If you are thinking of getting Critical Illness (CI) coverage soon, take note:
In August 2019, the Life Insurance Association (LIA) Singapore announced the changes, which will take effect from 26 August 2020. The changes are meant to reduce ambiguity of the intent of coverage, so that customers can better understand what is being covered and what is not.
Let’s understand the changes:
The LIA’s CI Framework, last updated in 2014, includes standardised definitions for a total of 37 severe-stage CIs.
The total numbers of CI remained unchanged at 37.
Of the 37, the names of 14 CIs have been enhanced, and the definitions of 21 CIs have been revised.
|Existing List of 37 CIs||Revised names||New List of 37 CIs (With effect from 26 August 2020)|
|1||Major Cancers||Yes||Major Cancer|
|2||Heart Attack of Specified Severity||No||Heart Attack of Specified Severity|
|3||Stroke||Yes||Stroke with Permanent Neurological Deficit|
|4||Coronary Artery By-pass Surgery||No||Coronary Artery By-pass Surgery|
|5||Kidney Failure||Yes||End Stage Kidney Failure|
|6||Aplastic Anaemia||Yes||Irreversible Aplastic Anaemia|
|7||End Stage Lung Disease||No||End Stage Lung Disease|
|8||End Stage Liver Disease||No||End Stage Liver Disease|
|10||Deafness (Loss of Hearing)||Yes||Deafness (Irreversible Loss of Hearing)|
|11||Heart Valve Surgery||Yes||Open Chest Heart Valve Surgery|
|12||Loss of Speech||Yes||Irreversible Loss of Speech|
|13||Major Burns||No||Major Burns|
|14||Major Organ/Bone Marrow Transplantation||No||Major Organ/Bone Marrow Transplantation|
|15||Multiple Sclerosis||No||Multiple Sclerosis|
|16||Muscular Dystrophy||No||Muscular Dystrophy|
|17||Parkinson’s Disease||Yes||Idiopathic Parkinson’s Disease|
|18||Surgery to Aorta||Yes||Open Chest Surgery to Aorta|
|19||Alzheimer’s Disease / Severe Dementia||No||Alzheimer’s Disease / Severe Dementia|
|20||Fulminant Hepatitis||No||Fulminant Hepatitis|
|21||Motor Neurone Disease||No||Motor Neurone Disease|
|22||Primary Pulmonary Hypertension||No||Primary Pulmonary Hypertension|
|23||HIV Due to Blood Transfusion and Occupationally Acquired HIV||No||HIV Due to Blood Transfusion and Occupationally Acquired HIV|
|24||Benign Brain Tumour||No||Benign Brain Tumour|
|25||Viral Encephalitis||Yes||Severe Encephalitis|
|26||Bacterial Meningitis||Yes||Severe Bacterial Meningitis|
|27||Angioplasty & Other Invasive Treatment for Coronary Artery||No||Angioplasty & Other Invasive Treatment for Coronary Artery|
|28||Blindness||Yes||Blindness (Irreversible Lost of Sight)|
|29||Major Head Trauma||No||Major Head Trauma|
|30||Paralysis (Loss of Use of Limbs)||Yes||Paralysis (Irreversible Loss of Use of Limbs)|
|31||Terminal Illness||No||Terminal Illness|
|32||Progressive Scleroderma||No||Progressive Scleroderma|
|33||Apallic Syndrome||Yes||Persistent Vegetative State (Apallic Syndrome)|
|34||Systemic Lupus Erythematosus with Lupus Nephritis||No||Systemic Lupus Erythematosus with Lupus Nephritis|
|35||Other Serious Coronary Artery Disease||No||Other Serious Coronary Artery Disease|
|37||Loss of Independent Existence||No||Loss of Independent Existence|
|New List of 37 CIs (With effect from 26 August 2020)||Revised Definitions|
|2||Heart Attack of Specified Severity||Yes|
|3||Stroke with Permanent Neurological Deficit||Yes|
|4||Coronary Artery By-pass Surgery||No|
|5||End Stage Kidney Failure||No|
|6||Irreversible Aplastic Anaemia||Yes|
|7||End Stage Lung Disease||No|
|8||End Stage Liver Disease||No|
|10||Deafness (Irreversible Loss of Hearing)||Yes|
|11||Open Chest Heart Valve Surgery||No|
|12||Irreversible Loss of Speech||Yes|
|14||Major Organ/Bone Marrow Transplantation||No|
|17||Idiopathic Parkinson’s Disease||Yes|
|18||Open Chest Surgery to Aorta||No|
|19||Alzheimer’s Disease / Severe Dementia||Yes|
|21||Motor Neurone Disease||No|
|22||Primary Pulmonary Hypertension||No|
|23||HIV Due to Blood Transfusion and Occupationally Acquired HIV||Yes|
|24||Benign Brain Tumour||Yes|
|26||Severe Bacterial Meningitis||No|
