Overall, the Life Insurance Association Singapore (LIA) Critical Illness framework strives to balance both the insurers’ and the consumers’ interest. This is for the purpose of offering clear and consistent coverage across the insurance industry. With this in mind, let’s understand how the framework works in Singapore.

Table of Contents:

1. When to apply the LIA Critical Illness framework
2. 90-Day Waiting Period
3. Summary

Part 1: When to apply the LIA Critical Illness framework

Altogether, the LIA has put together a standard list of 37 medical conditions. In detail, this list was compiled by way of common definitions. At the same time, the definitions covers the “severe” stage of the respective medical conditions. Let’s go through three examples to have a better understanding to this end.

Scenario 1.1: An insurer covers a medical condition on the LIA Critical Illness framework. Additionally, this benefit is provided at the “severe” stage.

On this occasion, there are two things that the insurer must comply with:

1. Firstly, the insurer must follow the name used on the LIA’s list of 37 medical conditions.
2. Next, it must adopt the LIA’s common definition for the medical condition.

To illustrate, let’s assume that the insurer wants to provide coverage for the severe stage of Lung Disease. Seeing that this condition is on the LIA Critical Illness framework, the insurer needs to adopt the name “End Stage Lung Disease”. By the same token, the insurer will need to adopt the LIA’s definition to admit the claim.

Despite that, there is no minimum number of medical conditions that an insurer must cover. For instance, some insurers only cover 36 medical conditions for the “severe” stage critical illness.

Scenario 1.2: An insurer covers a medical condition on the LIA Critical Illness framework. However, this benefit is provided at the “mildly-moderately severe” stage, or the “extremely severe” stage.

In other words, the insurer wants to provide coverage for a medical condition on the LIA’s list. However, this coverage is not at the “severe” stage.

To demonstrate, an insurer wants to provide an early stage cover for Lung Disease. (Recall: The name for “severe” stage lung disease is “End Stage Lung Disease”.)

In this case, Life Insurance Association Singapore does not provide any names or definitions. Hence, the insurer may give its own “name” for the medical condition, e.g. “Severe Asthma”. In like manner, the insurer may use its own definition to admit a claim for Severe Asthma.

Under those circumstances, different insurers may adopt a different definition for a similar medical condition. In order to protect your own interest, I will encourage you to read the definitions carefully. Otherwise, you won’t know whether the scope of coverage is reasonable.

Example: Multi-Claim Critical Illness – Recurrent Heart Attack

For example, this definition is extracted from Insurer A:

Another occurrence of a heart attack occurring after two years from the date of the last Diagnosis of any Critical Illness Stage of the Heart Attack of Specified Severity or the Relapsed Heart Attack.

By comparison, this definition is extracted from Insurer B:

Defined as a separate Heart Attack and not a progression of the previous one(s). The cardiologist must certify that the Heart Attack as diagnosed for the subsequent claim is at a different location of the heart from the previous Heart Attacks(s). Furthermore, there is a waiting period of two years from the date of diagnosis of severe stage critical illness claimed.

Basically, Insurer A does not impose any restrictions on the location for the second heart attack. If you had a heart attack once, then what is the chance that the same coronary artery becomes blocked again?

Scenario 1.3: An Insurer covers a medical condition that is not on the LIA Critical Illness framework.

In this situation, the insurer may use their own definitions in respect of all stages of illness progression.

Take the case of AIA Singapore where it covers 43 medical conditions for some of its critical illness benefits. For the same reason, it will follow the LIA’s framework for the 37 medical conditions. Thereafter, AIA will adopt its own definitions for the 6 conditions that are not on the LIA Critical Illness framework.

For instance, the insurer may wish to cover brain damage and this is not on the LIA Critical Illness framework. Therefore, it may give the condition its own name, e.g. “Acquired Brain Damage”. In the same way, the insurer will define the situation when a claim is admissible to that end.

Part 2: 90-Day Waiting Period

Above all, there is a 90 day waiting period for the below mentioned critical illnesses at the severe stage:

• Angioplasty & Other Invasive Treatment for Coronary Artery;
• Coronary Artery By-pass Surgery;
• Heart Attack of Specified Severity;
• Other Serious Coronary Artery Disease;
• Major Cancer.

To be sure, the waiting period begins from the insurance policy’s effective date. Furthermore, the insurers will use the “date of diagnosis” to determine whether the condition falls within the waiting period. In truth, the waiting period clause is to prevent anti-selection.

Part 3: Summary

Summing up, the industry will review the LIA Critical Illness framework once every three years. This is with the intention to keep the framework relevant. For instance, the upcoming revision by 26 August 2020 is to align with the advances made in medical technology and medical practices. Moreover, it also addresses the ambiguity that were raised during the past five years. On the whole, the LIA Critical Illness framework will help to reduce the situations when one insurer pays a claim while another insurer rejects the claim.

All things considered, you should do a comprehensive portfolio review on a consistent basis. In effect, it keeps you updated with the latest changes in the industry. What’s more, it refreshes your knowledge on the insurance policies that you own. This is especially important since not all the definitions are written the same way. Therefore, you must know what you had paid for.

Checklist:

1. When was your last financial portfolio review?
2. Consolidate all your insurance policies into a comprehensive insurance portfolio summary
3. Conduct long-term financial planning for your future.