Question about Critical Illness Coverage

[ctan84]

Hi all,
Im reviewing through my critical illness (CI) coverage and was thinking to calculate specifically how much coverage is enough. The LIA (Life Insurance Association) insists that about 3.9X of annual income is needed for 5 years of CI coverage. But when I did my own calculation of expenses needed, its certainly not what's stated as 3.9X, but significantly lesser. Hence, I would like to kindly check with you folks here if my approach in the calculation is correct:

1. Is it a must to plan for 5 years? The recommendation is usually 3-5 years, can I just base my coverage amount on 3 years?

2. In the calculation of coverage amount, these are the parameters I used: A) Dependents' expenditure (Parents - monthly allowance for the next 3 years / Kids - total expenditure for the next 3 years). B) Mortgage for the next 3 years. C) Insurance premiums that have to be paid for the next 3 years. D) Annual personal expenditure (bills, groceries, food, shopping etc) X 3 years E) Lump sum of money for alternative treatment / supplements / tonics - about $50k F) If necessary, 3 years extra expenditure to hire a helper

3. If I want SOME CI coverage beyond 65 years old, does it make sense to get a whole life plan with CI rider? Probably about $100k of CI coverage. Or is it more economical to continue paying the term life + CI premium in the age bracket >65 (which is rather expensive by then).

4. Assuming I have a medical history which excludes me specifically from some of the 36 CI (i.e., all cancers) & this exclusion is also extended to my medi-shield private rider coverage, is it a good strategy then to purchase disability income insurance to make up for the lack of coverage for these excluded conditions?

Thanks alot in advance for the advice.

 

[moejoseph]

Below are my personal opinion. Some bros here may have differing thoughts, but it will be up to you to determine ur actual needs

Hi all,
Im reviewing through my critical illness (CI) coverage and was thinking to calculate specifically how much coverage is enough. The LIA (Life Insurance Association) insists that about 3.9X of annual income is needed for 5 years of CI coverage. But when I did my own calculation of expenses needed, its certainly not what's stated as 3.9X, but significantly lesser. Hence, I would like to kindly check with you folks here if my approach in the calculation is correct:

1. Is it a must to plan for 5 years? The recommendation is usually 3-5 years, can I just base my coverage amount on 3 years?

The guideline only act as a guideline to follow. Anything you are comfortable with is good enough, within your budget especially

2. In the calculation of coverage amount, these are the parameters I used: A) Dependents' expenditure (Parents - monthly allowance for the next 3 years / Kids - total expenditure for the next 3 years). B) Mortgage for the next 3 years. C) Insurance premiums that have to be paid for the next 3 years. D) Annual personal expenditure (bills, groceries, food, shopping etc) X 3 years E) Lump sum of money for alternative treatment / supplements / tonics - about $50k F) If necessary, 3 years extra expenditure to hire a helper

3. If I want SOME CI coverage beyond 65 years old, does it make sense to get a whole life plan with CI rider? Probably about $100k of CI coverage. Or is it more economical to continue paying the term life + CI premium in the age bracket >65 (which is rather expensive by then).

There's an age limit to CI rider, and it differs for some companies. The premium rate will definitely be more expensive if >65 is included, but the rate are spread over the payment period as well. Will say that Term + CI rider is still cheaper because it does not have cash value.

4. Assuming I have a medical history which excludes me specifically from some of the 36 CI (i.e., all cancers) & this exclusion is also extended to my medi-shield private rider coverage, is it a good strategy then to purchase disability income insurance to make up for the lack of coverage for these excluded conditions?

Yes, this is especially important. Do look into Eldershield upgrade as well

Thanks alot in advance for the advice.

 

[SBC]

Sorry, ride on this similar thread. Thanks

Is Life Policy bundled with Dread Diease similar to standalone CI?

Can claim against multiple of these policies?

 

[Lewis.T]

Sorry, ride on this similar thread. Thanks

Is Life Policy bundled with Dread Diease similar to standalone CI?

Can claim against multiple of these policies?

Depends. Take a look if your coverage is additional or accelerated.

