Recently, a group of new colleagues joined the company, and during casual conversations, the topic naturally turned to insurance.
Many of them mentioned that after joining Shenlan Insurance, their perspectives on insurance, especially critical illness insurance, had changed significantly compared to before. Some even felt they had previously underestimated its value. If even those who already appreciate insurance and are willing to join the industry feel this way, it’s likely that many others share similar misconceptions. To address this, we’ve prepared this article to revisit critical illness insurance and help everyone avoid coverage gaps due to a lack of understanding. 1. Critical Illness Insurance: Beyond Income Replacement To some extent, critical illnesses do not discriminate. Former U.S. President Joe Biden was recently diagnosed with malignant prostate cancer; global icon Jay Chou suffers from ankylosing spondylitis; and world-class badminton player Lee Chong Wei was diagnosed with nasopharyngeal cancer at 36. What differs, however, is how financial resources determine one’s options in facing illness. Biden can afford a top-tier medical team; Jay Chou’s royalties ensure lifelong financial security; Lee Chong Wei spent nearly 10 million on 33 proton therapy sessions to eliminate cancer cells. In stark contrast, many young people continue working despite cancer or return to work the day after surgery to avoid wage deductions. Image source: Social media Traditionally, critical illness insurance is seen as a way to “replace lost income,” providing a lump sum to cover mortgages, car loans, etc. But its true value lies in granting policyholders more choices during recovery. It allows opting for advanced, lower-side-effect medications over generic drugs. It enables taking extended leave without financial stress or rushing back to work. It provides the freedom to switch to less demanding jobs for better health. While these choices may pale compared to celebrities’ privileges, they represent significant relief for ordinary people battling serious illnesses. 2. Underestimated Advantages of Critical Illness Insurance Beyond choice, critical illness insurance offers two often-overlooked benefits: 1. Its stability is underestimated. Unlike medical insurance with renewal concerns, critical illness policies often provide lifelong coverage.More importantly, its coverage is less likely to become outdated compared to medical insurance.
Take “Good Medical Insurance” or “Blue Medical Insurance” as examples. Two years ago, they were top-selling medical insurance products, but now they are no longer the first choice due to the lack of coverage for externally purchased medications and medical devices. In just two years, the core coverage has revealed shortcomings. What if the market changes again in the future? We cannot always rely on good health to switch to new products… On the other hand, critical illness insurance from two years ago still maintains its relevance today. Many even miss the pre-2021 products that treated mild thyroid cancer as a critical illness for claims. The point here is not to compare which product is better but to highlight the fundamental differences between the two. Medical insurance cannot replace critical illness insurance. Medical insurance operates on a reimbursement basis, covering specific expenses as per the policy terms. Therefore, if medical advancements or reforms introduce new treatments not included in the policy, they won’t be covered. Critical illness insurance, however, pays out upon diagnosis of certain diseases or reaching specific conditions. As long as these diseases exist, the coverage remains largely unaffected. 2. Critical illness insurance is not as expensive as you might think. The biggest criticism of critical illness insurance is its cost—typically at least a few thousand yuan per year, payable over 20-30 years. Many worry about future renewal pressures. But compared to medical insurance, critical illness insurance offers more stable and long-term protection. It is less likely to “abandon” us. Medical insurance premiums increase with age. For example, “Good Medical Insurance” costs around 400 yuan annually for a 30-year-old but rises to 6,000-7,000 yuan for those in their 60s or 70s. This doesn’t even account for the potential price hikes due to the “death spiral” effect. The “death spiral” occurs when the average age of policyholders rises, increasing the product’s payout risk and premiums. Healthier individuals may switch to other products, leaving behind less healthy policyholders, further driving up costs. The result? In old age, medical insurance can become prohibitively expensive—costing thousands or even tens of thousands annually—leaving you in a difficult position: struggling to afford it yet facing significant risks without it. Critical illness insurance, however, typically has fixed premiums over 20-30 years, providing lifelong coverage. There’s no worry about being unable to purchase it later or facing rising costs. If you fall ill during the payment period, many policies waive future premiums while continuing partial coverage—a highly user-friendly feature. Additionally, many may not realize that long-term critical illness insurance policies accumulate cash value, which becomes a valuable asset.For example, as shown in the figure below: Paying ¥1,800 annually for 35 years to purchase a long-term critical illness insurance with a coverage of ¥300,000 for life, the total investment amounts to ¥63,000.
