For those who are unaware, there will be changes to the critical illness definitions soon.
The respective insurers have now till 26 Aug 2020 to shift to the new definitions.
Subsequently, insurance plans that provide critical illness coverage will have to abide by the new definitions from the Life Insurance Association (LIA) Singapore.
(Read more here)
If you are new to insurance and are wondering why such a list of critical illness definitions will have an extended impact to the insurance industry, below is the context.
As long as you are getting critical illness coverage from any insurer in Singapore, the plans need to abide by the LIA's definitions. This is to standardize the industry's payout in the event of any critical illness claims.
However, do note that this is different from the early and intermediate critical illness coverage.
You can refer to this link for more info shown above.
I supposed the first question that most will ask is...
Will it impact my existing policies?
The answer is no.
Only policies incepted after 26 Aug 2020 or policies that specifically states that they follow the new definitions, would be affected.
At this juncture, my understanding is it will not impact existing policies that had already been incepted.
The next question that comes to mind is...
Is it for the better or worse?
Let's take a dive into some changes to understand the changes better.
(You can read more here for the full list of changes.)
And a big disclaimer prior to my analysis,
The information provided here is for learning purposes. Although best efforts are made to ensure that all information is accurate, any unintended errors and misprints may occur. I, and the organization that I represent, are not liable for any damages, legal issues, or any other unforeseen, unfavourable consequences, directly or indirectly, caused by the information provided here.
Now that the disclaimers are out of the way, I shall proceed with my sharing.
And credit to two of my friends, whom are now my clients, who do have medical background that helped me with the information provided here. Without whom, I would be as lost as most of you.
Here goes....
1. Major Cancer
According to my medical friends, the new definitions are clearer.
In fact, with further reading, one of them was impressed that LIA references AJCC Cancer Staging Manual as their benchmark.
This will remove any doubts in event of claims.
2. Heart Attack
The addition of this word, ischaemia, is stricter.
He gave me an analogy of a river flow. An obstruction to a river flow could be a small stone in the river. The stone is an obstruction, but the water can still flow.
As for ischaemia, it is akin to having a dam in the middle of the river. The water can't flow with the dam's presence.
In short, it means there is no oxygen flow.
3. Irreversible Aplastic Anaemia, Deafness, Loss of Speech, Blindness, Paralysis
For this part, it is pretty straight forward.
Because it is irreversible, it means it is stricter.
Same goes for Deafness, Loss of Speech, Blindness and Paralysis.
4. Severe Encephalitis
This may be better in his opinion.
Viral could mean the condition's origin needs to be viral but severe could be from multiple, or different origins.
5. Other Serious Coronary Artery Disease
I was curious that invasive would mean a surgery is required.
My friend quipped that it could also mean the insertion of dye, which could also be invasive.
However, he noted that "the branches above coronary arteries are excluded" is stricter than 2014's definition.
TL; DR
My friend gave me a good breakdown of the situation here.
From the company's perspective, it is good because the definitions are clearer (and stricter for some) now. There is no room for arguments or disputes.
From the consumer's standpoint, it is also good overall since the conditions are clearly defined. If the customer has critical illness and fulfills the conditions described, the insurer will have to pay.
Having ambiguity can be a double edged sword.
It is good if the doctor can assist to claim since there is room for negotiations in 2014's definitions. The payout maybe easier and more lenient.
On the other end, the insurer also reserves the right not to pay since it may not be how they define certain things.
It could be a case where a person with critical illness, can get a payout from Company A but not Company B because of the different interpretations from the 2014's definitions.
Hence, that is the key reason that LIA made this move to refine the definitions - to prevent any ambiguity.
Coming back to the question, is it for better or worse?
Here's how I see it.
From a contractual standpoint, having a broader definition may be better because there is room for negotiation.
If an insurer has paid out, there is a high chance that the other company will also pay out.
In addition, some of the definitions are stricter (e.g Heart Attack and Irreversible), it may not be as favourable.
As such, I would be increasing my higher critical illness coverage prior to the launch of 2019's definitions.
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