Critical Illness Life Insurance

Understanding Critical Illness Life Insurance

Studies show that men and women will be diagnosed with a critical illness before reaching the age of retirement. When such a situation occurs, you want to make sure that your family’s needs will be sufficiently given attention. Coping with a debilitating illness alone will put undue stress on your life and you want to at least have peace of mind when it comes to your dependents’ well-being. This is why critical illness life insurance is important.

Critical Illness Cover Explained

As the name suggests, critical illness life insurance is designed to protect your family should you be diagnosed with a serious ailment. You will be paid out a lump sum once you have been diagnosed and survive 28 days after the disease has been spotted.

The money that you get from your policy can be used to medical and other treatment expenses. It may also be used to fulfil the daily financial needs of your family seeing as the disease you are diagnosed with may result in a loss of income.

Illnesses Covered

The ailments covered under critical illness life insurance vary depending on the specifications of individual insurance companies but there are some illnesses that are standard across all policies. Some of the illnesses included under this type of cover are:

Heart disease

Stroke

Alzheimer’s (before the age of 65)

Cancer

Coronary diseases

Kidney failure

Deafness and blindness

Brain tumour (benign)

Mutiple sclerosis

Third degree burns

Several years ago, the Association of British Insurers (ABI) set certain restrictions on critical insurance claims. There are some ailments that the policy will not cover, such as angina and mild cases of prostate cancer. To make sure you are fully aware of the coverage your insurer provides, make it a point to read the key facts document.

Critical versus Terminal Illness Cover

There’s also what is called the terminal illness insurance and you might be confused as to which type of policy may be suitable for you. Terminal illness insurance is a policy that pays out a lump sum if you are diagnosed with a disease from which you are expected to die within 12 months.

It is important to note that most companies include terminal illness cover in critical illness life insurance at little or no extra charge. You cannot purchase it as a stand-alone product.

As an alternative, you may choose to bundle in critical illness cover with a life insurance policy although you will be paying higher monthly premiums. GP