recovery without the financial stress. Whether you’re young, old, single, or supporting a family, it’s worth considering how this plan fits into your life.
The Straits Times – Living longer in poor health? Here’s how you can prepare for costly medical bills
HealthHub – Principal Causes of Death
SmartWealth – Life Insurance Claim Statistics in Singapore (Death, TPD & CI Claims)
