Special circumstances: Covering critical illness

How did the concept of ‘critical insurance coverage’ come about?

CRITICAL illness insurance is one of the more unique products in the world of insurance. It covers a very specific set of conditions that can affect a person’s life.

To illustrate and compare, life insurance and personal accident insurance do not cover specific conditions, but cover the value of a life, with the benefits being paid out regardless of the cause that may result in death or disability.

Perhaps to understand why critical illness insurance is different, and how it became popular, we need to look back at its inception.

Critical illness insurance wasn’t the brainchild of people in the life insurance industry. Instead, it was conceived by a certain Dr Marius Barnard, who was a heart surgeon and a member of the team that performed the world’s first human-to-human heart transplant back in 1967.

Dr Barnard had no prior knowledge of insurance in his profession.

Now in his eighties, Dr Barnard himself had major surgery and battled prostate cancer, and reveals that that there is a fine, delicate marriage between medical health and financial health.

He cites a young woman as one of the motivations that indirectly led to his involvement in one of the major reforms in the healthcare and insurance industry.

One in five Malaysians above the age of 35 suffer from some form of heart disease. That’s almost 20% of the population. – Filepic

A divorcee in her mid-30s had approached him with lung cancer, and he had performed surgery on her.

In just three short weeks after the operation, she returned to her job.

Two years later, she re-approached Dr Barnard with a relapse, revealing that she had come to see him straight from work despite her illness, as she had to put aside her current poor condition to continue making ends meet for her children.

Her lack of income meant she continued working till the end of her days.

His perplexity at this common situation grew as he continued working and medical advances grew significantly; he found that he could now better take care of the physical wellbeing of his patients, yet financially, there was little he could do to help them as a doctor.

Life insurance, it dawned upon him, was a venue to ensure patients not only physically outlived their illnesses, but also had the financial means to do so.

With just an adjustment as to the timing of the payout of the benefit, he argued – upon diagnosis, and not upon death – people with critical illnesses like his patients could add on years to their lives.

Many similar cases to the young divorcee only fuelled Dr Barnard’s drive to introduce such a plan, and the first critical illness plan was launched in 1983.

Evolution

Thanks to Dr Barnard, today, critical illness insurance represents an important part of anybody’s financial and protection repertoire.

Most critical illness insurance plans cover up to 36 critical illnesses, and the most common conditions covered are heart attack, stroke and cancer. These are also the illnesses that have the highest incidence rates amongst Malaysians.

To cite some statistics and estimates:

> One in five Malaysians above the age of 35 suffer from some form of heart disease. That’s almost 20% of the population.

> 52 ,000 strokes occur in a year in Malaysia.

> One in four Malaysians will develop cancer by 75 years of age.

Despite the statistics and information about critical illness being fairly common knowledge, the occasionally mind-boggling general attitude of “it won’t happen to me” is a big factor in people choosing not to invest in a critical illness plan.

However, sometimes the real reason for not picking up a critical illness plan is the lack of information, difficult jargon and exclusions surrounding a critical illness plan, which make a choice so difficult.

Additionally, critical illnesses are no longer the same as they were 20 years ago when the first plan was developed.

Conditions that were extremely severe in the past are not so life-threatening today, but as medical costs continue to rise, the question now becomes: “Should I get critical illness protection”, not “How much coverage is sufficient?”

Manulife Insurance Berhad hopes to be able to answer this question in the coming instalments of this three-part series.

Part two will cover the topic of how much critical coverage do you need.

How do you evaluate this? What types of plans are out there in the market at this point of time? What are their limitations?

This article is courtesy of Manulife Insurance Berhad. For more information, e-mail [e-mail]. The information provided is for educational purposes only and should not be considered as medical advice. The Star does not give any warranty on accuracy, completeness, functionality, usefulness or other assurances as to the content appearing in this column. The Star disclaims all responsibility for any losses, damage to property or personal injury suffered directly or indirectly from reliance on such information.