October 14, 2018 thefinlens

Critical Illness Coverage Standalone vs Riders: Things to Consider

Critical Illness plan is a protection plan that gives payout when the person applying has been diagnosed to suffer from critical illnesses as defined by the Life Insurance Association Singapore. The payout can also be received after a surgery, as long as it meets the conditions in the insurance policy.

The purpose of Critical Illness (CI) plan is created with consideration that the person who is sick may no longer be able to work, so the money can be used to support financial life even if there is no regular income.

CI plan is usually applied to complement Hospitalization plan because the latter only covers for medical needs in the hospital, while the CI plan can be used to cover for additional needs such as hiring a caretaker or even as a new sort of income for the family.

People who wish to apply can opt for Standalone plan or as a rider to Term or Whole Life plan. This is where it gets confusing.

To know which CI plan is the best for you, consider the following things:

critical illness coverSTANDALONE PLAN

Many people are still not aware that to have a CI plan does not always need to have a life insurance first. Standalone is available but it seems to be a less popular option, possibly due to its higher price compared to the riders. Still, it offers a more comprehensive coverage compared to the other options.

The most interesting part of the standalone plan is probably the multi-payout feature. Commonly, CI plan can only be claimed in a lump sum, but now many insurance companies make it possible to claim in multiple payouts. You need to check with the insurance policy as it varies for each company and package.

RIDER – TERM PLAN

Just like its name, this CI only provides protection in a fixed term. This may be more suitable for those who suffer from Terminal Illness (TI) and Total and Permanent Disability (TPD). In case of Terminal Illness, as you have been diagnosed to only have life expand for 12 months only, applying for a short period coverage may be more suitable rather than a lifetime coverage. Take a note that Terminal Illness is different from Critical Illness (hyperlink to the previous article).

Opting for this plan also allows you to allocate the money you do not put under the plan for other purposes such as investment. You can consult with a financial consultant for how to make use of your money optimally.

RIDER – WHOLE LIFE PLAN

It is more expensive than the term coverage, but it lasts for your whole life, usually up to 99 years old. The main character of this coverage is that your loved ones will be able to receive a payout after you pass away, in whatever condition. Another thing is that since it has saving and investment elements, you can grow your money with this plan.

But remember that once you put your money into paying the premiums, you cannot take it back until you meet the conditions as written on the policy, so think wisely about your whole financial condition.

ASPECTS TO CONSIDER

  • BUDGET – if you have limited budget, do not force yourself into applying for a more expensive coverage plan.
  • FAMILY – if you wish to leave your family with enough money after you pass away, you may want to opt for the rider whole life plan.
  • HOUSEHOLD NEEDS – again, be wise before applying for insurance because once you put your money in, you will not receive them until it’s time to receive payouts. Calculate your loans, children’s education fee, and any other things to take into consideration. If you are confused, talking to a financial consultant may be a wise step to take.
  • OTHER MEDICAL NEEDS – imagine if you suffer from one or some critical illnesses, would the coverage from the plan be enough? Try to compare some insurance packages and compare them to the possible cost you might have to bear while being sick. If it’s not sufficient, you may want to start thinking about how to be able to cover the uncovered.

Interested in Critical Illness protection? Do not wait until later because nobody knows when one will get sick. Also, some insurance companies feel reluctant to accept an application of those who have been diagnosed sick.

Talk to us before you decide on taking a CI plan, and we at TheFinlens will look into your financial condition and make a careful personalized plan for you.

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