Tips to choose the Best Critical Illness Insurance?
Below are the factors to consider when comparing Critical Illness Insurance (CI):
- Type of insurance (Whole Life or Term CI)
- Premiums
- The age of the Insured Person
- Number of Covered Critical Illnesses and their Definitions
- Numbers of Claims
- Claims procedures
- Terms of Payment
- Return of the policy
Type of Critical Illness insurance
| Term Critical Illness | Whole Life Critical Illness | |
| Definition | Providing critical illness coverage within a specified term | Providing lifelong critical illness coverage |
| Coverage period | Shorter, ranging from 1 to 15 years | Lifelong until age 100 |
| Premiums | cheaper | More expensive |
| Cash Value | χ | ✓ |
| Premium Adjustment | Adjusted annually | Remains unchanged during payment term |
| Characteristic |
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How to Compare Term CI?
1. Premiums
When comparing different Term CI plans, the first step is to start with premiums.
| Bowtie | Insurer A | Insurer B | Insurer C | Insurer D | |
| Male* | HK$68 | HK$106 | HK$176.4 | HK$175.8 | HK$82.2 |
| Female* | HK$86 | HK$188 | HK$176.4 | HK$208.3 | HK$129.5 |
- *Assuming the insured is a 25-year-old non-smoker, chooses an annual renewable critical illness insurance, and the Sum Insured is HK$1 million.
There are various critical illness insurance products on the market, and even for plans with coverage, the charges vary between companies. Compared to traditional insurers that rely on agents or brokers’ services to sell policies, Bowtie’s premiums are more affordable for the same Sum Insured due insurance intermediary’s commissions are saved.
When comparing premiums, it is important to consider the premium adjustment in the future instead of just the first year premium. Check carefully if the premiums will increase after 10 or even 20 years, to ensure that it is within your financial capability.
2. The Sum Insured
The most direct factor that affects critical illness insurance premiums is the Sum Insured.
In order to fulfill the different needs of customers, the sum insured of CI on the market is very flexible, ranging from a minimum of HK$100,000 to a maximum of HK$4 million or even more. Normally, the higher the sum insured, the more expensive the total premium.
It is important to understand that the main function of CI is to provide a lump-sum payment to the insured in the event of a critical illness diagnosis to make up for the loss of income due to inability to work.
Additionally, since treatment for critical illnesses typically takes 2 to 3 years, it is generally recommended that the coverage amount should be 2 to 3 times the insured’s annual salary.
If you have a property or car mortgage to pay, or are the bread-feeder of your children and parents, you should consider increasing your sum insured. So that, in the event of a critical illness, you will receive a stable cash compensation to ensure your family’s quality of life.
3. Age of the Insured Person
Most CI policies have issued age restrictions, typically from being 15 days old, and the maximum age ranging from 60 to 65 years old.
As for the Period of Cover, term CI insurance usually guarantees renewal coverage until age 85, while Whole Life Critical Illness CI insurance provides coverage until the insured reaches age 100.
When choosing CI insurance, the insured should pay attention to the issued age restrictions and renewable age limits to make more appropriate plans for the future.
4. Number of Covered illnesses and Disease Definitions
Currently, there is no unified definition of “critical illness” in the insurance industry.
Therefore, before applying for CI insurance, you should compare the definitions of critical illnesses in various insurance plans. For example, is “Situ Carcinoma” a type of “Cancer”; or in what degree of vascular blockage is treated as “Stroke”?
In addition, you can also compare the number of illnesses covered by different plans. It is worth noting that the more types of illnesses covered, the more expensive the premium. Especially when many of the illnesses covered may rarely happen in real life – according to past claims surveys, more than 90% of critical illness cases are cancer, heart disease, and stroke, so even if the policy provides coverage for rare illnesses, the chances of the insured using it are low.
Instead, the insured person should focus on whether the CI insurance provides coverage for early-stage critical illnesses, as some insurance companies may exclude Situ Carcinomas from coverage, or offer only a certain percent of reimbursement for early-stage critical illnesses. It is best for the insured to check carefully before applying for coverage to avoid misunderstandings when making claims in the future.
Worry about suffering from rare critical illnesses?
