1) Standard package (usually comprising about 36 to 37 types of critical illnesses)
2) Early stage package
3) Whatever other fancy products a marketing guru can come up with
But before you decide which type to get, you must first know the true reason behind critical illness insurance.
The most common mistake people have is to confuse critical illness insurance with medical insurance (hospitalisation).
Critical Illness insurance is NOT a substitute for medical insurance. They are two different types of insurance.
One type will cover most of your hospital bills. Another type will pay you a lump sum only if your illness meets the definition in the policy contract.
The lump sum from a critical illness insurance is to be used mainly for your daily expenses (food and bills) until you are able to get back to work.
So how much Critical Illness Insurance should you get?
This can be very subjective because different critical illnesses will require different amounts of recuperating time.
A good guideline is 2 to 5 times of your annual income. That is, if you earn $50,000 per year, you should get between $100,000 to $250,000 of critical illness insurance. Why 2 to 5 times? This is because a critical illness may put you out of employment/business for 2 to 5 years (depending on the type of illness and how serious it is).
Then there are some people (especially insurance agents who earn a big fat commission) who argue that you should buy enough critical illness insurance in case you cannot work for the rest of your life. Very true and very real. But the reality is: Can you afford the premiums to do that?
To put things into perspective, get a quote from an insurer based on your age and gender for a sum assured equivalent to you replacing your daily expenses from now all the way till your expected mortality age (eg. age 90). If you are a low-mid income earner, you will realise that a premium of this size will take up a substantial percentage of your monthly salary.
Critical Illness insurance is important. But we should not spend so much on it to the extent that it affects our retirement. If we have limited resources, we have to prioritize.
Your priority should be to allocate sufficient budget for medical insurance (hospitalisation) for yourself and also your dependents (children/parents/spouse). Only after you have done that, then should you use any extra budget you have for your critical illness insurance.
I heard that Critical Illness insurance does not cover early stage (stage 1 or 2) cancer. Therefore I should get Early Critical Illness coverage right?
Early stage is about 3x more expensive than normal critical illness and should be bought only if you have excess budget after expending on your medical insurance.
And if you haven't yet done that, drop everything else and get that first. You can read up more here : http://the-truth-about-insurance.blogspot.sg/p/medishield-life-private-shield-plan.html
