Understand the premium is quite steep for critical illness insurance that covers early to late-stage critical illness. Any merits for getting these types of insurance? If not, any alternatives?

I think Insurance policies that provide coverage for early stage critical illness are undoubtedly pricier compared to those that only cover critical illness in its advanced stages. heardle

As a matter of fact, insurance policies that cover early stage critical illness will certainly be more expensive that insurance policies that cover major stage critical illness only.

This is because the former usually covers for all stages of critical illness, starting with early stage, intermediate stage, and major stage. Let me give you an example. For most of the plans at AIA, major stage covers a total of 43 medical conditions (Life Insurance Association only has a list of 37 medical conditions, and some insurers cover only 36 medical conditions). When we add in early stage cover, the latest plan from AIA covers a total of 175 medical conditions, including pre-early conditions. With a wider range of coverage, it is without doubt that the premium will be different.

Next, let's look at this from the contractual point of view. After studying insurance policy contracts for so many years, here is the real fact: Life Insurance Association only mandates insurers to follow its framework for the listed 37 medical conditions. For any medical conditions that are not within the framework, the insurers may create its own name and definition for the covered condition. I have explained in detail here: Critical Illness Definition Changes Singapore: Clarity comes with a Cost

As you may see under Part 1.2, both insurers supposedly cover the same condition, but the definition for payout are shockingly different. As layman consumers, we suffer because we are not well-versed in such term. Anyhow, given such terms, which insurer will you choose to work with? And which plan do you think cost more? P.S. the answer is not that simple.

Moving on, as for merits of getting such insurance policies, it depends on individual needs and there is no right or wrong answer to that end. However, from the insurer perspective, it is clear - if you have major stage critical illness coverage but you are in coma for only 48 hours, then you are not eligible for claim. However, you will be eligible for claim under early stage critical illness coverage, assuming all other conditions are met. In this case, can you sleep for 48 hours more so that you can get insurance payout? Argh, I believe this doesn't make sense at all. Therefore, there is certainly a market for early stage critical illness coverage.

Finally, insurance is merely a tool to cover financial risks that we cannot bear on our own. Whether we should get it or seek alternatives, it is all about conducting comprehensive financial planning to that end.

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