Posts Tagged ‘Understanding Critical Illness Cover’
Understanding Critical Illness Cover
Monday, June 29th, 2009No one likes to think about the possibility of suffering a serious illness, but then again, if it were to happen to you, there would be devastating consequences in terms of financial security for you and your family. How would you pay for your debts? How can you pay your bills? How would you cope up ending up in this serious condition? All of us should be aware that critical illness Insurance is very important if we want to protect our loved ones and next of kin in the event that something bad should occur.
What is Critical Illness Insurance?
Critical illness insurance or critical illness cover is an insurance product, where the insurer is contracted to typically make a lump sum cash payment if the policyholder is critically ill.
In critical illness insurance, there are contract terms that contain specific rules that define when a diagnosis of a critical illness is considered valid. It may state that it may need some diagnostic tests and/or that the diagnosis need be made by a physician who specialises in that illness.
Each provider will offer somewhat different terms which cover different types of critical illness and often different degrees of cover within a particular condition. Although they differ from company to company, typical illnesses and diseases covered by critical illness insurance may include cancer, heart attack, stroke, blindness, Alzheimer’s, multiple sclerosis, organ transplants, kidney failure and paralysis. The policy of the provider may also be structured to pay out regular income and the payout may also be on the policyholder undergoing a surgical procedure (e.g. having a heart bypass operation). Coverage can also vary according to the degree of severity of, or conditions associated with, an illness or disease. For example, if you are diagnosed with a type of cancer that is treatable and that results in minimal “down time”, you may not be eligible to make a claim.
Critical Illness Insurance is totally different with Disability Insurance. Critical Illness Insurance provides the full benefit in a lump sum payment on the diagnosis of a critical illness while Disability Insurance, also known as “income replacement” insurance, provides a monthly income replacement benefit if you become disabled and can no longer perform normal duties during work. The benefit is limited to a percentage of your regular income and ceases once you earn an income or you no longer meet the definition of disability in the contract.
You should consider the benefits that may be already be available to you through other insurance policies, such as life insurance and group health insurance in determining your need for critical illness insurance. For example, the benefits offered through your employer’s group disability plan may provide adequate and appropriate coverage in the event of a serious critical illness.
It is important to read the provider’s policy carefully. In addition, be sure to ask your insurance representative to provide you with a complete and detailed explanation of your coverage because Critical Illness Insurance can be intricate for you.
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