 

[oceanicmanta]

@ctan84

on pt4, DII wont "make up" for the excluded coverage due to pre-existing conditions ... ie most likely these exclusions will also be extended to your DII.

regardless, DII could still be considered as part of your protection .. you wld have to prioritise between DII & CI ...

 

[moejoseph]

Sorry, ride on this similar thread. Thanks

Is Life Policy bundled with Dread Diease similar to standalone CI?

Can claim against multiple of these policies?

Usually as rider for Life Plan, it is only accelerated or additional. If CI occur, it will be paid out and that's it.

Some plans enable ECI & CI to be added together. But if u are looking for multi-pay, a standalone CI plan will be more relavant

 

[Zenest]

IMHO, pls ref my reply in blue.

Hi all,
Im reviewing through my critical illness (CI) coverage and was thinking to calculate specifically how much coverage is enough. The LIA (Life Insurance Association) insists that about 3.9X of annual income is needed for 5 years of CI coverage. But when I did my own calculation of expenses needed, its certainly not what's stated as 3.9X, but significantly lesser. Hence, I would like to kindly check with you folks here if my approach in the calculation is correct:

1. Is it a must to plan for 5 years? The recommendation is usually 3-5 years, can I just base my coverage amount on 3 years?
IMHO this 3-5yrs guide is to provide for your expenses (outside your hospital expense) during your recovery period. Your expenses may include your normal living expenses + medical cost.
a) If you recover after 5yrs, you continue to earn income as before.
b) if your med condition is long term (organ failure awaiting donor), you have this 3-5yrs to adjust your future source of income / expense.
c) if pass on due to illness, than the surplus goes to beneficiary.
In this case, catering more is better than falling short, where affordable.

2. In the calculation of coverage amount, these are the parameters I used: A) Dependents' expenditure (Parents - monthly allowance for the next 3 years / Kids - total expenditure for the next 3 years). B) Mortgage for the next 3 years. C) Insurance premiums that have to be paid for the next 3 years. D) Annual personal expenditure (bills, groceries, food, shopping etc) X 3 years E) Lump sum of money for alternative treatment / supplements / tonics - about $50k F) If necessary, 3 years extra expenditure to hire a helper
As per point 1.

3. If I want SOME CI coverage beyond 65 years old, does it make sense to get a whole life plan with CI rider? Probably about $100k of CI coverage. Or is it more economical to continue paying the term life + CI premium in the age bracket >65 (which is rather expensive by then).
Both Term and Wholelife plan has pros and cons (assuming term plan covers wholelife (> age 99). Premiums for both types of plan are usually level through out policy term, unless you take it up via group insurance like MHA / SAF/ Safra.
Term plan premiums are lower than traditional wholeife plan, but sum assured is level throughout policy term.
It's good for those who requires max coverage for limited budget.

Traditional wholelife plan, premiums are higher but sum assured increases with bonus declared annually. It also accumulate cash values over time.
Over long term, trad wholelife may give greater value per dollar of premium.
Some trad wholelife plans now has a balance of term plan coverage built in whereby it provides term coverage during your economic years up to age 70 and reduces to base cover sum assured + bonus after.

If you have immediate coverage needs but limited budget, you may consider term policy for a start.


4. Assuming I have a medical history which excludes me specifically from some of the 36 CI (i.e., all cancers) & this exclusion is also extended to my medi-shield private rider coverage, is it a good strategy then to purchase disability income insurance (DI) to make up for the lack of coverage for these excluded conditions?
As mentioned by Oceanicmanta, your exclusions will likely be extended to DI ins as well.

Thanks alot in advance for the advice.

 

[Zenest]

Sorry, ride on this similar thread. Thanks

Is Life Policy bundled with Dread Disease similar to standalone CI?

Can claim against multiple of these policies?

If you are asking if you can claim from more than one insurance policy due to CI, the answer is Yes.

Some may confuse claim of CI with Hospitalisation cover.
For Hospitalisation cover (eg. Medishield / company H&S ins), you can also claim from multiple policies but only up to your total hospitalisation expense (including Pre-Post Hospitalisation).