The Truth about Critical Illness and Cancer Insurance: Do You Really need Early Stage and Multi-pay?

Disclaimer: I am not a insurance or medical professional. I speak only from my own experiences for discussion purposes. Please seek personal insurance advice from a certified professional.

The reason why I’m financially independent is because I have claimed 5 insurance policies on my cancer diagnosis. This included 2 term and 1 life insurance policy. The rest are hospitalisation and disability income insurance.

I’m an insurance nerd who likes to read my policy wordings and understand it. I had done a ton of research on what is a good buy, filed multiple claims, and gone back and forth with insurance companies.

Hence, I feel I’m in a better position to comment on Critical Illness (CI) and cancer-related claims than most. Here are some of the lessons I can share.

Stage Doesn’t really Matter

When it comes to cancer, stage doesn’t matter for the purpose of claiming insurance. Why is that so? Take a look at the official definition of cancer listed at the Life Insurance Association of Singapore (LIA). I extract the short version below:

“A malignant tumour positively diagnosed with histological confirmation and characterized by the uncontrolled growth of malignant cells with invasion and destruction of normal tissue.”

There is no mention of the “stage” of cancer. What is important is that the tulmour is malignant. This is confirmed through a histology report, where they test a small piece of the tumour. If the tumour is classified as benign or unknown malignancy, it CANNOT be claimed under CI plans, no matter how big or wide it has spread.

I show my own first histology report below. Under this report, I cannot claim for my CI plans, because the report says the tumour was benign! It was only later when they extracted the entire tumour and did more testing, was the diagnosis corrected to cancer.

Also note that CI definitions are standardised across all insurers. If one company will accept the claim, generally, all insurance companies will. So you can go for the cheapest quote and there should be NO difference in whether your claim gets approved or not.

So what does Early Stage really mean ?

Ok, let’s look at the definition. There isn’t a standard definition under the LIA, but most insurers are using the term “Carcinoma-in-situ”. A further explanation can be found here. There is disagreement on whether it can be called cancer, but most doctors will agree it has a stronger probability to become cancer and will treat it.

The thing is, there is a high chance that Carcinoma-in-situ can’t be detected because it is so small! Most cancers are detected by feeling a lump or symptoms of the body e.g. blood or pain. But if the mass of abnormal cells are small, chances are that you can’t feel it and it doesn’t cause problems. It may not be even detectable by conventional medical screening.

Another thing is that it is unlikely to kill or maim you. It is so small that it is probably not really harming your body, and treatment is much easier on the body than full-blown cancer. Chances are that you will continue to go back to work after treatment and feel fine.

I think having an early CI policy is fine if it covers more than just cancer. I have an early CI plan too. But just be aware that your CI plans are much more important and should provide the bulk of your protection.

Is Multi-pay CI insurance worth it?

While I didn’t buy this myself, I notice there are some multi-pay CI policies out there, saying that you can claim up to 5 or 6 CIs.

Think about it.

How many people can survive so many rounds of critical illnesses???

There is a reason they are called critical illnesses. They are life-threatening and can severely affect your quality of life for the rest of your days. These are your strokes, cancers, and heart attacks. It’s true that people are living longer and better after a CI. But the chances of having 5 CIs and being able to claim them seem astronomically low.

Filing insurance claims is not like going down to the library to borrow a book. It’s a lot of work. You have to submit a ton of documents and medical records. It is your duty to prove to the insurance company that you have met the policy conditions. It can easily take 6 months or more to file claims and actually receive the money. Do you really want you or a family member to be filing these forms on your 4th heart attack? It’s an easy way to get your 5th.

In addition, these plans are not cheap. Quotes will depend on your age and health, but multi-pay plans are much more expensive than traditional term plans. That’s understandable because the liability to the insurance company is much more.

I’m going to say most people are better off with one big payout, on your first CI. You get so much more, and you can use the money to relax and take care of your health. Don’t shortchange yourself by having additional CIs so you can get another instalment of cash.

Summary

I’m not saying that early critical and multi-pay plans are a waste of money There are people who want to feel more secure and it works for them. And that’s totally fine.

But for most people, they should be able to find more protection and value in traditional CI term plans. The problem with Singaporeans is not that they don’t buy insurance plans, it’s that they are buying the overly complex and expensive ones that have a low payout.

You need to be cost-efficient, because we all have limited funds and it is not quite possible to achieve high protection (i.e. sum assured) without term insurance. To get a $500,000 sum assured for early CI and multi-pay, you can be easily be paying 5 figures a year. To get that same sum for traditional CI term plans is much cheaper.

All my advice must be taken with a pinch of salt as I am not a medical or insurance professional. I just read a lot and have actual experience claiming. I have only claimed for myself and other people’s experience may be different. I won’t address individual insurance queries, that should be left up to the insurance company or agent.

If anyone would like to add-on or clarify the points I made above, I’ll be super glad to listen and edit the article further. There is just a huge lack of information out there, and I hope to improve that.