How much critical illness benefit do you need?
When do you need Critical Illness Insurance?
The main purpose of Critical Illness Insurance is to provide a lump-sum of cash assistance when the insured is unfortunately diagnosed with a critical illness covered by the policy. It protects the insured’s lost income due to the inability to work during treatment, which allows them to maintain their living standards without making sacrifices due to financial pressure.
Unlike general medical insurance, Critical Illness Insurance does not offset medical expenses through reimbursement, but provides a lump-sum payout instead. This allows the insured to decide how to use the funds without any limitations.
In general, if you find yourself in any of the following 5 situations, you should consider applying Critical Illness Insurance:
- Relying on employment income
- Repaying property loans
- Having young children
- Having parents to support
- Running a company or business
Do you need Critical Illness Insurance?
No one can guarantee that they will always be healthy.
Especially in Hong Kong, a place where we have a fast pace of life, it’s inevitable we may have developed some unhealthy habits, and even young people in their prime may suffer from severe illnesses or even pass away.
According to the latest statistics from the Health Bureau, the leading causes of death in Hong Kong are malignant tumors, pneumonia, heart disease, and cerebrovascular diseases. Except for pneumonia, the rest are considered “severe critical illnesses” covered by mainstream Critical Illness Insurance.
Therefore, Critical Illness Insurance is essential for everyone.
How to calculate the critical illness benefit that you need?
When calculating critical illness benefit or coverage, it is generally recommended to consider both “budget” and “need.”
1. Budget
When the budget is not an issue, a larger critical illness benefit/ coverage is always better. However, we should keep in mind that the benefit is in proportion to the premiums. In other words, the higher the benefit amont, the more expensive the premium.
On the other hand, premium for Term Critical Illness Insurance normally will increase annually. Policyholders should consider future increases of premium in the future before purchasing this type of product to avoid exceeding their budget.
2. Need
Critical Illness Insurance aims to support the insured’s living expenses during the period when they are unable to work due to illness. Policyholders should choose the right coverage and should not blindly pursue high coverage.
A good starting point is the policyholder’s annual salary. Since severe illnesses typically require 2 to 3 years for treatment and recovery, the critical illness coverage should be at least 2 to 3 times the annual salary. For example, if your annual salary is HK$360,000 (monthly income of HK$30,000), the required coverage would be HK$360,000 x 3 = HK$1,080,000.
If you have high daily expenses or you have other medical coverage to reimburse for the lost income during illness, you may consider adjusting the level of coverage of your critical illness according to your personal circumstances.
In summary, when calculating the critical illness coverage you need, remember to balance “premium” and “coverage/ benefit amount” to avoid creating unnecessary burdens in the future.
3 examples to help you assess your critical illness coverage needs
| Life stage | 28 Years Old (Single) |
| Personal monthly salary | HK$25,000 |
| Monthly expenses | Food and clothing: HK$8,000 Mortgage: HK$7,500 Car Loan: HK$5,000 |
Mr. Chan is single and has relatively fewer family responsibilities.
It is recommended that his critical illness coverage should be three times his annual salary, which is HK$25,000 x 12 x 3 = HK$900,000.
A critical illness coverage of HK$900,000 will be enough for him to cover living expenses for three years even if he is unable to work, or even some remaining funds to supplement medical expenses.
If Mr. Chan applies for Bowtie’s Critical Illness Insurance, he only needs to pay a monthly premium of HK$73*, which is only 0.29% of his monthly salary and won’t be a financial burden.
*Assuming this policy is for a non-smoker
| Life stage | 35 Years Old (Married) |
| Personal monthly salary | HK$35,000 |
| Dependent | Both parents of the couple (Retired) Monthly expenses of the elderly HK$10,000 |
| Monthly expenses | Rent: HK$12,000 Food and Clothing: HK$8,000 |
Mr. Li, a newlywed, without mortgage or car loans, but needs to support the parents of his and his partner. If he is diagnosed with a serious illness and needs to temporarily stop working, it would increase the financial pressure on his spouse.
Therefore, it is recommended to have critical illness coverage of at least three times his annual salary, which equals HK$1,260,000.
A critical illness policy with a coverage of up to HK$1.26 million is enough to cover all the necessary expenses, including supporting parents, rent, and daily living expenses for three years. The remaining claim can be used to pay for medical expenses related to the critical illness, giving you more protection with just one policy.
