I Already Have Hospitalisation Insurance. Why Do I Need A Critical Illness Plan Too?

This post was originally posted on Planner Bee.

Health insurance is vital, so you can protect yourself from unexpected illnesses and injuries.

There are two main types of health coverage in Singapore: Critical Illness (CI) Insurance and Hospitalisation Insurance. Many people confuse the two, since they both can cover medical bills.

If you do not know what CI insurance is and how it complements hospitalisation insurance, here’s our guide.

What does each policy cover?

While both hospitalisation and CI policies offer coverage when there is a medical emergency, they serve different purposes, and their payouts vary as well.

Here is a comparison:

Read more: How different insurance policies work for varying medical situations

Changes to Integrated Shield Plans

Previously, Integrated Shield Plans (IPs) covered cancer drugs not included on the Cancer Drug List (CDL). Patients had to pay a deductible and a percentage of the co-payment, while IPs covered the remaining costs of outpatient cancer drug treatments in full.

However, since 1 April 2023, changes to MediShield Life Coverage for cancer treatment have altered how insurers handle cancer treatment expenses, imposing a sub-limit on outpatient cancer treatments listed on the CDL.

Coverage for each drug is now set as a multiple of MediShield Life (MSHL) limits. For drugs not on the CDL, coverage is also limited and depends on your riders.

Additionally, a diagnosis of a critical illness usually requires several expensive treatments. Hospitalisation insurance have coverage limitations and is often insufficient to cover all consultation fees, tests, vitamins, and alternative treatments like Traditional Chinese Medicine.

This is where a CI policy becomes valuable, giving you the flexibility to use the payout as you deem fit. For instance, a CI policy lets you cover important expenses such as daycare for your children or to compensate for loss of income as you recover.

Which policy should you buy first?

Always get hospitalisation insurance first. At the very least, you need to be able to pay off any medical bills if you get hospitalised.

Hospitalisation insurance covers both minor and major illnesses, and injuries, as long as you are warded or undergo day surgery.

Check how much coverage you would need with our calculator here.

Do note that IPs do not have outpatient General Practitioner (GP) or Specialist (SP) coverage.

For outpatient claims, you can check with your company employee benefits about your coverage, or you can buy an International Health plan.

Why do I need CI insurance too?

A diagnosis of a critical illness often leads to significant financial strain due to high treatment costs and the inability to work. CI coverage complements major and long-term treatments. Most illnesses require initial hospitalisation, but some require you to continue treatment while you recover at home.

While hospitalisation insurance helps with medical bills, it does not address the broader financial challenges. A CI plan ensures that you will still have the financial means to cope with the following:

• Income replacement: When a critical illness prevents you from working, a CI plan provides a lump sum payout that can replace lost income while you undergo treatment. This payout is usually able to cover your expenses for up to a few years, helping to maintain your lifestyle and meet ongoing financial commitments.
• Non-medical expenses: Critical illnesses often incur additional non-medical expenses, such as transportation to treatment centres, home modifications, and hiring caregivers. These expenses cannot be claimed under a hospitalisation plan, and this is where CI insurance fills that gap.
• Long-term recovery: Recovery from a critical illness can be lengthy and may require continuous medical care, rehabilitation, and lifestyle adjustments. The financial support from a CI plan ensures you can focus on recovery without the added stress of financial worries.

Read more: Is Your Critical Illness Coverage Enough for You?

Flexibility to adjust your payout

There are a variety of CI plans depending on the insurer. Some may cover more critical illnesses than the average, although these would likely command higher premiums.

CI plans can be either standalone policies or tied to your life insurance policy as a supplementary plan.

The good thing about a CI plan is its flexibility. You can use the payout however you wish. A hospitalisation plan can only be used to cover your medical expenses.

These are some ways you can use a CI policy’s payout:

• Make up for lost income from work
• Pay for rehabilitation and long-term care expenses such as medication, treatment, hiring caregivers or nurses, or purchasing medical equipment
• Protect yourself from using your savings or retirement funds
• Pay for regular household expenses such as mortgage payments, utility bills, groceries, and childcare
• Look after your dependents while you recover

The best time to buy a CI plan is when you are young, fit, and have no existing medical conditions as the premiums are lower and nearly all insurers will accept your application. You will also be completely covered without any exclusions.

Read more:__ Do You Really Need Early Critical Illness Coverage?

How long should CI insurance cover me for?

When considering coverage for critical illness, both term plans and life plans offer unique benefits tailored to different needs. To choose the right plan, start by keeping in mind the period you would like to be covered for, and think about the following:

• Affordability: Term plans are generally more affordable, which is suitable if you are looking for temporary coverage during high-responsibility years.
• Coverage: Life plans offer permanent coverage and can be beneficial if you are seeking long-term financial security and an investment component.
• Financial goals: Ultimately, consider your financial goals, responsibilities, and the level of coverage needed when deciding between a term plan and a life plan.

Conclusion

Both hospitalisation and CI insurance are crucial to protect us from high and unexpected fees.

Ideally, a person should have both hospitalisation and CI insurance, as they offer a safety net if there is ever a medical emergency. By combining both insurance plans, you can achieve comprehensive coverage and peace of mind, knowing you are well-prepared for any health challenges that may arise.

If you can afford it, make sure the rest of your family is also covered by both types of insurance, as you never know who will fall ill.

If you are unsure which CI plan to get, speak to a trusted financial consultant, or you can always reach out to us at [email protected] for more advice.

Read more:__ Best Critical Illness Insurance