Someone argued against my suggetion to insure $50,000 for critical illness. He said that the correct cover should be determined by a financial needs analysis.
In my view, $50,000 in critical illness coverage is adequate for most poeple.
Most illnesses do not cost a lot of money to treat, especially if they have access to subsidised wards in Singapore.
If they need more than $50,000, they can draw down on your savings from other sources. They should invest a large portion of their savings in more productive assets, and not over-commit all their savings in a low return, critical illness cover.
If a financial adviser tell you that you need more than $100,000 for critical illness coverage, you should ask the following questions:
1. What percentage of people make a critical illness claim?
2. What is the average cost of treating the critical illness? (Do not allow them quote you an isolated case that occurs once in 20 years)?
3. How much commission do they earn by selling a big critical illness policy to you?
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