Is Critical Illness Insurance Right for You?
June 28th, 2008 | by Editor |Critical illness insurance has become a very popular product recommended by Canadian financial advisors. But not all financial planners recommend these products. Read on for more details.
Critical illness insurance is a relatively new insurance product that attempts to bridge the gap between life and disability insurance.
Life insurance policies pay out upon death or diagnosis of a terminal illness. Disability insurance covers lost wages due to an accident or extended sickness. Critical illness policies cover the insured upon diagnosis of an illness such as cancer, heart disease or stroke – events that you may recover from but that could temporarily or permanently hinder your ability to earn income.
With all the complexities of insurance policies, many people don’t recognize the limitations of the health insurance coverage offered by their employer or government health programs. Most life and disability plans define a maximum amount of coverage. A critical illness such as cancer or heart disease can require immediate and continual treatment. With the expense of today’s medical technology, coupled with the potential loss of personal wages, it’s quite possible that health insurance coverage might not arrive in time or last long enough.
Critical illness insurance provides a living benefit in cash directly to the ill person, without specifying or restricting expenses. The amount paid out can be used however you like, from hospital bills to more general financial concerns such as looking after business, assets, or family. This benefit frees the patient to concentrate more closely on what matters most — getting healthy.
When you are diagnosed with a critical illness, your critical illness policy will pay out the policy amount tax-free in a lump sum, usually 30 days after the initial diagnosis. This is quite different from disability insurance where it can often take up to three months for long-term disability payments to begin, and the payments are made in monthly installments.
There are various types of critical illness policies available from multiple companies, so it’s important to find one that meets your specific needs at a competitive price. Policies will specify a definition for each medical condition and the provision of such benefits. It’s typical to have cancer, heart attack and stroke covered, but it’s important to review and understand the specifics. If you end up falling victim to a critical illness not specified in your plan, you would not collect on the policy.
Related Article:
- Exploring mortgage insurance and credit insurance
1 Trackback(s)