Early Critical Illness (ECI)
Critical Illness (CI)
Asked on 24 Feb 2020
I heard from friends that early critical illness is not required since the ability to work is usually not affected, however, CI is definitely important. Is this accurate?
Hi Ting Jian,
The key difference would be in their definitions.
As you might expect, critical illness definitions (late stage) revolve around major illnesses which are already at a critical (but not fatal) stage. At this point, the person is seriously ill and will likely be spending his time recovering or seeking treatment in a hospital, or equivalent. Chances of recovery are still there, and it's not a definite death sentence if you were to have a cancer or heart attack.
Critical illness definitions are already defined very well in Singapore, and will only be more precise from Aug 2020.
The standard list is here:
The new definitions effective no later than 26 Aug 2020 are here:
Now, what about early critical illness? Just think of it as critical ilness which have yet to progress enough to meet the definition of late stage critical illness. So for example, early cancer usually means that the cancer cells have not yet spread. Again, it is not a death sentence to be diagnosed, and in fact, chances of recovery would generally be better.
A sample definition for early cancer would be "the focal autonomous new growth of carcinomatous cells confined to the cells in which it originated and has not yet resulted in the invasion and/or destruction of surrounding tissues. " Note that it has not yet resulted in the invasion or destruction of surrounding tissues; i.e. it has not yet spread.
Late stage cancer would be " uncontrolled growth of malignant cells with invasion and destruction of normal tissue. " The term "invasion and destruction of normal tissue" implies it has spread to the surrounding tissue. The difference is quite stark as you can see.
I will point out however, that there is no standardized list of early critical illness definitions just yet. Perhaps some day, but not right now.
Now, whether or not early stage critical illness is required is a subjective question. Instead of putting forth a statement as such, consider for a moment a scenario where you didn't have any form of early critical illness coverage. I call this 'by default', since this is the default scenario that everyone will have if they don't take any action to cover their risk.
So one day you discover you have early stage cancer. You don't have any early CI cover. You seek treatment in a hospital. You are warded. You get discharged. You seek Chemotherapy on your own, burning through your annual leave and hospitalization leave. You run out of leave and take no pay. You tap on your own savings. You finally beat the cancer, and go back to work a year later, with your savings depleted. Or you could continue to drag yourself to work in between your treatment, in order to sustain you/your family finances. The stress of juggling work and treatment isn't easy.
Now consider a situation 'by design'. You consider your risks and mitigate it by transferring it to the insurer. That's what insurance really is. Risk transfer. You are then diagnosed with early stage cancer. Now, while the first part of this story is the same as before, i.e. You seek treatment in a hospital. You are warded. You get discharged. You seek Chemotherapy on your own, burning through your annual leave and hospitalization leave. But the second part of this story doesn't have to happen. You take no pay leave. But you don't have to worry about the family finances. Your early critical illness payout provides a sum that will take care of your finances for easily a couple of years, preventing you from losing your potential income and providing for household expenses. You recover and return to work. You don't have to go down the route of juggling work and treatment just to ensure there is food on the table. That's what I term 'by design'.
Granted, early critical illness coverage will cost more than late stage critical illness coverage. However, consider the scenario as such; would you rather have the $100K payout, or burn through your own resources?
(One must of course still work through the numbers to see if it makes financial sense, but I think you get my point)
Unless your friend is an early critical illness patient survivor or a specialist in any of the 175 covered medical conditions, otherwise it makes more sense to spend considerable time to do proper research before making a decision.
Pardon me as I don't mean to sound rude. Instead I have seen, heard, and read so many similar irresponsible comments in the past that doesn't even make sense. Now, let me explain.
Generally, early critical illness and major critical illness differs in the severity of the medical condition itself. Let's take Heart Attack of Specified Severity for example. Here is part of the definition for:
*Early Stage: Insertion of a permanent cardiac pacemaker that is required as a result of serious cardiac arrhythmia which cannot be treated via other means.
*Major Stage: Death of heart muscle due to obstruction of blood flow, that is evident by at least three criteria proving t he occurrence of a new heart attack.
*Disclaimer: Refer to policy contract for full details.
According to a resource from Singapore General Hospital,
"You will need long term follow up. Initially you will be seen at 4 to 6 week intervals to check the pacemaker is functioning as intended. If there are no problems, the follow up interval may be lengthened to every 3 months or more."
Integrated shield plan may cover the inpatient hospitalisation bill, as well as pre- and post- hospitalisation for a stipulated period of time. In the industry, AIA Singapore gives the highest pre- and post-hospitalisation coverage of up to 13 months for treatment via AIA Preferred Providers.
Even with such extensive coverage, it is barely sufficient to cover the lifetime worth of follow-up cost.
