In consultation with the Monetary Authority of Singapore (MAS), the Life Insurance Association of Singapore (LIA) announced on 29 August 2019 that changes will be made to the standard list of 37 critical illnesses (CIs) definitions.
This latest round of changes is referred to as the LIA Critical Illness (CI) Framework 2019. The previous version of LIA CI definitions was announced in 2014.
Having a common definition and list of critical illnesses across the industry helps consumers, since it is easier to compare products from various insurers and know that all the bases are covered, without being worried that some CIs are covered by one insurer, and not by another.
Here’s what these changes are exactly, and how it will affect existing (and future) critical illness insurance policies.
What Exactly Has Changed In The Critical Illness Definitions?
Of the 37 critical illnesses defined under the LIA framework, changes have been made to the headers of 14 of them, while changes have been made in 21 of the definitions.
Here ‘s an overview of the CI headers and their respective changes in bold. An asterisk has been appended to critical illnesses with changes to the wording of their definitions.
1. Major Cancers*
2. Heart Attack of Specified Severity*
3. Stroke with Permanent Neurological Deficit*
4. Coronary Artery By-pass Surgery
5. End Stage Kidney Failure
6. Irreversible Aplastic Anaemia*
7. End Stage Lung Disease
8. End Stage Liver Failure
10. Deafness (Irreversible Loss of Hearing)*
11. Open Chest Heart Valve Surgery
12. Irreversible Loss of Speech*
13. Major Burns
14. Major Organ / Bone Marrow Transplantation
15. Multiple Sclerosis*
16. Muscular Dystrophy*
17. Idiopathic Parkinson’s Disease*
18. Open Chest Surgery to Aorta
19. Alzheimer’s Disease / Severe Dementia*
20. Fulminant Hepatitis
21. Motor Neurone Disease
22. Primary Pulmonary Hypertension
23. HIV Due to Blood Transfusion and Occupationally Acquired HIV*
24. Benign Brain Tumour*
25. Severe Viral Encephalitis*
26. Severe Bacterial Meningitis
27. Angioplasty & Other Invasive Treatment For Coronary Artery
28. Blindness (Irreversible Loss of Sight)*
29. Major Head Trauma*
30. Paralysis (Irreversible Loss of Use of Limbs)
31. Terminal Illness
32. Progressive Scleroderma*
33. Persistent Vegetative State (Apallic Syndrome)
34. Systemic Lupus Erythematosus with Lupus Nephritis*
35. Other Serious Coronary Artery Disease*
37. Loss of Independent Existence*
You can read the exact word-for-word changes implemented in the LIA Critical Illness (CI) Framework 2019 for more details. In essence, the definitions have been tightened and made more specific, which means there is less ‘grey area’ when it comes to making claims.
What Do These CI Definition Changes Mean For Current And Future Policyholders?
Insurers have until 26 August 2020 to comply with the new CI framework. This means that on 26 August 2020 onwards, all critical illness policies sold in Singapore must follow the 2019 framework. This applies to individual and group insurance policies, as well as standalone CI policies and CI riders.
As we know, critical illness policies are important, but can be pricey. The tightened definitions should help keep premium costs in check, since there is less ambiguity over what can be claimed and what cannot.
It helps prevent the situation where you think you’re covered for something because of looser wording of the CI definition, only to find out that your claim is rejected. Also undesirable is everyone having to pay higher premiums because other customers are enjoying a low bar for making claims.
Thus, we should not allow ourselves to be rushed to buy CI plans under the older definitions by financial advisers wishing to make a quick buck and taking advantage of our ‘fear of missing out’.
If you already have an existing CI policy with the older (more lenient) definitions, know that it will continue to be honoured for as long as your policy is in force. If you’re considering buying new CI policy today, you can check with your adviser which version of definitions are used.
LIA has stated that it will continue to review the CI framework’s continued relevance every three years, in line with evolving medical trends and consumer demands, so such reviews to the CI definitions will be a routine and ongoing process.
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