A Guide to Critical Illness Insurance

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Count yourself lucky if you’ve never needed Critical Illness Insurance (CII), sometimes called Catastrophic Illness Insurance. You may not have heard of it, but among the many types of insurance policy available in the Philippines, this is the one designed to help you through a life-threatening illnesses.

What is Critical Illness Insurance?

The policy is designed to cover costly treatment and medical bills in the event the policyholder is diagnosed with a critical illness. As the longevity of retired Filipinos increases, insurance companies need to find ways to allow them to enjoy their golden years, even if they contract a serious illness. Critical illness insurance covers at least 25 life-threatening illnesses that ordinary life insurance often ignores.

Below are details about this type of life insurance:

How does Critical Illness Insurance work?

With most critical illness insurance policies in the Philippines, the policyholder receives a lump sum cash benefit equal to the policy amount if they are diagnosed with a critical illness.

Why get Critical Illness Insurance?

Critical illness Insurance covers certain types of illnesses that are both life-threatening and very costly to treat. For example, chemotherapy can cost as much as P5 million, without factoring the expense of hiring a private nurse for in-home care.

If you come down with a critical illness, you will not be able to work. Even if you can maintain a source of income, it may not be enough to shoulder the cost of treatment and pay for daily expenses. Partners may have to take leave from work to help you recover, meaning they too will lose their income.

Although not all critical illnesses are curable, treatable diseases can take anywhere from 6 months to 2 years for recovery or control of the disease. Unless you can rely on investments and savings, a critical illness insurance policy supports you through this difficult time.

Apart from paying for costly treatments, a critical illness insurance policy is useful to:

  • Pay for medical services that are difficult to obtain, such as caregivers
  • Pay for treatments not covered by traditional life insurance policies
  • Enable focus on the treatments and helping the patient get well instead of working to pay bills
  • Pay for transportation expenses, vehicles to be modified for wheelchairs, and for placing lifts in homes for patients with mobility issues
  • Allow patients to rest and spend their remaining days comfortably with their family

What are the Critical Illnesses that this policy covers?

When choosing a critical illness policy, go through the insurer’s fine print. Apart from checking which types of critical illness their policy covers, find out how to make a claim on the policy. With certain illnesses, it’s not always as simple as showing the doctor’s diagnosis—some insurance companies will follow a certain set of protocols and guidelines before honoring claims.  Here are eight critical illnesses that are covered, their definitions, and how serious they need to be in order for a policyholder to make a claim:

  1. Alzheimer’s Disease

Alzheimer’s disease is a progressive degenerative brain disease. The insured person must exhibit loss of mental capacity, usually by showing clear signs of impairment in memory and judgment. Such impairment must result in a significant loss of both mental and social functioning, with the policyholder requiring a minimum of eight hours of supervision daily.

  1. Bacterial Meningitis

For the policyholder to qualify for a claim, a diagnosis of bacterial (not viral) meningitis must be accompanied by proof of the cerebrospinal fluid showing growth of pathogenic bacteria. The meningitis must result in a neurological deficit that lasts for at least 90 days from the day of diagnosis.

  1. Brain Tumors (Benign)

The brain tumor should be located within the cranial vault, and limited to areas of the brain, the three membranes that line the skull and vertebral canal and envelop the brain and spinal cord, cranial nerves, and the pituitary gland. The tumor must need surgery or radiation treatment to prevent it from causing irreversible neurological damage. Some insurers may stipulate that no benefits will be paid out to pituitary adenomas that measure less than 10mm, or no benefits paid to a recurrent or metastasized tumor which was diagnosed before the effective date of coverage.

  1. Total Blindness

What is defined as total blindness is irreversible loss of vision in both eyes, such that the policyholder’s corrected visual acuity is 20/200 or less for both eyes, and/or their field of vision is less than 20 degrees in both eyes.

  1. Cancer

Cancer is a confirmed diagnosis of the presence of a tumor, characterized by the uncontrolled, abnormal growth and spread of malignant cells and the invasion of tissues. No benefits will be paid out if the cancers are not life-threatening, such as:

  • Carcinoma in its original place
  • Stage 1A malignant melanoma that is 1mm or less in thickness and is not ulcerated
  • Any non-melanoma skin cancer that has not metastasized
  • Prostate cancer in its early stages
  • Recurrent or metastasized original cancer diagnosed before effective date of coverage

Usually a 90-day exclusion period for any cancer diagnosis is enforced after the policy is issued. This prevents people from buying insurance when they suspect they have cancer but not diagnosed, and then lodging a claim as soon as the test result is positive and the policy activated.

  1. Heart Attack

The victim of a heart attack must have a definite diagnosis of heart muscle failure due to loss of blood supply caused by arterial blockage. For a policyholder to make a claim for a heart attack, they must manifest symptoms consistent with a heart attack, along with an accompanying ECG reading, and proof of development of new Q waves during or after having a coronary angiography and coronary angioplasty.

  1. Coma

For a policyholder receive a claim, they must be diagnosed as being in a state of unconsciousness, be unresponsive to any external stimuli and not respond to internal needs for a continuous period of at least 96 hours. Their score on the Glasgow coma rating must be 4 or less. No benefits will be payable if the coma was medically-induced, resulted from alcohol or drug abuse, or if brain death was diagnosed.

  1. Stroke

To collect critical illness claims for a stroke, medical experts will give a definite diagnosis of the rupture or blockage of an artery to the brain, causing brain cells to die from lack of oxygen. New neurological symptoms associated with the stroke should be present and last for over 30 days from the date of diagnosis. The symptoms must be corroborated by diagnostic imaging tests.

Computing Coverage for a Critical Illness Insurance Plan

To determine the amount you will need if falling critically ill, consider the following:

  1. Amount of income lost from being unable to work and needing time to recover by 6 months to 2 years
  2. Amount of income lost for your spouse not working and helping you in recovery for 3 to 6 months
  3. Medical expenses not covered by traditional insurance like the cost of treatment, medical equipment if any, home nursing care if required, and medical treatment abroad if necessary
  4. Everyday expenses like rent, utilities, food, and transportation costs
  5. Other expenses like childcare costs and any other costs

Once you have estimated a sum, discuss the premiums, budget limits and a repayment timeline with a licensed broker or insurance company.

Before you Apply

It’s cheaper to apply for critical illness insurance or for any insurance policy when you are young and healthy. Insurance underwriters look at factors that increase or decrease the likelihood of paying out claims.

The insurance company will check your overall health, whether you smoke or not and your family’s medical history to determine whether to approve your policy application. Depending on your age and the coverage you want, you might be asked for additional information, such as results from blood tests, urine samples, and an ECG test.

Your Occupation and Lifestyle

Before you apply for CII, think about your work and your lifestyle. If you work in a hazardous environment involving heights, being underground or with explosives or cancerous substances, insurance companies will consider these factors as high risk. Also consider that if you’re a heavy smoker or drinker, don’t exercise and have an unhealthy diet and lifestyle, your policy application may be rejected. Your hobbies will also be scrutinized; insurance companies won’t take risks with avid skydivers or racing drivers.

Applications for critical illness insurance are rigorously analyzed for potential hazards that increase the chance of claims. If accepted, the policy provides you with peace of mind and financial support should you become sick, and gives you the means to help you recover.

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