Preparing Ahead

How Important is Critical Illness Insurance?

By Kendrick Chua, Brighterlife.com.ph

Comments (3)

blthumb_criticalillnessAs an 80s kid, I remember a multivitamins commercial that had a very catchy tagline which says “Bawal Magkasakit.” The commercial highlights the importance of being fit and healthy every day because getting sick is costly.

Getting critically ill is costlier. The tagline is very apt for the Philippines’s health care system because the government simply cannot provide quality treatment for its people. The sad reality is that we are left on our own. And in a country where only a few can afford private healthcare, contracting a critical illness such as cancer and stroke could be a death sentence.

A research study revealed a glaring statistic: 95% of  Filipinos will sacrifice their savings to treat a critical illness. When the savings have been completely depleted as they would most likely be, Filipinos will borrow money from friends, relatives, and even financial institutions just to continue the treatment.

The thing is, there are times when it is not us who are burdened by the expenses but, rather, our loved ones. I remember a former colleague who took out a P2 million loan to finance her mother’s cancer treatment. Despite earning a respectable income, she had no choice but to resort to borrowing because their savings were already depleted after the initial round of treatment. 

Unfortunately, after fighting the cancer for so long, her mother still succumbed to it. It was triple jeopardy on my former colleague: her mother passed away, savings wiped out, and buried in debt.

Not wanting to burden her family in case the same thing happens to her, she took out a critical illness insurance as proof of the lesson.

What is Critical Illness insurance?

Critical illness insurance fills the gap Health Maintenance Organizations (HMOs) cannot fill. By providing a lump sum, the policy holder can let an individual afford medical treatment (or if there is no cure, then finance the last remaining items on the bucket list).

Furthermore, the benefit can also pay for succeeding recuperation aids, replace lost income due to illness, or even pay off any loan incurred during the treatment. After-care is equally as important as the treatment lest people forget—and equally costly.

When my father suffered a stroke several years back, it rendered him unable to walk properly. Thankfully, through therapy and medication, he fully recovered and now walks five kilometers a day for exercise (far more than what I do in a single day). However, his current maintenance medicine costs us several thousands of pesos a month; which will will continue on.

Given those benefits, critical illness insurance is a vital asset in one’s financial portfolio. The examples cited above clearly show how sickness can derail our financial goal. One’s retirement fund can be consumed to finance an illness.

Why should we get one?

However, despite having a low premium, people still find critical illness insurance worthless because it doesn’t earn any dividends or interests. They feel it is money down the drain. They’d rather invest in something that earns more. So let me ask this: Would you rather have critical illness insurance and not use it, or contract one just so you could claim the benefit? It’s the same with car insurance. Would you wish to crash your car just so you could file a claim?

If nothing happens to you, be grateful that you won’t experience the suffering others went through. But if it critical illness strikes, at least you have something to rely on.

What is worse than getting sick is getting sick with no money at all.

The sad reality, which many fail to see, is that it is our loved ones who suffer the most when we contract an illness. My colleague was the one who had to take care of her mother when her mother was still alive; and pay off the P2 million loan long after the mother  passed. We will move on to the great beyond and leave the suffering, but our loved ones will still carry the burden.

Can you bear that thought?

Kendrick Chua is a Sun Life Financial Advisor and a Registered Financial Planner. He regularly writes for Rappler, Business Mirror and Money Sense. He is also a Chinese Language Instructor, TV host of CHInoy TV, a violinist and a freerunner-wannabe. He can be reached via kendrick.c.chua@sunlife.com.ph.

Image used under Creative Commons from Gaby Stein

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Dulce on


What is more recommended for me? A VUL for both my retirement fund and life insurance (with critical illness, etc) or get a separate life insurance for critical illness, etc and build a separate fund for my retirement? They say kasi get a term insurance and invest the rest. I currently do have a VUL for retirement and critical illness, Im in my 20’s, married with 1 kid. Kaya I’m quiet confused if tama ba kinuha ko.

    Mika on

    Hi Dulce, choosing the right product depends on your goals and needs. A financial advisor can best help you determine the best investment that fits you. You can email us via editor@brighterlife.com.ph so we can refer you for free consultation.

    coco deniega on

    getting a VUL or do the BTID (buy term invest the difference) is really a matter of preference.

    i’ll give you one advantage of both:

    in VUL, you have life insurance and investment. in paying your premiums regularly will ensure that your family is protected financially should anything happens to you. At the same time earning your extra income thru the policy’s fund value. You can even put in excess premium if you have extra money so that your fund value will have more chance to grow.

    while in BTID, the 1st advantage is its premium is cheaper than VUL. The extra money that you can save from vul can be put directly to the investment instrument of your choice (mutual fund, uitf, stocks).

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