An Introduction To Critical Illness Insurance

Eliminate your financial concerns with a critical illness insurance policy. Whether it's a serious medical condition such as cancer, heart disease, or kidney failure, a CI policy has got you covered from head to toe.

Medical costs have been on an upward spiral for a long time, especially now that the Malaysian government has allowed medical and dental practitioners to hike their professional fees up to 14.4%. Treatment that would cost you RM10,000 right now, will likely be quadrupled in the next 8 to 10 years. Sure, money tucked away in a savings account or long-term fixed deposit might help pay for future medical bills, but it isn't necessarily enough. Once you savings pool runs dry, a Critical Illness Insurance plan might be your solution.

What Is A Critical Illness Insurance Policy?

A Critical Illness ( CI) plan will provide financial support when you are diagnosed with any of the 36 critical illnesses most prevalent among Malaysians. It will be a lump sum payment based on the severity level of your ailment. For example, if your buy a CI plan with sum assured of RM30,000, 25% of that amount will be payable once you are diagnosed with early stage cancer.

However, if you are diagnosed for it at a later stage of the illness, you will be able to receive 50% of the sum assured. Because the money goes straight to you, the policyholder, you can spend it on anything at all - that would include buying yourself a holiday or a brand new sports car, but of course, the most sensible thing to do is to use the money to pay for any medical treatment and daily expenses.

But isn't that the same thing as a Medical Card? No. Unlike a CI policy, your Medical Card is an insurance plan that will only pay for the cost of your medical treatment and surgery at selected panel hospitals. These expenses are paid directly to the hospital from your insurer, not to you. If you pay for your medical bills first, you will be able to claim from the insurance company at a later date.

What illnesses should Malaysians be most worried about?

It is about time we lay down some hard hitting facts and figures. We Malaysians are very generous with our sugar, from our colourful kuihs to our super sweet teh tariks, so there's no wonder that we are the top Asean country with the most diabetics. It is estimated that in 2011, 15.2% of adults were diabetic - that's more than 4 million people!

Alarming still are adults with high cholesterol, affecting more than 6 million men, women and even children nationwide. Other high frequency non-communicable diseases ( NCD) or more commonly known as chronic diseases include high blood pressure, obesity, stroke, and other heart diseases. All these and more are covered by a Critical Illness Insurance.

Below are the top 5 chronic diseases in Malaysia:

Critical Illness Description
1. Heart Attack Also known as myocardial infarction, it is the permanent damage of heart muscles. One in four deaths in government hospitals are attributed to heart attacks in 2009.
2. Stroke It is caused by an obstruction in the blood flow, or the rupture of an artery that connects to the brain. Again, one in four government hospital deaths are stroke related.
3. Coronary Artery Disease Happens when blood supply to the heart is hindered by the build up of cholesterol. It is responsible for 25.4% of the total mortality rate in 2011.
4. Cancer Cancer is a class of diseases characterised by out-of-control cell growth. In 2012 itself, there were 21,700 deaths due to cancer in Malaysia.
5. Kidney Failure Occurs when the kidneys become unable to filter waste products from your blood. Over 4,000 Malaysians are diagnosed with kidney failure every year.

Typically, if you are diagnosed for a critical illness in its early stages, or below a certain severity level, you may not be able to make a claim at all. Also, traditional CI policies will end after a single claim is made. Fortunately, there are some insurance companies that have started to provide coverage for early diagnosis, including the allowance for multiple claims for recurring illnesses such as the Great Eastern Early Living Care and the Manulife Cover Me Again.

How much am I paying to be insured for Critical Illness?

A better question would be, "How much can you afford to be insured for?". The amount you want to be assured for, or sum assured as it is often called, hinges entirely on your own budget and needs. The first thing to get down is calculating all the direct costs that you and your family would have to bear, and for how long. 

Being unable to work, losing out on paid employment, and constantly commuting between your home and the hospital for daily treatment and medical check-ups is nobody's idea of living a normal life. - you will need some sort of financial support to replace your monthly income and adjust to your new lifestyle.

Here's an example:

Diana earns RM40000 a year, so the ideal amount to be insured for is at least three times her annual income, or RM120000. Her policy premium would then be around RM4000 a year, not exceeding 10% of her annual income. Remember, premiums will also depend on your gender, occupation, health condition, and your status as a smoker or non-smoker.