|27||Angioplasty & Other Invasive Treatment for Coronary Artery||No|
|28||Blindness (Irreversible Lost of Sight)||Yes|
|29||Major Head Trauma||Yes|
|30||Paralysis (Irreversible Loss of Use of Limbs)||No|
|33||Persistent Vegetative State (Apallic Syndrome)||No|
|34||Systemic Lupus Erythematosus with Lupus Nephritis||Yes|
|35||Other Serious Coronary Artery Disease||Yes|
|37||Loss of Independent Existence||Yes|
*Source LIA Singapore
*For the full list of changes, check LIA Definitions of Critical Illnesses: Comparison between Version 2014 and Version 2019.
For proposals that signed by 25 August 2020, insurers must ensure that the policies are issued no later than 25 February 2021. This gives insurers a grace period of six months to issue all such policies under Version 2014 definitions. New CI products introduced before 26 August 2020 may adopt either Version 2014 or Version 2019 definitions. If the insurer chooses Version 2014, the CI product must be withdrawn by 26 August 2020. The application of Version 2019 will be based on the Proposal Signed Date.
How will these new changes impact current policies with CI coverage? Will they affect claims assessment?
Policyholders with existing CI coverages are not impacted by the new CI definitions. Claims assessment and benefits will follow the definitions, as well as the terms and conditions stated in their existing policy contracts.
Why is LIA Singapore refining the CI definitions?
In a note released by LIA, the changes are meant is to provide greater clarity regarding the definition and names. More information can be found here.
What are some highlights of the CI definition changes?
1) “Major Cancers” has been revised to “Major Cancer”.
Added to definition: Major Cancer diagnosed on the basis of finding tumour cells and/or tumour-associated molecules in blood, saliva, faeces, urine or any other bodily fluid in the absence of further definitive and clinically verifiable evidence does not meet the above definition.
2) For “Heart Attack of Specified Severity”, the reference to “Death of heart muscle due to obstruction of blood flow” has been revised to “Death of heart muscle due to ischaemia”. This makes it clear that both Type 1 Myocardial Infarction and Type 2 Myocardial Infarction are covered.
3) “Deafness (Loss of Hearing)” has been amended to “Deafness (Irreversible Loss of Hearing)”.
Also, the term irreversible is defined as, “cannot be reasonably restored to at least 40 decibels by medical treatment, hearing aid and/or surgical procedures consistent with the current standard of the medical services available in Singapore after a period of six months from the date of intervention.”
Are Singaporeans well-covered in terms of CI protection?
In times of critical illness, the average Singaporean and is only covered for about a year of their expenses – or 20% of what is needed should they be out of the workforce for five years.
Reasons for the 80% CI protection gap could include a lack of understanding of such protection, with people thinking they are unlikely to develop a critical illness, giving it lower priority. Their perceived cost of getting such insurance plays a part as well.
How much critical illness coverage is sufficient in times of need?
CI insurance provides one with a payout when he or she is diagnosed with a critical illness. Five to ten years’ worth of annual income is a commonly used guideline. Do consider the age of dependents – you may want more than that if your children are still young.
This is another rule of thumb to follow: CI policy should provide enough funds – after deducting debts and other liabilities – for replacement of annual income for five years. Your adviser might suggest up to ten years, depending on your circumstances.
There’s no “one-size-fits-all” CI plan. So, speak to us on tailoring your CI plan to best fit your specific financial situation today.
APEX ADVISORY GROUP
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