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The changes in Critical Illness (CI) Definitions In an Insurance Policy

Unless you’re a medical practitioner or a healthcare worker, you’re unlikely to have studied the definitions of critical illnesses in your insurance policy. These definitions play an important role in determining whether you are eligible to claim from your policy in the event you are diagnosed with an illness so it is worth some of your attention.

At face value, you might want these definitions to be as loose as possible so that you can squeeze in a potential claim; well, that’s what the insurance companies want too but it’s for them to wriggle out of paying you your claim. In view of these conflicting views, the Life Insurance Association of Singapore (LIA) has issued a set of standardised severe stage CI definitions that every CI insurance in Singapore has to comply to since 2003. These definitions are reviewed periodically to ensure they remain relevant, the last being in 2014.

Come 26 August this year, the latest set of 37 CI definitions will soon appear on new CI policies issued by insurers. According to LIA, the objective for this round of changes is to express the intent of the coverage with greater clarity and to stay relevant in view of medical advancements.

Given that over 90% of severe stage CI claims received by life insurers fall under five of the 37 definitions – major cancer, heart attack of specified severity, stroke with permanent neurological deficit, coronary artery bypass surgery, and end-stage kidney failure, you can probably afford not to memorise these definitions and let them bypass your heart.

But supposedly, you want to impress your friends and family that you’re on top of your insurance terms and conditions, here’s how you can make sense of the CI definitions and their revisions the MoneyOwl easy way.

Of the 37 definitions, 10 retained their original definitions, 6 had name changes to include words like ‘severe’ and ‘irreversible’ to reflect its intended coverage and 21 of them had both name and definition changes.

You can broadly group the various CIs into 6 categories as presented above. Though the brain and heart are also major organs, they are really the two most important organs that keep your body running so they deserve special mentions.

• Brain – conditions that result in permanent brain damage or neurological deficit. These include stroke, major head trauma, encephalitis, benign brain tumours, etc.

To be neurologically deficit, one would have symptoms such as numbness, paralysis, localised weakness, difficulty with speech, inability to speak, difficulty swallowing, visual impairment, difficulty in walking, lack of coordination, tremor, seizures, dementia, delirium, and coma. Increasingly, it is probably easier to assess whether you can claim based on its impact on your livelihood instead of the medical name.

• Heart – conditions that require some form of open-chest surgery to correct restriction of blood flow in the coronary arteries, i.e. the blood vessels that surround your heart. These include heart attack of specified severity, coronary artery heart bypass, heart valve, and aorta surgeries.

While angioplasty – the opening of blocked arteries by inflating a balloon within it, is one of the CI definitions, it is considered as minor surgery. As such coverage for this item is limited to 10% of your sum assured, capped at $25,000, and can only be claimed once.

• Major Organs – conditions that result in permanent failure to your lungs, kidneys, liver, and bone marrow. These include major cancer, end-stage kidney, lung and liver failure, and organ transplant.

As major cancer is the main culprit for CI claims, it is worth noting that there are new exclusions in this ever-growing list. Certain prostrate, thyroid, gastrointestinal, and new variants of bone marrow cancers are considered minor and, in some cases, non-malignant hence they have been excluded from the list of severe stage CI definitions.

There is also more definitive medical evidence required to diagnose that one has major cancer and often requires confirmation by a consultant specialist as well. These changes more clearly reflect the intent of CI coverage and goes a long way to help everyone manage the rising cost of CI cover by focusing on cancers that severely impact one’s life.

• Nervous System – conditions that affect the nervous system that causes an eventual permanent inability for one to perform at least 3 out of 6 Activities of Daily Living for a continuous period of 6 months or more. These include muscular dystrophy, motor neuron disease, poliomyelitis, etc.

If the definition sounds familiar to you, it is! These are the exact same definitions under which we define severe disability under long-term care plans like ElderShield and CareShield Life launching end of this year. A CI plan pays a lump sum under such conditions to replace your loss of income while a long-term care plan provides monthly payouts over a lifetime to pay for your caregiving needs.

• Senses – these refer to the irreversible loss of sight, hearing, speech and use of limbs which could be caused by an injury or illness.

The key changes to this category of definitions is the inclusion of irreversible. This is meant to future-proof the definitions because with medical advancements over the next few years, it could entirely be possible for one to restore a certain level of sensory ability. Except for the loss of sight, as time is required to prove that medical interventions had not been successful, there is a waiting period between 6 weeks to 12 months before claims are paid out.

• Others – the catch all group of CIs such as major burns, terminal illness, loss of independent existence, etc. No changes in definitions within this group.

And there you have it. I hope you have a clearer understanding of what you are covered under your critical illness plans and what these revisions mean for you. It provides a clearer scope of what you are paying for. If you think about it, you probably won’t want another policyholder belonging to the same insurance pool as you to make willy-nilly claims that will impact how much premiums you pay on your CI cover in the future right?

Am I affected by these changes?

These changes do not apply to early or intermediate CI cover as these follow each insurer’s definition. Perhaps someday when early CI becomes prevalent, LIA might step in to standardise them.

Your existing personal CI plans are not affected by these changes as well. If you subsequently apply to increase your coverage under an existing policy, your insurer has the discretion to use the old definitions or apply the new ones to your top-up coverage.

If you are on a group policy such as MINDEF & MHA Group Insurance Coverage, these new definitions will be applied for new diagnoses made from the date of annual renewal of those plans. It is also one of those reasons why it’s probably best not to concentrate your coverage using group term plans.

If you are thinking of increasing your critical illness coverage because there is a gap, do not let these changes affect your decision. It is always more important to get the necessary coverage as soon as you can because the unexpected can always strike. The key thing to know is these CI definitions are as comprehensive as it gets and that it got your back covered.

Use our insurance comparison tool to find out how much critical illness coverage you need and how you can get the maximum cover at the lowest cost.