Ricky Batten

The importance of having critical illness insurance

It's definitely something worth thinking about.

Let’s imagine a hypothetical situation where you can only afford to pay for three insurance plans every year. Which ones would you choose? 

The reason I am asking this question is that there are just so many different insurance solutions on the market nowadays, ranging from the more traditional home and travel insurance, to more ‘novel’ products such as cyber attack insurance and pet insurance; it's easy to feel spoilt for choice. 

While some people are mainly concerned with how frequently they can use their insurance, I also recommend selecting insurance based on what kind of coverage and protection it offers. So, referring back to the question I asked, critical illness insurance would definitely be one of my top choices. 

Why is critical illness insurance important?

While it’s good to have outpatient benefits that cover minor diseases such as fever and flu, it’s the critical ailments that you should be looking out for. If you’re diagnosed with some form of critical illness, not only will you have to pay for the often exorbitant medical bills, but you may also end up having to take extra time off work to receive treatment, or even become unable to work. The costs of medication and loss of income can take a detrimental toll on your finances.

You may argue that it is rather unlikely you will become critically ill since you are in good shape and maintain a healthy lifestyle. But, what about in twenty years’ time? No one can say for sure. Not to mention, there are also diseases that occur in perfectly healthy people, such as cancer.

This is especially important for expats working in the Land of Smiles, as neither the Universal Coverage System (UCS) nor your employee benefits will likely cover the majority of medical expenses for critical illness.

So what exactly is critical illness insurance?

For those unfamiliar with insurance jargon, critical illness insurance is an insurance policy designed to pay out when you’re diagnosed with a critical or life-threatening illness. It is usually included as part of a more comprehensive life insurance or medical insurance policy but standalone critical illness plans are also available. So if you already have a general health insurance policy, you may consult your insurance company and consider topping it up with critical illness cover.

Virtually all critical illness insurance plans have a set list of illnesses they will pay out for, which at least includes cancer, stroke, heart attack, and coronary bypass surgery. On top of that, policyholders can also choose from a list of conditions offered by the insurer such as:

  • Deafness
  • Loss of speech
  • Chronic liver disease
  • Major burns
  • Bone marrow transplantation
  • Occupationally acquired AIDS/HIV
  • And more

How does critical illness insurance work?

Critical illness insurance pays out in a lump-sum at a predetermined time, for instance, two weeks after diagnosis or surgery. The time may vary by plan so you should check for specifics in your policy. While policyholders may use the money on whatever they deem suitable, they are commonly used to cover:

  • Medical costs and hospital fees
  • Living expenses while they are unable to work
  • Loss of income
  • Payment of mortgage or outstanding bills
  • Funeral costs should the insured pass away

How much will critical illness insurance cost for me?

The cost of critical illness insurance depends on a whole host of factors, including your age, sex, health, recreational pursuits (such as smoking) and policy benefits. When you apply for this form of insurance, insurers will perform a rigorous underwriting process to evaluate your health conditions and even family history of disease in setting your premiums, if they decide to insure you.

What should I take note of when securing critical illness insurance?

As with other forms of insurance, there are some points that you should pay attention to, such as reviewing inclusions and exclusions of the plans, and not selecting plans based solely on its premiums. Apart from this, there are some other aspects unique to critical illness insurance that's worth your attention.

While some critical illness insurance policies include guaranteed premiums, they are commonly valid for a set period only. Most insurance companies now reserve the right to increase premiums, but they also offer the option to reduce cover accordingly. 

You should also watch out for policy exclusions and definitions of illnesses. For example, some plans do cover AIDs, but only limited to those who acquire the disease at work or through blood transmission. Some cancers such as early-stage melanoma will not be covered largely because of its high recovery rate.

 The waiting period is another tricky part, which includes the waiting period before a claim can be lodged and the period for which you must survive an illness after diagnosis, which is usually up to one month.

In a nutshell, critical illness insurance is arguably one of the most cost-effective forms of insurance. Just by investing a standard amount of money each month, it can offer you and your family peace of mind and financial protection against critical or even terminal ailments in the long run.

If you have any questions about health insurance in Thailand, get in touch with my team, or visit Pacific Prime Thailand's websiteblog, and resources page today. 


Simple question: What health insurance would I be eligible for at age 71?

By Tim, Chiang Mai, Thailand (3rd November 2018)

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