However, after just 9 years of premium payments, the cash value exceeds the total premiums paid, and it remains higher for a long period thereafter. This means that even if you don’t fall ill, there’s still an opportunity to recover this money, contrary to the misconception of it being ‘wasted.’ That said, while critical illness insurance is important, offers stable protection, and includes cash value, its cost remains the biggest barrier. To address this concern, we’ve prepared some tips for purchasing critical illness insurance at a lower cost. 3. How to Buy Critical Illness Insurance More Cost-Effectively First, timing is crucial when buying critical illness insurance. In short: the earlier, the better. On one hand, premiums increase with age, and health issues become more likely, limiting product options. If your birthday is approaching, we strongly recommend purchasing soon, as a one-day delay could cost hundreds more annually, adding up significantly over decades. On the other hand, critical illness insurance is also susceptible to policy changes. For instance, we predict a possible reduction in the predetermined interest rate in Q3, which may lead to premium hikes. Click to read more >>> Second, focus on the essentials when buying critical illness insurance to maximize value. While modern critical illness insurance offers extensive coverage, many features require additional costs. To avoid overspending, prioritize core needs, such as: – Opting for higher coverage rather than multiple claims. – Prioritizing basic protection over like death benefits. – Emphasizing affordability over brand reputation. To assist you, we’ve compiled some cost-saving strategies. The most common approach is prioritizing coverage during the family’s peak responsibility period, with the following three methods: For example, Option 2: Purchase ¥300,000 coverage with an additional payout rider, saving over ¥1,000 annually compared to buying ¥500,000 coverage. The benefit: If diagnosed with a critical illness before age 60, you receive ¥540,000; after 60, ¥300,000, ensuring optimal value for money. Other cost-saving strategies follow similar principles, prioritizing high-coverage during critical periods to achieve savings. Choose based on your needs. Note: Some products offer premium waivers for as optional coverage. If available, consider adding them, as they can save significant costs if illness occurs during the payment period. Additionally, there are now 1-year critical illness insurance policies, 10/20/30-year term policies, and pure critical illness insurance options. These are generally more affordable and can serve as transitional solutions for those with limited budgets, with longer-term coverage added later when finances allow.If you are unfamiliar with insurance, you can click here to have a professional planner provide a cost-effective critical illness plan tailored to your situation, which is faster and more efficient than researching on your own.
IV. Frequently Asked Questions After reading the previous content, many may have new perspectives on critical illness insurance, but some questions may remain. We have compiled several common inquiries: Q1: Does everyone need critical illness insurance? There are three types of people who may not need it: 1. Those currently facing financial hardship. If critical illness insurance would add significant burden, it is advisable to prioritize immediate needs. However, basic medical insurance is essential to prevent “poverty due to illness.” 2. Wealthy individuals, especially those with passive income (e.g., dividends, rental income, or royalties). For them, critical illness insurance may be unnecessary. Instead, consider high-end medical insurance for premium healthcare access and savings insurance for stable wealth management or inheritance planning. 3. Retired elderly individuals, as premiums may exceed coverage (e.g., paying $110,000 for $100,000 coverage). Focus on supplemental accident and medical insurance instead. Others are encouraged to purchase it if feasible. Q2: Some policies require specific surgeries for claims. Could such coverage become outdated? Possibly, but there is no need for excessive concern. Historically, some policies required open-heart or abdominal surgeries (e.g., coronary artery bypass). With advancements in minimally invasive techniques, such requirements may seem outdated. However, China’s CBIRC mandates that disease diagnosis criteria must evolve, and insurers cannot deny claims solely based on outdated standards. Many insurers also pledged “preferential claim settlements” in 2021, favoring consumer-friendly criteria when discrepancies arise between old and new definitions. Even if insurers resist, legal rulings typically protect consumers against unreasonable or obsolete clauses. V. Conclusion Some say medical insurance helps patients survive, while critical illness insurance helps them live. Though subtle, this distinction carries profound implications. We hope this article offers fresh insights into critical illness insurance, helping readers avoid coverage gaps due to misinformation.If you find the content helpful, feel free to like and share it.
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