Insurance Planning: How much is sufficient for Critical Illness (CI)

This post is trigger by a Question on How much is sufficient for Critical Illness (CI)?




This post will not touch on what are the CIs covered and what products are available.

This post will focus on a scenario on a recovery patient from CI treatment and roughly how to calculate the "sufficient" amount of coverage.

Based on a true situation from someone I know,

Mr Sian went for a body check out and found out he have "a Critical Illness" and needs treatment for it.

The first 3 years are the critical mile stones for a cancer treatment and another 2 years for recovery and hopefully no recurrence for that period. 

Mr Sian Couldn't work due to the treatment side effects and that is where the CI policies come into the picture to claim for loss of income.

Treatment fees are already insured by integrated shield plan. (unless the treatment is not done in Singapore)

Mr Sian requires at least three years income protection and the period in getting a new job which is around another one year income protection.

So by rough estimate is 3yrs+1yr+1yr(additional) = 5yrs income protection, just in case the economic is gloom for job position.



The calculation is rather simple but what we have to take note is

1. Most CI coverage is accelerated benefit (AB) from the total death benefit.

That means the proceed will eat into your death benefits which you have planned to leave for your family.

Non-accelerated benefit (NB) are available as stand alone (more expensive) but whether a person needs an AB or NB will depends on each individual situation.

2. After you claim a CI proceed, there is a high chance you cannot get another CI protection unless you already have an additional CI protection that is not claimed.

3. There are now new products in the market that allows point 2 to be negated but I am not in position to suggest or recommend because I am not in the Insurance industry.

4. There might be other Cancer implication which hopefully does not happen.

Hope this post help readers gets an idea on a real CI situation rather then just the amount of money that is paid out.

We have to plan beyond the payout sometimes.

Another Good Deed Done!