Dear Mr Tan,
You recommend that $50,000 is sufficient for critical illness cover. May I know how you derive this amount?
In my opinion, if I am diagnosed with a critical illness eg cancer, I would have to stop working. I would probably need $2,000 a month to support myself for 5 years, while waiting to see if the cancer would go into remission. Thus, the amount of my critical illness cover should be $2,000 x 5 years = $120,000.
Please advise if my scenario is realistic and reasonable?
REPLY
Critical illness coverage is expensive. A significant portion of the premium goes for marketing and other expenses. If you spend too much on it, you have less money to save for your other needs.
If you spend less on critical illness insurance, you will have more money to save and invest. This will allow you to accumulate savings which can be drawn down for all kinds of emergency (including critical illness), and also for retirement.
I am not aware of many people who have to suffer a critical illness for 5 years. Have you come across many people in this situation?
If the illness is serious, they will pass away and the family can claim under the life insurance policy. If the critical illness is not serious, they can be cured within a shorter time.
However, if you feel that there is a need to insure for a larger sum, it is all right. It is a question of getting the right balance.
"I am not aware of many people who have to suffer a critical illness for 5 years. Have you come across many people in this situation?"
ReplyDeleteMr. Tan, I'm curious about this as well. As an insurance insider, why don't you ask your colleagues and get back to us with numbers? if that's not too much to ask, of course.
without this data, it is impossible to make any rational recommendation and we can only resort to guessworks.
As a person who has a critical illness of 10 yrs (kidney problems) $120,000 is not enough..but life is full of uncertainties, e illness can be for a short or long time, one must be prepared financially..My advice: have a ready sum of at least $250,000 in critical cover.
ReplyDeleteI have a client who had a heart attack in 1995 followed by nerve problem that caused him to be wheelchair bound.
ReplyDeleteHe is fortunate as he is in civil service and was maintained in employment until today.
12 years have passed and he is still on wheel chair. Imagine if he is in private sector, I am sure he will be terminated from employment.
Illness are difficult to say, one may have cancer and be in remission, others may suffer for a few years.
Worst, chronic illness like kidney failure, diabetes, or terminal illness.
Other than losing employment, if one has a family, how will the family suffer the financial impact?
How high should a coverage be? Practically depend on family needs and to plan in such that one will not be a burden as much as possible.
Some need $50k, some may need $500k, it depend on individual's family needs.
-Thomas Phua