The survey, taken from 300 people aged over 18, showed that 65 per cent of them do not think the Voluntary Health Insurance Scheme proposed by the Hong Kong government would provide sufficient protection in the event of critical illness. However, 28 per cent of that group do not have plans to bridge that gap with their own critical illness insurance.

Planning for critical illness is vital in case the ability to work is lost, the firm says, as in such cases it can help avoid disruption to a family's lifestyle – hence it is a facet of wider financial planning.

The survey suggests that residents in Hong Kong do not have sufficient awareness of this wealth planning aspect. Half of the survey respondents were Hong Kong locals and the other half were expatriate residents.

Some 67 per cent of the respondents said they had critical illness insurance. For the respondents that do not have cover in place, 21 per cent of them think that their savings would be sufficient to cover any medical expenses. Out of those people, 39 per cent are uncertain about the expenses to expect while 36 per cent do not know how much of their salary would be needed to cover medical expenses and support their families’ living standard in case they should be diagnosed with a critical illness.

“Individuals should not ignore the potential risk of being diagnosed with critical illness. In Hong Kong, over 13,000 people died of cancer in 2013. Our survey results, however, indicate that people may have underestimated their critical illness insurance needs and not be sufficiently protected. To ensure accurate assessment of sufficient coverage, they should seek advice from trusted professionals,” James Tan, managing director for Asia at Friends Provident International, said.

There is a clear difference between the financial planning of the local Hong Kong residents compared to their non-native counterparts. Some 36 per cent of expatriates compared to 17 per cent of locals do not know the adequate level of cover for critical illness expenses. As for how much of their salary would be needed to cover such an eventuality and to maintain living standards, 41 per cent of expatriates did not know compared to 21 per cent of locals.

Nearly half of the expatriates, 49 per cent, have protection as a top priority in their financial planning. Critical illness protection is not considered as important; 53 per cent of them are without any coverage for critical illness needs. For the emigrants who rely solely on their companies’ medical insurance, 42 per cent don’t know the appropriate size of the coverage for critical illness.

“Expatriates should not ignore their vulnerability and it is not only important to have critical illness cover in place, but also the right one considering their mobility and special needs. For example, they should enjoy an efficient claiming process despite their geographical locations. Consulting their advisors and reviewing their plans on a regular basis are important steps to put things into perspective,” said Charlotte Dilworth, regional protection development and underwriting manager at Friends Provident International.

Equal weight should be given to life insurance and critical illness coverage, according to Friends Provident International. Close to two-thirds, 65 per cent, of the respondents have life insurance yet only 56 per cent take out critical illness policies. Some 71 per cent of the respondents who choose life insurance do it for peace of mind about their loved ones’ futures should they pass away.

“Most people, especially expatriates, focus heavily on protecting their income, because losing their job is a more tangible concept than developing critical illness. However, should they be unfortunately diagnosed, they might lose the ability to work. Critical illness insurance provides income protection in the form of a lump sum cash payment, offering flexibility in managing their expenses during recovery or treatment period,” Tan said.

When it comes to choosing which policy to purchase, 58 per cent of respondents think the kind of illnesses covered is the most important. The number of illnesses covered was considered as the top factor for 36 per cent of respondents. When deciding which critical illness coverage they purchased, 54 per cent of the respondents said they take into account the insured amount of a critical illness insurance policy.

Some 19 per cent follow advice from their friends or families when purchasing life insurance while 8 per cent take it into consideration when buying critical illness cover. Friends Provident International said that this discrepancy could arise because of the greater variety of critical illness policies.

“It is encouraging to see that people seem to understand that it is the kind of illnesses covered that matters in a critical illness policy, not the number of diseases. Having critical illness cover means you are ready to tackle even the worst scenario head on and, therefore, it is essential to ensure that you have the most suitable protection and coverage in place,” said Dilworth.

The survey was commissioned by Friends Provident International and carried out by YouGov. Friends Provident International is part of the Aviva Group.