How to choose an individual critical illness insurance plan?
How to choose an individual critical illness insurance plan?
Critical illness (CI) insurance provides a lump-sum payment without limitation of usage which may be used for protection against risk of lost income and/or cover medical and living expenses after major critical illnesses.
The following are some criteria to consider when choosing a suitable critical illness insurance plan:
Benefits coverage
Most CI plans cover Cancer, Heart Attack and Stroke, the 3 major critical illnesses which make up around 90% of CI claims in HK.
Some plans might cover more than 100 major critical illnesses and early-stage critical illnesses and you need to pay attention to the plan features and policy wordings if you are interested in coverage for certain specific critical illnesses.
Issue age and period of cover
Some plans offer coverage up to a certain age without lifetime protection and some only allow member up to a certain age (say 60) to enroll.
Multiple critical illness protection
As some major critical illnesses may recur, many plans now offer multiple critical illness protections. However, plans from different providers will have different waiting periods and eligible critical illnesses. Multiple protections will certainly mean higher premiums.
Savings element
Plans with savings elements usually offer different payment terms ranging from 10-25 years. You might choose the longest payment term if a plan provides premium waiver in the event of a major critical illness.
For the same amount of benefits coverage a certain timeframe, the total premiums paid for plans without savings elements can be as low as one-fifth of the savings plans.
Age and smoking habit
For the same amount of benefits coverage, premiums will generally rise with age, increasing at a faster rate after age 30.
For the same age, the premium for a smoker can be up to 70% higher than a non-smoker.
Provider
There are many critical insurance providers in the market and you might have seen many complaints on TV regarding issues and difficulties with claim denials. Therefore, it is paramount for you to consider only those with a solid reputation, history and experience which is sustainable into the future.
It is the insured’s responsibility to answer all the health-related questions with utmost faith during the underwriting and application process, and to pay attention to policy wordings and exclusion items to avoid issues when submitting claims.
Summary
Since the plan features and benefits coverage of critical illness insurance plans in the market greatly varies, it is paramount to review the policy wordings carefully before enrolment.
As the premiums for critical illness coverage will rise with age, it is recommended to get a policy at a young age, especially for plans with savings elements as you will incur a loss in case of early surrender.
Depending on your age, financial situations and budget requirements, it may also be worthwhile to consider pure protection plans without savings elements.
Please contact us if you are interested in learning more about critical illness insurance plans.
Last Update: 31st December 2022