Critical illness insurance in China

When it comes to the economy and wealth in China, the rise in the past 20 years has been nothing short of meteoric. The sheer number of people who have pulled themselves, or been pulled out of poverty and into the middle class has grown exponentially and is forecasted to do so in the impending future. This growth has spurred an increase in demand for nearly all things from tangible products like cars and phones to intangible products like critical illness insurance.

Even though the forecast growth rate between 2019 – 2023 has dropped after the COVID-19 pandemic, Globaldata predicts that there still will be a strong compound annual growth rate (CAGR) of 6.1%. Private insurers are also driving the momentum in terms of new product offerings in critical illness cover. In short, critical illness insurance in China will continue to be a big business for insurers. In order to capture this business, you are likely going to see an increase in advertising from insurers for new policies. Like all other products in China, some policies will be fantastic, while others will be far short of this. The question is, how can we find the best critical illness plan for our coverage needs?

First, define critical illness

While many seasoned expats and professionals will be aware of what it is, there is increasing evidence that many younger professionals are unsure of what critical illness insurance is and whether they will need it. To that end, we should first define this type of insurance before looking into securing the best plan on the market.

Simply put, critical illness insurance is an insurance policy that is designed to pay out when a person is diagnosed with a critical or life-threatening illness that they have a chance of recovering from. This is different from strictly terminal illness cover, which only pays out when you have a terminal disease.

The majority of plans created in China pay out in a lump-sum at a predetermined time e.g., 14 days after diagnosis or surgery. Other plans offer a kind of income that is paid out in installments over a set period of time once a diagnosis has been made. In China, and in much of the world, these plans are sold usually as riders on life insurance plans, meaning if you purchase a life insurance plan, you can also add on critical illness insurance.    

The key to note here is that almost all critical illness plans will have a set list of conditions or illnesses they will pay out for. These will vary by insurer, but all plans will cover at least:

• Cancer
• Heart attack
• Stroke
• Coronary artery bypass surgery

While the money paid out by these insurance plans can be used for anything, it is most commonly used to cover:

• Medical costs associated with the listed condition
• Costs associated with recovery from the condition
• Funeral costs should the covered die
• Lost income
• Payment of mortgage or outstanding bills
• Living costs of surviving family members

Do I need critical illness insurance?

In truth, not every person out there will need critical illness insurance. For example, if you live in a country where retirement benefits, healthcare, and welfare are well ingrained and sound, then the chances of needing this type of insurance are considerably lower. The same can be said for people who receive cover through their company that they deem to be acceptable.

That said, this is not the case for the vast majority of people in China. This is especially true for people who don’t have a large amount of savings, are single earners, or can’t afford to take the time off of work to recover. Essentially, if you can’t afford the hospital bills and living costs now, should a serious disease or ailment strike you, then it would probably be a good idea to consider critical illness insurance.

5 tips on how to find the best critical illness plan

Here are our top 5 tips on how you can find the best critical illness plan

1. Always look at the conditions covered

This is extremely important, as insurers will usually have different lists of the conditions this type of insurance covers. As we noted above, they will all cover at least cancer, stroke, heart attack, and coronary artery bypass surgery, but after that, the lists will be different.

While it is impossible to predict what diseases we may get, or whether we will get sick at all, it would be beneficial to compare lists and look for some of the more common ailments. Ideally, you should look for a plan that covers a variety of illnesses.

2. Be aware that some cancers will not be covered

While cancer is always covered by these plans, it is important to note here that some cancers will be excluded especially if there are high recovery rates associated with cancer. For example, early-stage melanoma will not usually be covered largely because the recovery rates are near 100%.

Also, some older critical illness plans or those with a basic level of critical illness cover will only pay out during the advance stage of an illness. As a result, illnesses like DCIS and skin cancer are not included because these conditions can respond positively to treatment and will be arrested before the condition worsens.

So the key here is that cancer will need to be critical, some insurers will assess cancer cases on a case-by-case basis in order to determine whether they will pay out on a claim.

3. Check that total and permanent disability is included

This will increase premiums associated with critical illness coverage, as the chances of an insurer paying out on these types of claims will be higher. The thing is, while this is riskier for the insurer, it is riskier for you to not have this coverage. If you are maimed in a traffic accident your earning potential will likely drop, which can have an impact not only on your life but also on your family as well. Investing a little extra on the premium can go a long way in preventing future problems.

4. Don’t select on price alone

Like many things in China, the price, or premium, on these plans will be drastically different. In our experience, cheaper plans often have lower payouts and much stricter coverage limits and requirements. While these plans may be perfect for some people, they could be a bit of a risk for others.

We strongly recommend looking for a plan that balances coverage elements, clearly defined payouts, and an agreeable premium.

5. Discuss your options with Pacific Prime

Finally, if you are considering securing a critical illness plan, it would be a good idea to talk with the insurance team at Pacific Prime China. We can help you determine your coverage needs and then identify and evaluate a number of possible plans that will work for you. We can also help ensure that you get the best coverage from a reputable insurer.

Disclaimer: Pacific Prime China solely represents, operates and manages locally regulated insurance products and services in the territory of PR China. Any references to Pacific Prime Global Company or Group, the international services, insurance products or otherwise stated written or verbally, is for introduction purposes about our overseas network only as each entity is fully independent.