Singapore Insurance: 6 Key Differences Between Critical Illness Insurance and Medical Insurance (5-Min Read)
Many people often confuse critical illness insurance and medical insurance, thinking they are the same thing. They may assume that one insurance policy is enough, but that’s not the case. Let’s break down the 6 key differences between critical illness insurance and medical insurance.
Critical Illness Insurance (often called Life Insurance with Critical Illness Coverage in Singapore)
Medical Insurance (also called Hospitalisation Insurance or Integrated Shield Plan in Singapore)
1. What’s the difference in function?
- Critical Illness Insurance: Provides a lump sum payout upon diagnosis of certain major illnesses (such as stroke, heart disease, cancer, etc.), helping the patient and their family through difficult times.
- Medical Insurance: Covers hospitalization and surgery costs, including pre- and post-surgery outpatient treatments. It reimburses based on actual expenses.
2. Will premiums increase every year?
- Critical Illness Insurance: Premiums are based on your age when you buy the policy and remain fixed for the duration. The older you are, the higher the premiums will be, but they won’t increase year after year.
- Medical Insurance: Premiums are affected by your age and the type of hospital coverage you choose. They will rise as you get older.
3. Who should buy Critical Illness Insurance and Medical Insurance?
- Critical Illness Insurance: Essential for the main breadwinner in the family, especially if you have dependents—elderly parents, children, or a spouse who relies on you.
- Medical Insurance: A basic necessity for everyone, as everyone has a chance of getting sick.
4. How much coverage should you have?
- Critical Illness Insurance: The coverage should be at least 5 years of your annual income, as recovery from a major illness typically takes 5 years. This ensures you can focus on getting better without worrying about living expenses.
Example: If your annual income is SGD 100,000, it’s recommended to have a critical illness coverage of at least SGD 500,000. - Medical Insurance: Coverage is determined by the insurance company based on the level of hospital and treatment options, with a maximum coverage of up to SGD 2 million per year.
5. What should you look out for when choosing Critical Illness Insurance and Medical Insurance?
For Critical Illness Insurance, consider these three points:
- Whole Life vs Term Life: The duration of coverage varies.
- Cash Value vs No Cash Value: Some policies offer a savings component, while others are pure coverage.
- Stage of Illness: Coverage may vary depending on whether the illness is in its early, middle, or late stage.
For Medical Insurance, keep these two points in mind:
- Nationality:
- Singapore Citizens and Permanent Residents (PR) already have Medishield Life, with the option to upgrade to an Integrated Shield Plan.
- Foreigners need to directly purchase an Integrated Shield Plan.
- Do you prefer private or public hospitals?
- The private hospital plan covers both private and public hospital services.
- The public hospital plan primarily covers public hospital services. If you end up in a private hospital, the insurance company will reimburse based on public hospital rates (pro-rated).
6. Is the claims process the same?
- Critical Illness Insurance: No matter where you are, you can file a claim with a doctor’s certificate or memo (in English). The insurance company will pay you a lump sum in SGD (policy currency).
- Medical Insurance: Singapore Citizens and PRs can use the e-filing system to register for hospitalization and don’t need to pay upfront. Foreigners must pay the medical expenses first and then claim reimbursement from the insurance company, or they can request a Letter of Guarantee for approval before hospitalization to avoid paying out of pocket.
What’s Next?
These two types of insurance complement each other. It’s not enough to buy just one. The purpose of insurance is to help you face unexpected events or illness without panic. For just a small portion of your salary, you can transfer the risk of a serious illness to the insurance company. It’s important to secure your basic coverage so that you can focus on work and live with peace of mind.
Curious about which insurance suits your needs? I’m here to help! Feel free to reach out.
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Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek unbiased financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.
Published By:
Lidwina Teo 维娜
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