Critical Illness Insurance – Q&A

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Here’s Part 2 of the Unravelling Dilemmas in Medical Insurance series by LIAM:

Q1: I am interested to purchase a critical illness policy. Which company provides the best and widest cover for critical illness?

A:  All critical illness policies sold in Malaysia cover 36 critical illnesses, irrespective of which life insurance company is selling it. There is a mutual understanding and agreement amongst all life insurance companies in Malaysia to offer a maximum of 36 critical illnesses only, to avoid any misunderstanding and mis-selling based on ‘number of critical illnesses’.

In Malaysia, the definitions for critical illnesses are standardised. All life insurance companies are using the same definitions of critical illness for their products. This is to avoid any confusion amongst the companies should any claim arises for the same critical illness.

However, there are some differences in the critical illnesses offered as insurance companies can choose any 36 out of 42 critical illnesses that has been agreed upon for any of their products.

Also some companies offer enhancements to the standard critical illness policies. These enhanced critical illness policies may include some benefit payment for certain less serious medical conditions. There is no restriction to the type / number of less serious critical illness conditions that a life insurance company can offer. Thus you need consider the additional cost of these enhanced versions of the critical illness policy against your need for increased protection.

Q2: I am the main income earner in my family. My wife is not working as she is looking after my 3 children. My concern is that if I suffer a critical illness, my income may be greatly affected as my work is very strenuous and requires me to travel a lot. I may have to slow down and may not be able to put in the same amount of energy as before. Is there a critical illness plan that can protect my loss of income?

A:  Most critical illness plans provide for payment of a lump sum if you suffer from a critical illness. This lump sum payment will come in handy to pay for immediate upfront costs, like treatments and follow-up expenses, purchases of medical equipment and tools to support any disability, etc.

However, there are also critical illness plans that are structured to pay out as regular income. This form of payments will help to provide protection against the loss of income which is important to help meet daily expenses.

For such policies, if you suffer from a critical illness, the insurance company will pay a regular income from the time of your critical illness until the expiry of the policy.

For example, if you own a 20 year Critical Illness Income policy and you suffer a critical illness in year 5, the insurance company will pay you regular incomes for the remaining 15 years until the expiry of the policy.

Q3: I had a heart attack recently and my cardiologist found that 2 of my arteries were blocked while another was partially blocked. Under which critical illness should I claim on my policy?

A:  For heart conditions involving arterial blockages, there are 4 critical illnesses you can consider for making a claim. They are Heart Attack, Coronary Artery Disease requiring Surgery, Other Serious Coronary Artery Disease and Angioplasty.

If you had a heart attack you can make a claim under ‘Heart Attack’.For your claim to be admitted, you must satisfy the insurance company that the following conditions are fulfilled:

  1. You must have a typical history of chest pain prior to your admittance to hospital
  2. ECGs will normally be done once you are in the hospital. These ECGs must show changes reflective of a heart attack.
  3. The hospital should also be monitoring the rise and fall of your serum biomarkers such as creatine kinase-MB and troponin.

Otherwise, if you have narrowing of at least 3 major arteries of your heart of more than 60%, you can consider making a claim under the critical illness ‘Other Serious Coronary Artery Disease’.

If you had undergone a coronary artery by-pass surgery, you can make a claim under ‘Coronary Artery Disease Requiring Surgery’. This is open heart surgery in which by-pass grafts are inserted to circumvent the clogged arteries.

If an angioplasty was done instead of an open heart surgery, some critical illness policies will pay for such an event. The angioplasty done can either be balloon angioplasty or the insertion of stents. However, only a percentage of the sum assured will be payable for claims made under ‘Angioplasty’ and you can only make one claim under ‘Angioplasty’.

Q4: I have bought an education policy for my child. How can I ensure that this policy can continue to provide the necessary funds for my child’s education if I suffer a critical illness?

A:  Most education policies do provide a waiver of premium benefit insuring the life of the parent who owns that policy. This benefit can either be purchased by the payment of additional premium or it comes together with the education plan as a package.

If the parent suffers from a critical illness, all future premiums shall be waived. The education policy will continue to enjoy all the benefits it is entitled to until it reaches maturity. The sum assured plus whatever bonus accumulated will then be paid for the education of your child.

The article is written courtesy of Life Insurance Association of Malaysia. For further information, please log on to www.liam.org.my.

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