Cash benefit covers
A hospital cash insurance standalone or rider policy gives you cash payouts when you are hospitalised due to either an injury or illness. A fixed cash amount is given to the insured per day of hospitalisation and, sometimes rehabilitation as well. The purpose of this policy is to sustain your daily basic needs while you are unfit for work.
Other key features
- Double payment for stay in the Intensive Care Unit, where patients in critical conditions are held
- Triple payment for hospitalisation overseas or due to accidents
- Get-well allowance upon discharge
- Accidental death cover
Terms & Conditions
- A waiting period from the policy start date will apply for hospitalisation due to illness.
- Premium increases by age band and discounts are sometimes, given during renewals in the event of no claims.
- There is usually a cap on the number of claimable days per lifetime.
- Coverage ends when the insured is over the age of 65.
- Common exclusions include pre-existing medical conditions, self-inflicted injuries, pregnancy-related incidents, addictions as well as mental and sexual illnesses
Rather than giving just a small amount like the hospital cash allowance coverage, a disability income add-on seeks to compensate you to maintain the insured’s standard of living and earnings, no more or less. This is because disability is a permanent condition, and will naturally require more compensation.
Depending on the insurer, total disability can be defined as one of these ways:
- Inability to perform existing job
- Inability to perform an occupation in the same or similar field
- Inability to work at all
- Inability to perform at least three of the six basic day-to-day activities – washing, dressing, feeding, toileting, mobility, and transferring
The insured will be compensated for lost income monthly, usually up to 75 per cent of the salary. The payments stop upon recovery, and will be pro-rated where necessary.
The definition of partial disability also varies from across insurers. Some accept it when the insured is forced to undertake reduced responsibilities at current occupation due to the disability and therefore, receive a lower salary. Others define it as the event of inability to perform any duties at the current job and being forced to work elsewhere with a lower salary.In either scenario, there is a specified minimum decrease in earnings – usually, at 25 per cent.
A standard formula used for the computation of benefit is as follow:
[ (Pre-disability $$$ – post-disability $$$) / pre-disability $$$ ] x 75% of pre-disability $$$
What to take note?
In some policies, rehabilitation expenses such as training courses, medical aids and workplace modifications can be reimbursed as well. There are also insurers that provide an optional escalation benefit where, at a higher premium, the insured can receive an additional three to five percent in the event of a claim.
Most importantly, disability income insurance coverage only kicks in after a deferred period. The insured is usually able to choose from one to three months at the point of signing. Of course, the premium will be higher for a shorter deferred period.
To claim, the following conditions must be satisfied:
- Policy is in force
- Insured is employed
- Insured is disabled after deferred period
- Disability fits within insurer’s definition
- Insured should not have other sources of income that amount to more than the benefits due to him/her
Designed to cover substantial medical costs, this policy provides a lump sum to the insured, if he/she has contracted a critical illness.A critical illness is either life-threatening or fatal.
Coverage under this category includes prolonged treatments formost of the standard critical illnesses below (list differs across insurers or countries):
- Major cancers
- Heart attack
- Heart valve surgery
- Severe coronary artery by-pass, disease or invasive treatments
- Major organ or bone marrow transplantation
- Kidney or liver failure
- Aplastic anaemia
- Loss of sight, hearing or speech
- End stage lung disease
- Major burns
- Multiple sclerosis
- Muscular dystrophy
- Parkinson’s disease
- Surgery to Aorta
- Alzheimer’s disease or severe dementia
- Fulminant hepatitis
- Motor neurone disease
- Primary pulmonary hypertension
- Blood transfusion or occupationally-acquired HIV
- Benign brain tumour
- Bacteria meningitis
- Major head trauma
- Apallic syndrome
- Progressive Scleroderma
- Systemic lupus erythematosus with lupus nephritis
- Loss of independent existence
- Other terminal illnesses
The assured sum will be split between the event of critical illness, and death / total and permanent disability. However, in the absence of critical illness, the full sum will be paid upon death.
The insured is given an extra lump sum in the event of critical illness, on top of the assured sum for death or total and permanent disability. However, if there is no critical illness, the assured sum still remain the same, without any increase.
Nomination of beneficiaries
As critical illness policies typically have built-in death payouts, the insured will be required to name their appointed beneficiary. They can do a Trust Nomination where the insured will lose all rights to the policy and written consent of all nominees is required for revocation of nomination. In a Revocable Nomination, however, the insured will be free to make changes to the nomination without anyone’s consent.