You will be able to read a critical illness definition and tell whether early-stage or multi-pay cover changes when you are paid.
Two critical illness quotes landed on Jun Hao's table on the same evening. Both were for S$150,000. One was noticeably cheaper. Ryan explained that the dearer one was "early-stage" and the cheaper one "severe-stage only", and that the dearer one "pays earlier". Jun Hao asked how much earlier, for which conditions and how much. Ryan said he'd check.
You can answer those questions yourself from the policy wording. This lesson shows you where to look and what each structure does with the same diagnosis.
Before standard wording existed, two policies could both list "stroke" and mean different things. The Life Insurance Association, LIA, now publishes standard definitions for a set of the main severe-stage critical illnesses, and insurers in Singapore use the same wording for those conditions. A major cancer, a heart attack of specified severity or a stroke resulting in permanent damage should mean the same in any policy that uses the standard list.
Three cautions apply. The standard definitions cover severe-stage conditions; early-stage and intermediate-stage definitions are generally each insurer's own, so they can differ between policies. LIA has revised the definitions over time, so an older policy may use older wording. And a policy can cover conditions beyond the standard list, defined in its own words. The policy contract tells you which wording applies to each condition. LIA's website publishes the current standard definitions.
A severe-stage policy pays when a listed condition reaches the severity in its definition, and not before. For cancer, the definition typically requires a malignant tumour with invasion of tissue, and it excludes specified early forms, such as many tumours found at a pre-malignant or very early stage. For a heart attack, it typically requires evidence such as specified changes in heart tests and blood markers.
That means a condition can be serious, frightening and expensive to treat and still fall short of the severe-stage definition. An early cancer caught by screening and removed in a short operation may not pay anything under severe-stage cover, even though it's still cancer in everyday speech.
Early-stage policies also pay at an earlier, less severe stage of listed conditions, usually a portion of the sum assured, and some add an intermediate stage between the two. In many designs, an early payment is taken out of the total, so a later severe-stage claim on the same condition pays what's left. In others the early payment is extra. The policy says which.
Here's how that plays out, with invented terms rather than any insurer's. Jun Hao has S$150,000 of cover, and the policy pays 25% at early stage, deducted from the total. Suppose a screening finds an early cancer. Early stage pays 25% of S$150,000, which is S$37,500. If the cancer later progresses to severe stage, the policy pays the remaining S$112,500. Under severe-stage-only cover, the early diagnosis pays nothing, and a later severe diagnosis pays the full S$150,000.
So early-stage cover changes when you're paid, not usually how much you're paid in total. It costs more because the insurer pays out more often and sooner.
Multi-pay policies can pay more than one claim, for the same condition recurring or for a different condition. They usually come with rules: a waiting gap between claims, limits on claims for the same condition or a recurrence, conditions grouped so that only one claim per group is allowed, and a cap on total payouts as a multiple of the sum assured.
With invented terms: a multi-pay policy pays S$150,000 for a severe cancer. Three years later Jun Hao has a heart attack meeting the definition. If the policy's gap has passed and heart conditions are in a different group, it pays again. A single-pay policy would have ended after the first claim.
Multi-pay is the most expensive structure. It's worth more to someone who would be badly hurt by a second illness than to someone whose first payout would already cover their recovery.
Before you compare prices, compare the policies on the same condition. For each policy, find:
the definition of that condition at each stage it covers, in the policy contract the share of the sum assured paid at each stage, and whether early payments reduce later ones the waiting period from the start of the policy for that condition the survival period after diagnosis any rules for recurrence or a second claim
The waiting and survival periods differ by policy and by condition, and you'll find them in the contract rather than the brochure. A cheaper policy with a long waiting period or a narrow definition may not be cheaper for what it actually covers.
Jun Hao picked cancer, the condition his family worries about most, and asked for both contracts. The dearer policy paid a portion at early stage, deducted from the total. The cheaper one paid only at severe stage. So the price gap paid for being paid sooner if a cancer were caught early. It did not buy a larger total payout.
You'll do the same with one common condition, writing down how a severe-stage, an early-stage and a multi-pay policy would each pay for it.
Pick one common condition and write how a severe-stage, an early-stage and a multi-pay policy would each pay for it.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).