Making Sense of Critical Illness Insurance Part 3
Contributed by Michelle Ee, Wealth Management Director, Financial Alliance Pte Ltd
and MK Chan, Corporate Development Director, Financial Alliance Pte Ltd
(The contributors can be contacted at michelleee@fa.sg and mkchan@fa.sg)
In our previous articles, we gave an overview of what a critical illness insurance is, and how the payout for a critical illness insurance works. Hence, for this instalment, Financial Alliance’s Wealth Management Director Ms Michelle Ee shares her opinion on how much critical insurance is adequate.
How much critical illness insurance is enough?
To the oft-asked question of how much critical illness cover is enough, Michelle advises, “For basic critical illness, it depends on the amount one needs every month to cover his dependents’ and his own expenses. We recommend covering oneself with an amount equivalent to at least 60 months of expenses as we feel that 5 years is about the right duration for a person to recuperate from a critical illness.”
Michelle also recommends adding a lump sum amount into the sum assured to cater for care and treatment expenses. To derive how much the lump sum should be, Michelle proposes that one should consider how likely one will go for alternative treatments or overseas treatment. Do take note that not all hospitalisation and surgical insurance in Singapore covers such treatments. However, any existing comprehensive hospitalisation and surgical insurance the client possesses will be useful and could be taken into consideration when deriving the lump sum.
The same method may be used to derive the sum assured required for early-stage critical illness insurance. Michelle advises, “The duration to cover expenses may be reduced to 6 months, followed by a small lump sum to cover care or treatment that fall outside the scope of hospitalisation and surgical insurance.”
More information about critical illness insurance will be made available soon. Stay connected to our Facebook page by liking us to be notified when part 4 of this article is published.