Tuesday, August 23, 2016

Low claim payout for critical illness covers

Two young entrepreneurs saw me to seek my views about developing a mobile app to educate people on their financial planning and buying of insurance.

They ask if critical illness coverage is important for everyone. I told them to avoid it. The insurance companies are making too much profit from this type of cover.

I showed this website to them. The claim ratio is as low as 20%. If the customer pays $1000 in premium for this cover, the insurance company and the agent makes $800. The customer gets an average of only $200 back in claims.


They were shocked at this high profit margin. Why do consumers buy this policy? I said that they are ignorant.


Anonymous said...

Hello KL,

From your blog, I saw there are couple of posts related to CI and of course avoiding it. I don't quite understand. We have heard of cases around the internet that how the payout will and had helped people through the period of knowing they have been diagnosed with CI.

The payout had helped to tide the family's monthly financial since he/she will be out of job. The payout can also help to buy those trial medicine e.g. cancer CI. On the average the cost of medication is below $150K.

Assuming there isn't any CI during our working age and when we still have dependent to feed/pay their school fee, this will lead to rejection of trial medical treatment/drugs which isn't cover under H&S.

Your detailed comments in this will be highly appreciated as CI is expensive and insurance companies are starting to improve/new product and market it to the general public.

For discussion sake, let's just keep away from Early CI.

Thank you.

Anonymous said...

CI not expensive if you buy term CI and buy 5 times your annual salary. Whole life CI is a scam and very expensive and they benefit the conman agents and their company.

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