【Critical Illness Insurance】Product update — Comparing the whole-life critical illness insurance of AIA vs Manulife vs Prudential (Q3 2021)

Critical illness strikes unpredictably. Buying a whole-life critical illness policy pays off for life — you’re prepared whenever you’re unfortunately “picked”. Many customers consider the insurer’s brand and history when choosing critical illness insurance to ensure the company can reliably and sustainably protect their health over a long lifetime. Today’s critical illness plans have evolved beyond serious illness coverage to include more benefits and innovations. This time 10Life compares the popular whole-life critical illness plans (updated versions) from Hong Kong’s three major insurers from different angles — including AIA 友邦加裕智倍保3, Manulife 宏利活耀人生危疾保2 (Enhanced) and Prudential 英國保誠危疾加護保III — to help readers understand each product’s features.

 

 

Critical illness insurance pays a lump sum when the insured is diagnosed with a specified insured disease. It mainly covers major critical illnesses and early-stage critical illnesses. For major critical illnesses such as cancer, heart disease, and stroke, the payout is usually 100% of the sum insured (Note 1). If diagnosed early in the policy (for example, within the first 10 years), the payout can be as high as 150% of the sum insured. Assuming the insured is a 35-year-old non-smoker paying HK$12,000 per year for 25 years, Figure 1 shows that if a major critical illness occurs within the first ten years, Manulife’s payout is higher, about HK$579,648 (female) to HK$621,047 (male), while Prudential’s payout is HK$544,135 (female) to HK$564,086 (male). After a major critical illness claim, future premiums are waived while lifelong critical illness protection continues.

 

As people pay more attention to health and undergo regular check-ups, many diseases can be detected early, so early-stage critical illness coverage has become important. Using carcinoma in situ and angioplasty — common early-stage conditions — to compare the three products’ early-stage payouts, Prudential provides the highest payouts of about HK$90,689 (female) to HK$94,014 (male). Notably, Prudential’s premium waiver mechanism also covers specified early-stage illnesses: after diagnosis, the insured is exempted from paying premiums for the following 12 months to focus on treatment.

 

Figure 1: Comparison of AIA, Manulife and Prudential popular whole-life critical illness plans — major and early-stage critical illness coverage
Assuming the insured is a 35-year-old non-smoker paying HK$12,000 per year for 25 years. Claim occurs within the first 10 years of the policy.

 

 

Cancer is frightening but no longer necessarily fatal; patients’ survival rates have improved significantly with ongoing cancer treatments, and living with cancer for years is not impossible. However, targeted therapies and immunotherapy are expensive and treatments may be lengthy, placing heavy financial burdens on patients. In response, insurers have added continuous cancer treatment benefits: during the waiting period between major critical illness claims, if the insured continues active cancer treatment such as surgery, radiation, chemotherapy, or targeted drugs, they can receive additional payouts.

 

We examine a case of cancer treatment lasting 8 years to compare cumulative payouts at different times. Assume the insured is a 35-year-old non-smoking female with the same premiums and contribution period.

 

Figure 2: Comparison of continuous cancer treatment benefits for AIA, Manulife and Prudential popular whole-life critical illness plans
Assuming the insured is a 35-year-old non-smoker female paying HK$12,000 per year for 25 years.

 

 

Notes:
1. The above information is provided by 10Life, updated to 31 May 2021, for reference only and not sales advice.
2. Assumes the insured is a 35-year-old non-smoking female paying HK$12,000 per year for 25 years. The payouts shown are averages of payouts at different periods within 50 years and have accounted for early additional benefits within the first 10 years of the policy.
3. Policy currency is USD; assumed USD:HKD exchange rate is 1:8.

 

When the insured is first diagnosed with cancer (treatment period <1 year) and makes the first major critical illness claim, Manulife pays the most, about HK$430,000 (Note 2).

If the insured continues active treatment in the 1st and 2nd years after diagnosis, they can receive continuous cancer treatment benefits each year. Among them, Prudential pays 60% of the basic sum insured annually, so the cumulative payout in the 2nd year is the highest, reaching about HK$830,000.

The waiting period between cancer claims is three years, so in the 3rd year the insured can make a second major critical illness claim. Prudential’s cumulative payout is the highest, about HK$1.2 million.

In the 4th and 5th years, Prudential and Manulife policyholders can again receive continuous cancer treatment benefits, and cumulative payouts continue to grow; AIA does not offer this benefit, so its cumulative payout remains unchanged.

In the 6th year, insured cancer patients under AIA, Prudential and Manulife can all claim the third major critical illness benefit, but Prudential’s cumulative payout still leads.

In the 7th and 8th years, Prudential and Manulife policyholders still undergoing treatment can again receive continuous cancer treatment benefits. Prudential’s cumulative payout is the highest, reaching about HK$2.43 million. AIA does not provide this benefit.

 

 

Beyond specified disease coverage, whole-life critical illness insurance seeks to add more types of benefits in response to customer needs. The global COVID-19 pandemic has increased attention to infectious disease coverage, and insurers have added related benefits. AIA’s critical illness benefit covers diseases declared by WHO as public health emergencies of international concern; if the insured is admitted to an intensive care unit for three days or more, 20% of the sum insured is payable. Manulife and Prudential are more flexible: if the insured is admitted to intensive care for three days or more for any reason (including infectious disease), 20% of the sum insured is payable.

 

Insurers also offer family protection. Many parents buy insurance early for young children to secure lifelong critical illness protection but worry that if they die during the premium payment period, the child (the insured) won’t be able to pay remaining premiums. To address this, AIA and Prudential both provide premium waivers so the child (the insured) does not need to pay future premiums and continues to be covered (Note 3).

 

Another situation covered by AIA: if a spouse is insured while the policyholder or beneficiary is the other person, and the policyholder dies before age 80 and the policy has been in force for two years, the spouse (the insured) will have future premiums waived (Note 4).

 

Prudential offers an additional family survivorship benefit: if any two family members (for example, oneself and spouse, oneself and a child, or two children) are insured together and one of them dies within the first 10 years, the beneficiary receives an additional 50% of the sum insured.

 

Due to space limits, this article only compares the main benefits of the whole-life critical illness plans. If readers wish to compare other details, please visit the “Product Decoder” on the 10Life website or consult a licensed advisor listed on the site.