Covering the changes in Life Insurance Association’s Critical Illness (CI) Policies and common questions you might have

Critical Illness (CI) policies provide insurance against the diagnosis of the severe stage of medical conditions, using well-defined wordings. However, before 2003 it was up to individual insurers to define the CIs covered. The language used was relatively difficult to understand and potentially created uncertainty in the minds of consumers.

2003 CIs Definition Standardisation

Addressing this uncertainty, Life Insurance Association (LIA) introduced standardised definitions in 2003 to increase trust and transparency and to allow for better comparison among different insurers’ products.

CI Framework 2014

However, even standardised definitions cannot be expected to work in perpetuity or prevent unforeseen future developments. As a result, the industry review exercise was initiated in 2013 to bring LIA’s 2003 common definitions up to date and aligned with advances made in medical technology and medical practice as well as to address areas of ambiguity based on insights gained from a decade of experience.

On 1 August 2014, LIA announced changes to the CI benefit framework with the following two changes:

• Revised standard definitions for the severe stage of 37 common CIsStandard definitions have been updated to reflect advances in clinical practices, medical science, and technology which have impacted certain illnesses in their diagnosis and treatment. The definitions of 16 CIs, such as Major Cancers, Heart Attack of Specified Severity, and Stroke, were revised whilst 21 definitions remain unchanged. CI products using preceding 2003 definitions will no longer be sold from 1 February 2015.
• Flexibility for more medical conditions to be covered before the new CI framework was launched, CI plans covered up to a maximum of 30 CIs. Under the new framework, insurers can now choose to cover any number of medical conditions under a CI plan, and insurers can also offer single-illness CI plans. This is intended to facilitate product innovation and the provision of good value to consumers.

Questions you may have in mind

The question that has been looming over consumers has been, “what does it mean to me?”

1. How are the new definitions different from the older version? – Standard definitions are good for consumers who buy products from different insurance companies but when you hold policies from different generations you again may face questions about the scope of their cover. Generally speaking, the new definitions are more in line with current medical technology as well as provide higher clarity.
2. Are the definitions for the early stage and intermediate stage of CIs standardized? – The LIA’s common definitions describe the respective medical conditions at the severe stage. Other than the severe stage for 37 CIs, all other medical conditions and their stages of illness progression are not defined by LIA.
3. Can I buy the CI policies under the 2003 framework on or after 1 February 2015? – No. On and after 1 Feb 2015, CI products using Version 2003 definitions may no longer be sold in Singapore.
4. How will the new definition affect the premium rates? – Some insurance companies, such as Aviva, have revised their plans to adopt the new definitions for their CI plans. Based on those plans, the adoption of the new definition didn’t affect the premium rates much.
5. Should I wait to buy the CI policies under the new framework? – Obtaining protection is always the first priority. If you have a shortfall in your insurance coverage, you should obtain the protection sooner rather than later, as it will cost more when you are older. In addition, the onset of a negative health condition holds the potential for higher premiums or even declination in coverage.

The more important question to ask yourself is: “Do I need Critical Illness protection at my current stage in life?” If so, it is better to get the protection as soon as you can. For more information, check out our insurance page today.