Bowtie designs “4 Supplementary Coverages” in response to unlisted critical illnesses under our CI policies. The 4 Supplementary Coverages include “Terminal Illness”, “) Total Permanent Disability”, ” Loss of Independent Existence”, and “Major Medical Treatment”. As long as the insured falls into the above situations, they can also receive 100% reimbursement from Bowtie CI policies, providing more comprehensive protection.
5. Number of Claims
CI can generally be divided into “single cover” and “multiple cover”. As the name implies, the former will terminate the critical illness coverage once a claim is made, while the latter allows the insured to repeatedly apply for claims for diagnosed critical illnesses in the future.
It is worth noting that most CI policies that provide multiple covers have a waiting period for claim. If the insured has previously made a claim, they must wait 1 to 2 years from the date of diagnosis or surgery of the last claim before applying for claim again.
It should be noted that there is a risk of relapse after recovering from critical illnesses. Using Heart Diseases & Stroke as example, 1 in every 4 patients will have a relapse each year.
Therefore, it is undeniable that CI with multiple cover can provide greater peace of mind.
However, compared to single cover CI, multiple cover policies generally charge higher premiums, and the insured can choose the most suitable plan based on their individual needs and affordability.
6. Claims procedure
If the insured unfortunately develops a serious illness, they may not have the energy to deal with complicated claims procedures.
To avoid unnecessary trouble, when choosing an insurance company, the insured should prioritize companies with simpler claims procedures.
Bowtie is committed to using technology to reform the insurance industry. Customers can handle everything from applying for insurance to making claims online. They do not need to fill out numbers of documents and can even have family members handle the claims on their behalf.
They can also log in to their account anytime and anywhere to track the progress of their claims.
This eliminates concerns about slow claim or claim failure due to complicated administrative procedures, and allows the insured to focus on recovery with peace of mind.
How to Compare Whole Life Critical Illness Insurance?
In addition to the 5 factors mentioned above, when applying for a Whole Life CI, the following 2 points should also be considered:
Term CI usually does not have any bundled elements. Even if the insured stops paying premiums at any time, they will not bear any additional liability.
However, Whole Life CI requires the insured to choose (1) either to surrender the policy or (2) withdraw the cash value of the policy after the entire payment terms.
If the insured stops paying premiums early, they may lose some or even all of the premiums paid, resulting in significant financial loss.
Whole Life CI is generally linked to savings or investment components, providing both CI protection, guaranteed and non-guaranteed returns.
If the insured treats CI as an investment tool, they should carefully analyze the investment strategy, stock portfolio, and past performance of each plan, and then choose the most ideal Whole Life CI based on their risk management and expected return.
How should I choose the best critical illness plan?
There are many CI policies on the market.Both term and Whole Life CI have their own characteristics, suitable for individuals with different backgrounds and needs.
When choosing the best critical illness plan, the most important thing is your individual needs and affordability. Do not blindly pursue higher coverage or more extensive protection.
Your actual needs
Although comprehensive CI is important, not everyone needs it.
Since CI is designed to protect the insured’s income lost due to loss of work ability when they are ill, it is to some extent aimed at individuals who are the breadwinners of their families. Under the concept, individuals with less financial burden, such as infants and students, CI may not be necessary.
However, CI provides a lump-sum reimbursement to the entire family in the event of an accident. Therefore, if financially feasible and after assessing the risk of illness, it is recommended to purchase a suitable CI early to meet potential needs.
Your coverage period
Another important point to consider is the length of the coverage period.
Generally, the maximum age covered by term CI is 85, while Whole Life provides coverage until age 100.
At first glance, a longer coverage period may seem better. However, the original purpose for CI is to compensate for income lost due to the inability to work. In other words, when the insured retires and no longer has any income or family responsibilities, CI could not help at all. In this case, it may be more practical to purchase high-coverage medical insurance to subsidize medical expenses than CI.
Your investment
For those who are not familiar with investing, lifelong critical illness insurance can be used as a hedge and a conservative investment tool.
However, if you have a certain financial knowledge or investment experience, the guaranteed return rate of only 1% to 2% (which lifelong CI usually provides) may not be ideal. In this case, it is recommended to purchase “pure protection” term CI, and invest the rest in order to increase cash flow and strive for higher investment returns.
