Singapore: 4 Things You Need to Understand About the Changes to Critical Illness Definitions

| 25 Aug 2020

The Life Insurance Association (LIA) announced on 29 August 2019, under its Critical Illness Framework 2019, that those looking to purchase critical illness insurance from 26 August 2020 onwards, will be looking at an updated set of definitions for the standard list of 37 critical illnesses.

Here are four things you should understand about the changes contained within LIA’s Critical Illness Framework 2019. This article first appeared here.

 

1. Changes will be effective by 26 August 2020

While all critical illness insurance sold in Singapore will have to comply with the new set of definitions by 26 August 2020, this is the cut-off date, rather than a starting date.

This means that insurers cannot sell critical illness policies with the old definitions after 26 August 2020, which were last defined in 2014. However, some insurers may have already started providing critical illness insurance adhering to the new definitions before 26 August 2020

You should look at your policy documents and/or speak to your financial services consultant to understand which definitions are used in your critical illness insurance plan.

 

2. What are the changes made to critical illness definitions?

Under the new Critical Illness Framework 2019, definitions of 21 critical illnesses were revised, while the names of 14 critical illnesses were enhanced to better reflect the intent of the coverage.

For the list of changes to the standard list of 37 critical illness under the Critical Illness Framework 2019, click here

You can examine the details of each of the 37 critical illnesses on the Critical Illness Framework 2019, comparing to the 2014 version, on LIA’s website.

 

3. Updating of definitions under LIA’s Critical Illness Framework 2019 can lead to better industry outcomes

Standardised Critical Illness definitions provides greater transparency for consumers to assess and compare different insurance plans.

It also reduces discrepancies in claim assessments, where one insurer may provide a payout while another rejects a payout. This way, consumers can rest assured that claims assessment will be similar regardless of their chosen insurer.

Nevertheless, insurers can continue to set their products apart by extending coverage for more medical conditions and stages of illness progression, beyond the standard list of 37 critical illnesses, so you still need to fully understand the full benefits of any critical illness insurance you are purchasing.

For example, plans such as AIA Power Critical Cover offers a wide coverage for 175 conditions, including 150 multi-stage critical illnesses, 10 conditions under our Pre-Early Benefit and 15 special conditions. AIA further boosts your coverage with a Power Reset Benefit, restoring 100% of your coverage 12 months after your last claim, allowing you to make claims up to five times your coverage amount. You will also enjoy twice your coverage amount should a relapse occur with our Power Relapse Benefit.

Find out more: AIA Singapore launches comprehensive critical illness plan with protection from "pre-early conditions" to all stages of critical illnesses

 

4. New definitions under the critical illness framework 2019 can benefit policyholders

While the majority of changes made was to provide clarity to the definitions of coverage to severe stages, some changes led to expanded benefits for the insured.

This includes:

  • Allowing claims under “HIV Due to Blood Transfusion and Occupationally Acquired HIV” for those who suffer from Thalassaemia or Haemophillia to be fair to the group, as these groups were previously denied claim.
     
  • Adjusting the “Blindness (Irreversible Lost of Sight)” condition to the legal definition of blindness of 6/60, from previously 3/60

 

Review your critical illness coverage requirement

Due to the more specific definitions in the majority of changes being implemented, you may be tempted or pressured to purchase critical illness insurance before the 26 August 2020 deadline.

As mentioned, these changes have both pros and cons for policyholders, so do not rush into making any decisions to buy before fully understanding the policy. Also, some insurers may have already introduced their new critical illness insurance, adhering to the updated definitions. Hence, do check which definitions you are buying into.

Furthermore, if you already own a critical illness insurance policy and wish to enhance your existing coverage, insurers have the discretion as to whether to follow the updated definitions. The same applies to auto-renewable critical illness insurance or critical illness insurance bought as a rider on another policy.

This means you may not have to rush to increase your coverage levels. Do check with your insurer on options available to you.

Before purchasing critical illness insurance, you should also understand how much coverage you need. You can look to LIA’s 2017 Protection Gap Study – Singapore as a guide, which recommends having enough coverage to last for an assumed critical illness recovery period of five years. 

This article was first published on AIA Singapore.


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