Do you need critical illness cover ( also known as 36 dread diseases cover)?

YES! Everybody need it. Don’t ever think that you will be healthy all the time. The fact is that humans health deteriorate over time. I have seen children suffered from cancer and kidney failures too. It is scary if you ever imagine these dreadful diseases strike us someday.

If you suffered such an illness you would be able to obtain cover that would allow you to receive a lump sum to help with recuperation, medical costs, payment of your mortgage, regular payments to replace your income.

Before we go in dept, you must understand that critical illness cover is totally different from hospitalization and surgical coverage (most widely known as health card or medical card). Here is the layman explanation:

Critical illness cover pay you directly a lump sum

Medical Card pay the medical expenses incur during your hospitalization, paid directly to the hospital, not you. ( in some cases, it might be a reimbursement where you pay first, and claim later)

So now the question is how much coverage do you need? I will show you two methods to calculate the sum assured you require which will meet your current needs. The first method is a very simple estimation. The second one is a bit complicated. If you follow my explanation and steps below, it is quite an accurate and easy to follow method of calculation.

First Method: Income Replacement Calculation

For most of the critical illnesses, it takes from several months to several years for treatment and recovery. For the industry benchmark, a person can definitely afford coverage of 3 years of his current annual income. Put it simple:

Sum assured you need = 3 times your annual income

Example: Paul earn $50,000 a year, he should buy $150,000 sum assured cover for critical illness. The insurance premium for his policy shouldn’t exceed 10% of his annual income ($5000/year).

You might be curious – Why 3 years income? Actually, it is a simple way of estimation. Just imagine that if you suffer from cancer, how long is the holiday you desire? If you bought 3 years of your income coverage, you can take 3 years off from your work for medical treatment. If you can afford higher coverage, it is certainly better.


Second Method: Expenses Estimation 

Using this method, you will need to specify or estimate the expenses you need if you are strike by one of the dread diseases. I will use an easy example to illustrate how the needs can be calculated:

Paul’s monthly expenses:

1.      Mortgage – $1500/month

2.      Car installment – $600/month

3.      Daily expenses (food, cloths, grocery etc) – $1000/month

4.      Medication – $500/month

Please take note that hospitalization and surgical benefit do not cover long term medication fees.

Total monthly expenses for Paul is $3600. You would have to estimate the number of years it takes to recover from an illness. This is a difficult one. Cancer might need 1-3 years. Kidney failure – will never recover. Coronary by-pass surgery – 3-6 months after successful surgery. It all depends on how long you want to rest and stop working! Let’s say Paul require at least 2 years off.

Sum assured required = Monthly expenses estimated x 12 x number of years

Sum assured required = $3600 x 12 x 2 = $86,400

Insurance plan currently available for critical illnesses coverage in Malaysia:

Great Eastern – Supreme Livin’ Care Plus, Greatlife Portfolio Insurance, Living Assurance Benefit Rider

AIA – Anniversary Life, AIA Assurance Account

Prudential – PruLink Assurance Plan, Crisis Cover Plus

ING – ING Prime Life Insurance, ING Critical Cover, ING Living Cover


The amount you are insured for critical illness determine your lifestyle during the disaster.

Over insured – You will never have to worried about money. Just be happy and get yourself healed 🙂

Adequately insured – You will be able to maintain your current lifestyle. Life goes on.

Under insured – Your family members suffered together. Why do you want to make it hard for them? Don’t you love them?

If you think you can’t afford to buy adequate sum assured, can you afford the risk to see the suffering of your family?

Write in the comment or contact me for customized plan. I would like to know what you think about getting insured with critical illness coverage too.

Related Article:

Everything about Life Insurance Company in Malaysia

Why you should first buy Investment-linked Insurance Policy

Investment-linked vs. Traditional Insurance

Types of Life Insurance Benefits

Definition of 36 Critical Illnesses or Dread Diseases in Insurance Policy




Personal finance author and trainer

    15 replies to "How Much Critical Illness Insurance Cover do you Need?"

    • […] I said before, a person should allocate about 10% of her income for wealth protection planning. In her case, to be able to afford RM150/month, she […]

    • […] How Much Critical Illness Insurance Cover do you Need? […]

    • johnny teoh

      Kc..I would like to have a 36DD coverage life insurance policy. Which insurance company and what type of plan would you suggest???

    • wei leong

      how much premium for critical illness insurance at age 45 insure for rm$200k

      • KCLau

        Hi Wei Leong,

        There are different plans that the rate may varies.
        For detail plan, please email me at

    • Azam Zaki

      3 times annual income method is the easiest way to find out the proper sum assured , but still we have to make sure that we do not lack of medical card coverage. 10 percent of your salary is a decent portion for insurance premium.

    • firdausprudential

      any age is the best time. make sure you are healthy. the drawback is higher premium when you are older.

      what KCLau replied is correct. make sure afford to pay the premium.

    • rosaline

      interested to take up the critical illness cover – age 45 for 30 K – however – at this age wld that be a good idea.

      wld appreciate yr comments

      • KCLau


        The best time to get covered is the time when you are still healthy and able to afford the premium.

    • Life Critical Illness

      The 3 times salary method at least! Most people fail to understand just how much of an impact critical illness has. Many people wwho have suffered a critical illness cannot return to their original jobs so it’s handy if you can at least pay off your mortgage. Why risk losing your home as well as your health? Also, money might be needed to pay for additional proviate treatment.

    • Critical Illness Cover

      The 3 times salary method is what works best I think as it’s easier for the client to understand. Clients rarely have a true grip of what their monthly expenses are.

    • kok leong

      KC,when you say paul insurance premium should not exceed 5000 what if paul oso have life insurance policy and to the extend off the recommended limit of insurance premium for each person what should it be or there is some formula like ( 50% life+ 30% CI +20% Investment Link)


    • […] limit exceeding RM50,000 c. TPD – annual benefit of total income per year – RM50,000/year d. CI – 3 times annual income – RM150,000 e. Death – this depends on your commitment to your love ones. Anyway, when you get the […]

    • […] discussed about how much critical illness coverage a person needs […]

    • […] I said before, a person should allocate about 10% of her income for wealth protection planning. In her case, to be able to afford RM150/month, she […]

Leave a Reply

Your email address will not be published.