Will work be affected?
Honestly, it is difficult to say as everyone's body is different. For the most part, we all want to stay healthy and assumed that recovery is as simple as it seem in reading or on television.
However, reality often differs. For instance, what if you are suddenly unwell and cannot cope with the condition? Will you need to take time off work?
In case you are wondering, all these are from my years of experience after doing so many claims for my clients throughout my entire career. From the moment I did my first critical illness claim, I hope I never have to deal with it again.
Furthermore, your income will always be lesser than what it should be since part of your earnings is used to pay for your medical bill to keep you safe.
Besides, we haven't disucssed on the long term repurssions associated with such medical conditions.
Is it worth it?
Yes, cost for early stage critical illness coverage is more expensive than coverage for major critical illness alone. This is because of a number of factors, e.g.
Number of covered conditions (LIA has a guideline to cover 37 major critical illness conditions, AIA covers 43 major critical illness conditions and a total of 175 when we include early critical illness)
Probability of occurence / detection
Definition for payout
With this in mind, the key question will always to be able to find one that brings the right value.
By far, all my clients prefer to have critical illness coverage with a broader definition for payout, as compared to one with complicated terms and conditions. This is because all my clients prefer to focus on recovery, rather than to fight the technical jargons.
Hence, you may wish to research along the same path as well.
How much coverage should I have?
Before we look into how much coverage we should get, one of the most important things to do is to have a complete understanding of your existing insurance portfolio. Through this process, it allows us to understand the coverage that we have, any financial gap, as well as to find out whether we are overpaying for our insurance policies. I have highlighted the rest of the reasons here: https://www.blog.pzl.sg/why-every-client-needs-an-insurance-policy-summary/
Next, here is the general rule:
10% to 20% of your annual income on healthcare insurance and life insurance
Basic Life Cover = 10 times your annual income
Critical Illness Coverage = 5 times your annual income
A guide for your cashflow: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/
All things considered, you should speak with an experienced professional who is able to give you the right advice based on real-life encounters. This will definitely help you to make an informed decision. Ultimately, it is your life and you will pay for it either via an insurance company or only from your own pocket.
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I think everyone has answered it quite adequately on the definitions portion, AKA early CI covers the additional earlier conditions of the major CIs, therefore it covers a higher number of conditions in total, inclusive (usually) of additional special conditions thrown in as a bonus.
So let me shed some light on the long term effects of early and Major CI.
In case no one ever told you before, TPD benefits on whole life/term life plans all expire at age 70, while personal accident plans all auto terminate at age 75. What this means is that all total permanent disability is not covered from age 70 onwards unless it is through an accident, and all partial of total permanent disabilities are no longer covered after age 75 even if there was an accident.
Major CI benefits circumvent this by providing a TPD benefit (a little more stringent) till age 100. Additionally, early CI provides a partial disability benefit till age 100 as well.
The only way to cover disabilities is through the CI coverages after age 70/75. So if you only have major CI, you must fulfil the option of "full paralysis", "loss of both limbs", or "blindness in both eyes" in order to claim, whereas for early CI you.only need to fulfill one limb/one eye to claim.
Hi Ting Jian,
Early Critical Illness have a wider range of definitions and also it might be different between insurers, however the guideline is usually early to intermediate stages usually. But in regards to critical illness it's usually when the illness could be in the intermediate stage to late stage already.
It is true that with the advances in technology, we are very likely to recover from a critical illness when we are diagnosed. However, would you like to still be working in that period while you are receiving treatment, or would you rather have a pay out from the insurer and you have the option to choose if you would like to take a break from work and focus on your recovery, or you can still continue working, and have the payout available for other new necessities?
I think if you are looking at premium, the inclusion of early critical illness will definitely increase the premium, but we must remember that in regards to insurance, it's not so much do I need it now, but rather it's do I have it when I really need it.
Also when you add in the early stage critical illness, it's usually part of the critical illness amount, so that could also be somthing you can consider.
Some guidelines in how much should 1 be insured for critical illness is
5 - 7x your annual income
Early stage, I think 2 - 3x your annual income can be a safe guideline
Do reach out if you have queries, or if you don't mind a meet up to have things explained further
Is there any other asset class that pays out $200,000 upon diagnosis of an early stage critical illness for a monthly premium of $200-1,500 (After a 90 day waiting period)?
If there is, let me know.
Early-stage CI covers a broader definition than later stages. Chances of recovery are higher and chances of claim are higher, thus, the premiums are higher.
Whether or not to buy both, you just have to answer this question. Yes, the chances are low, but if it happens, would you like the insurer to pay money? OR would you prefer to fork out the money while continuing to work?
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