Support My Efforts By Visiting The Advertisers

Disclaimer

This is a personal blog. The opinions expressed here represent my own, not those of my employer and is not intended to malign any religion, ethnic group, club, organization, company, or individual.

Critical Illness Coverage Review

>> Sunday, September 11, 2011

After a discussion with a fellow blogger about Critical Illness (CI) coverage, I started to notice that many people (financial advisers included, though I am not sure if it is a genuine misunderstanding or deliberate misrepresentation), have a misconception about the 3 main types of CI coverage CLAIMs.

All 3 types have the same coverage, i.e. they cover the 30 types of CI whose definition has been standardized by the Life Insurance Association (LIA) of Singapore. It must be certified by a medical professional that it falls within the contractual definition. BUT the difference is in the claim amount paid out upon diagnosis.

First type of claim is CI waiver. If diagnosed with CI, the claim will be to waive the premiums of the plan. If the plan is for a death coverage sum assured of $100k and premium monthly is $50, it means that you do not need to pay the $50 every month BUT you do not receive the $100k until a death claim. Therefore, the claim is for the premiums and not the sum assured.

Second type of claim is CI (Accelerator). If diagnosed with CI, the claim will be the sum assured. However, this results in a reduction of the death coverage sum assured. So for a plan with death coverage sum assured of $100k. If CI (Acc) coverage is $80k, you receive $80k and another $20k left for death claims, which you still have to pay premiums for! If CI (Acc) coverage is $100k, you receive $100k and the plan terminates.

Third type of claim is CI (Additional). If diagnosed with CI, the claim will be the sum assured, independent of the death coverage sum assured. So for a plan with death coverage sum assured of $100k. If CI (Add) coverage is $130k, you receive $130k and the death coverage of $100k is untouched, fully available for claim, though you still have to carry on servicing the premiums for that unless you add another CI waiver rider separately. However, if you were to pass away without contracting any CI, only the $100k is paid and not with the additional $130k.

CI (Add) coverage can be more than the main plan, but CI (Acc) is always less or equal to the main plan.

As can be seen, the 3 types of plans provides vastly different amount of pay out. CI waiver would be the cheapest in terms of premiums, followed by CI (Acc) and most expensive will be CI (Add).

Some agents are marketing CI waiver that it provides coverage for 30 CI (full stop). Without explaining that the claim is only on the premiums. Clients often mistakenly assume that they will receive the full sum assured if diagnosed with CI.

Although clients would like the CI (Acc) or (Add) coverage, they are often taken aback that it could more than double their premiums with no returns. Further, CI premiums increase exponentially with entry age.

Maybe it is time to review your CI coverage if it is in line with what you understand now.

0 comments:

Disclaimer

Privacy

The owner of this blog does not share personal information with third-parties nor does the owner store information is collected about your visit for use other than to analyze content performance through the use of cookies, which you can turn off at anytime by modifying your Internet browser’s settings. The owner is not responsible for the republishing of the content found on this blog on other Web sites or media without permission.

Blog Comments

The owner of this blog reserves the right to edit or delete any comments submitted to this blog without notice due to;

1. Comments deemed to be spam or questionable spam
2. Comments including profanity
3. Comments containing language or concepts that could be deemed offensive
4. Comments that attack a person individually

Terms and Conditions

All content provided on this blog is for informational purposes only. The owner of this blog makes no representations as to the accuracy or completeness of any information on this site or found by following any link on this site. The owner will not be liable for any errors or omissions in this information nor for the availability of this information. The owner will not be liable for any losses, injuries, or damages from the display or use of this information.

This policy is subject to change at anytime.

About This Blog

To promote the education of individuals for the need to have a healthy lifestyle and wealth management through proper financial planning, particularly in investments.




Top Blogs


Awards

There was an error in this gadget

Top Sites

  © Blogger templates Sunset by Ourblogtemplates.com 2008

Back to TOP