Why three times her annual salary? It's not as random as you think. Let's say that Diana were to suffer from cancer or fall into a coma for a prolonged period, being insured for three years worth of income would be ample time for her family to regain their footing and reshuffle their finances to fit the dramatic life change .

It is worth the money

Now that you're still young and fit, with a great family health record to boot, it's hard to see yourself bed-ridden in the hospital with a severe illness. But the older you are, the less in control of your body you become - how will you be ready for that eventuality? 

If you think you and your family don't have enough savings to fall back on, a Critical Illness Insurance can fill in the gaps. But remember, a good insurance plan is one that you can afford to pay. If you have the extra cash, take up an Investment-linked CI policy, where you invest a portion of your premiums in a fund of your choice to help make your financial nest egg for retirement.


Agree or disagree with this post? Questions? You also have your word!

  • Shelley

    What if you have already been diagnosed with coronary heart disease, and have has an angioplasty performed. Then, changed jobs so lost the existing hospital plan? Is there any hospital/surgery policies out there that allow for this pre-existing condition?

    • RinggitPlus

      Hi Shelley,

      Unfortunately all of them have the pre-existing illnesses clause.

      If the policy under the old company hasn't lapsed, you could try requesting to buy out your policy if the insurance company allows it.

      Understand that it is your previous company, if it was fairly recent you may still have a chance.


    • Gary

      I bought a CI policy 19 years ago under Great Eastern. The criteria for Coronary artery blockage was 75%. But that criteria has now been lowered to 60% narrowing of lumen in 2012. So will I get compensation if I got a 60% narrowing of lumen.

      • RinggitPlus

        Hi Gary,

        Most policies would stick to the criteria observed when you've purchased it, with future changes only affecting people who bought the policy after the changes have taken effect.
        However, we can't guarantee that all insurance companies work the same way. We recommend contacting them directly to be 100% sure.
        Hope this helps!

      • mr.ismail

        yup good addvice and tip

        • Rinee

          Hello, if a person is already diagnosed with heart condition and has had angioplasty done, and do not have current insurance, will we still be able to find an insurance coverage? If yes, any suggestions?

          • RinggitPlus

            Hi Rinee,

            A heart condition is a pre-existing condition that might lower your chances of getting an insurance policy approved.
            That being said, you can get a critical illness insurance policy that covers heart attacks and other special conditions unique to your situation:
            Thanks for your question!

          • Fariqh

            Hi, I would like to ask, I already purchased a life insurance together with medical card. My life insurance coverage is about RM 50K. I was a newbie since I get my first insurance coverage at that moment. Now, after more than 3 years of working with gross annual salary up to RM 30L per annnum, I was thinking to get a higher coverage. You had mentioned a CI must at least covered a 3 months of annual salary. Based from current income, it probably need another RM 50K to top up the balance of leakage. My question is, does life insurance need NEED to be attached with medical card if one wanted to upgrade a coverage level as well as I already have a medical card. Is it compulsory? And last but not least, based on 3 months annual income, is it applicate based on current annual income or policy holder SHOULD take a count based on annual increment until he/she retired? For example, their current annual income is about RM 50K. Considering an increment of their salary for another 30 years, he/she probably might earned up to RM 4K-5K monthly for their final salary, which about RM 48000 - RM 60K annually. This amount would bring up an accumulation of RM 150K - RM 180K for thier 3 times of annual salary. So, do they need to take a count to buy a life insurance with this coverage ( RM 150K-180K ) during their young age or have to revised every 3-5 years. If they opt to revise it every 3-5 years, a premium would be higher and more expensive due to increasing of their ages. What's your opinion? Thank you

            • RinggitPlus

              Greetings, Fariqh.

              Let us address this one question at a time.

              1) You do not need to buy a life insurance with a medical card attached to it. You can opt for a critical illness insurance as a separate product or ask your respective insurer for the option adding the critical illness rider. You need to ask your insurer on this as each insurer have different add-ons and rate.

              2) Here is where the person needs to make a choice. If you decide to add a critical illness rider to your life insurance, your premium will increase. However, it is a cheaper option than getting a critical illness insurance as a separate product. It should be noted that the critical illness insurance offers more coverage than the rider. Again, contact your respective insurer for more information.

              Thank you for your question and we hope this help.

            • S.Tharma

              I am diagnosed with diabetes and also with high blood pressure. can i will be covered under this policy ?