Understanding Critical Illness Insurance

Critical illness insurance is a policy in which the insurance company makes a lump sum cash payment if the policyholder is diagnosed with one of the specific illnesses on a predetermined list. The policy may also be structured to pay out regular income and the payout may also be on the policyholder undergoing a serious surgical procedure.

Critical illness insurance protects against the costs associated with a serious illness.

Critical Illness insurance pays out a tax-free lump sum amount upon diagnosis of a serious sickness. Critical illness insurance is considered a living benefit as it is paid out while the insured is still living. This tax-free payment can be used in whichever way the insured chooses. Although critical illness insurance can’t cure someone of a diagnosed illness, it can help ease financial strain and allow the insured to focus on recovery.

The cost (referred to as the “premium”) is based on coverage amount elected, age, your medical history, family medical history, smoking status, current health and possible risky lifestyle circumstances.

A critical illness claim is paid out when someone is diagnosed with a qualifying illness. The critical illnesses covered depend upon the insurance provider and are specified within the contract. The following four are covered; heart attack, cancer, stroke, and coronary artery by-pass surgery. Covered illnesses can range from four to over 21 different conditions. A claim can also be impacted by the severity of the diagnosed condition.

If a covered critical illness is diagnosed and the insured fulfills a survival period (usually 30 days), the tax-free lump sum payment is made. Usually, once the claim is paid, the critical illness insurance policy is no longer in force.

Who is Critical illness insurance suitable for?

• Those who are looking to protect themselves and loved ones from the financials costs (treatment, loss of income, etc.) of a diagnosed critical illness.
• Would like to provide a tax-free payment to relieve financial pressure in order to better focus on recovery in event of a critical illness.

What Critical Illness Insurance can do for you

• Reduce the financial disruption that a critical illness can bring.
• Allow you to focus on recovery with fewer financial worries.
• Avoid the need to make disruptive life changes due to financial pressure.
• Allow you to pay down debts that may be weighing you down.
• Provide the funding you may need to pursue alternative healing options not covered by medical insurance.

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