Critical Illness Insurance: Lapse Effects and Payment Periods
What happens if critical illness insurance lapses? Discover effects and typical payment periods in this guide from Bowtie Hong Kong.
Term Critical Illness Premium Payment Periods
Term Critical Illness Insurance mainly has two renewal methods: one is annual renewal, where the monthly premiums are the same within the same year, but the insurance company may adjust the premiums for the following year. Another type of term critical illness uses a ‘level premium’ method to collect premiums, with coverage periods generally being 5 years, 10 years, 20 years, etc. The so-called insurance ‘contribution’ refers to the premiums paid monthly or annually.
| Insurance Company | Coverage Period |
| Bowtie | 1 year |
| Insurance Company A | 5 years, 10 years |
| Insurance Company B | 1 year, 5 years |
| Insurance Company C | 1 year, 5 years, 10 years |
| Insurance Company D | 5 years, 10 years, 20 years |
Consequences of Stopping Payments on Term Critical Illness Insurance
‘Stopping payments’ on Term Critical Illness Insurance or not paying premiums will only result in losing critical illness coverage . For example, if you pay premiums monthly, you will have coverage for the month after paying, but if you stop payments the next month, you will lose coverage for that month without any financial loss.
Whole Life Critical Illness Premium Payment Periods
Whole life critical illness insurance generally has a longer premium payment period, ranging between 20 to 25 years .
Consequences of Stopping Payments on Whole Life Critical Illness Insurance
Due to lifelong critical illness insurance consisting of “protection” and “savings components”, lapsing lifelong critical illness insurance will not only result in immediate loss of critical illness coverage , but also affect the “savings component”. If you lapse it early, besides losing interest or investment returns, you will likely lose most of the premium principal .
Bowtie Term CI: Extremely Flexible Annual Renewal
Bowtie Term CI – Multiple Coverage Covers 98% of critical illnesses#, and provides 5 claims*, which is rare in the market. The plan uses a monthly premium payment mode, and you can cancel with 30 business days’ notice, which is 14 times lower than lifelong critical illness insurance with savings components^.
- ^Based on the standard premium for a 35-year-old non-smoking male insuring "Bowtie Term CI (Multiple Coverage)" with HK$1 million coverage; compared to a savings-type critical illness insurance for a 35-year-old non-smoking male; data is the average of standard premiums for 6 savings critical illness insurances (18-20 year premium payment period) offering multiple coverage available in the market as of March 10, 2022.
- *For claims under multiple critical illness coverage, cancer (new diagnosis, recurrence, spread, or continuation after the first cancer claim), stroke, heart disease, and other heart-related diseases (including coronary artery bypass surgery or other severe coronary artery diseases) must meet additional requirements; for details, please refer to the policy terms and conditions, as well as exclusions.
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