In a previous article, we discussed about Critical Illness and how there is a protection gap where most Singaporeans do not have the recommended level of annual income to support the onset of a critical illness. Where does this false sense of security come from?
According to a survey commissioned by AXA Insurance on Singaporeans’ financial preparedness for emergencies (conducted May 2021 by NielsenIQ where 1,562 respondents aged 18-65 years old across a spectrum of gender, age, ethnicity and monthly household incomes representative of the resident population), 95% of those surveyed have one or more misconceptions towards critical illness coverage. And these may be contributing to that false sense of financial preparedness.
Many people in Singapore know by now the importance of life insurance protection and getting coverage for critical illness. With our survey, we wanted to uncover if people are truly prepared for the financial implications of critical illness. Not only do we need to ask ourselves ‘Are we covered?’ but also ‘Are we covered enough?’,”
– Choo Kwek-Perroy, Managing Director, Life, AXA Insurance
The common misconceptions
Critical illness plans pay out regardless of diagnosis stage
Over 66% surveyed think that they will receive a payout from their critical illness plan regardless of the diagnosis stage, even though some plans may exclude early stage critical illnesses.
Hospitalisation plans will cover every need
More than half (54%) of the respondents believe that their hospitalisation plan will cover all their needs if they are diagnosed with a critical illness, despite the fact that there may be other costs such as insurance co-payments, medical appliances, supplements, and even their daily expenses that will continue to be incurred if they need to take time off work to recuperate.
Critical illness plans are expensive
Overall, 72% of respondents think that critical illness plans are expensive even though there are affordable options available.
In addition to the above, among those who said they feel financially unprepared for critical illnesses also cited a lack of financial knowledge as a reason for it.
On the positive side
Despite the worrying coverage gap, more Singaporeans are recognising the need for critical illness protection. When compared to an earlier AXA survey from 2018, the results showed improvement in the ownership of critical illness insurance which has grown from 52% to 72%.
Overall, among the different types of emergencies, there were significantly more Singaporeans who said they feel financially prepared for minor emergencies like daily medical needs (89%) and hospitalisation expenses (70%), compared to major emergencies like critical illnesses (50%) and death of family breadwinner (51%).
To learn more about the survey, please visit https://www.axa.com.sg/insights/2021-financial-preparedness-survey.
To learn how you can be prepared, check out AXA’s leading suite of solutions that cover you against critical illnesses including the new AXA Life Treasure (II). It offers one of the most comprehensive critical illness coverage in the market, including a first-in-market benefit of additional 50 percent payout upon diagnosis of one of the five most common critical illnesses (major cancer, heart attack, stroke, coronary artery by-pass surgery, and end stage kidney failure).
Images: AXA (infographics) and Envato (header)