By purchasing Bowtie’s Critical Illness Insurance, the monthly premium is only HK$181*, which is approximately 0.52% of Mr. Li’s monthly salary, and absolutely within his financial ability.
*Assuming this policy is for a non-smoker
| Life stage | 40 Years Old (Married) |
| Personal monthly salary | HK$40,000 |
| Dependent | A son and a daughter Monthly expenses of HK$12,000 |
| Monthly expenses | Food and clothing: HK$10,000 Mortgage: HK$10,000 Car Loan: HK$5,000 |
Mrs. Cheung and her husband have been married for many years, and although they both have stable jobs, they still need to support their young children and repay their housing and car loans. If one of them becomes unable to work due to a serious illness, it would bring a heavy financial burden to the family.
Therefore, it is recommended to have critical illness coverage of three times their annual income or more, at least HK$1,440,000.
This critical illness coverage will not only enough cover all the necessary expenses for 3 years, but also provides additional cash flow to help Mrs. Cheung and her family cope with the treatment expenses.
Bowtie’s Critical Illness Insurance offers a monthly premium of only HK$594*, which is approximately 1.49% of Mrs. Cheung’s monthly income. It is believed that it won’t provide a significant financial burden to their family while providing a comprehensive protection for Mrs. Cheung’s family.
*Assuming this policy is for a non-smoker
How to accurately calculate your insurance needs?
“How much Critical Illness Insurance to buy” is a very personal question. Required coverage varies according to different situations. Depending solely on a formula may not accurately calculate the most suitable critical illness coverage for oneself.
The Bowtie team is determined to provide you pertinent support.
Click here to get exclusive advice for Critical Illness Insurance
Frequently Asked Questions
When applying for insurance, the most fearful thing is “having to pay premiums without receiving compensation.”
Therefore, when choosing a Critical Illness Insurance plan, we should prioritize the reputation and the payout rate of the insurance companies. On the other hand, in order to avoid insufficient coverage when filing a claim, we should also spend time studying the policy terms and understand its coverage and exclusions.
Bowtie’s Critical Illness Insurance reimbursement criteria take international standard as reference. As long as the situation meets the policy’s stipulations, it will be fully reimbursed. Bowtie also makes important product information and documents publicly available on the website for customers to download and refer to.
Traditional Critical Illness Insurance usually only provides a one-time payout. After the insured person completes the first claim, the policy will immediately become invalid and no longer provide any coverage.
Critical Illness Insurance with multiple claims allows the insured person to make more than one claim. In the event that the insured person’s critical illness relapses, they can still enjoy additional coverage. This may fit those who seek more comprehensive protection or have needs for coverage of specific illnesses.
Bowtie Term Critical Illness Multiple Cover is offering up to 5-time 100% payouts to the insured, which could protect people from severe critical illness recurrence also!
Unlike general medical insurance, Critical Illness Insurance emphasizes specificity.
Among all Critical Illness Insurance claim cases in Hong Kong, more than 90% are related to cancer, heart disease, and stroke. In other words, compared to Critical Illness Insurance policies that cover over a hundred different illnesses, a policy with a precise and accurate coverage range is more practical.
For example, Bowtie’s Critical Illness Insurance covers only 38 types of critical illnesses, it already includes the most common critical illnesses (98%). Moreover, with the “4 Supplementary Coverages” under the product design, insured will be protected more effectively.
Details of the Supplementary Coverages are as follows:
| Terminal illness | A disease is likely to result in death within 12 months |
| Permanent total disability | Inability to work due to permanent disability for at least 6 months |
| Inability to live independently | Loss of the ability to perform at least 3 daily living activities |
| Major medical condition | Undergoing Voluntary Health Insurance scheme (VHIS) defined complex surgery + continuous ICU stay for 5 days or more |
| Learn more about Bowtie’s Critical Illness | |
1 According to a survey conducted in Asia from 2008 to 2012 by a reinsurance company, cancer, coronary artery bypass surgery, heart disease, other severe coronary artery diseases, stroke, benign brain tumors, and kidney failure accounted for approximately 97% of critical illness insurance claims for Hong Kong females. The remaining 3% of the data is collected by Bowtie via various channels from public sources and calculated mathematically, provided for general education and reference purposes only.
2 The insured person must be between the ages of 18 and 64 when diagnosed with permanent disability.
3 The insured person must be between the ages of 5 and 64 when diagnosed with an inability to live independently.
4 The insured person must be 69 years old or younger when diagnosed with a major medical condition.
