The overbearing cost of having to manage an illness such as cancer, heart attack, or stroke out of pocket can have a lasting effect on the financial stability of an individual or a family.
Many people think the standard health insurance plan or life insurance plan is enough to address any eventualities in life. However, the humongous costs associated with life-threatening diseases may be too much to be covered by either policy.
This is where a critical illness policy comes in – a cover that pays out a lump sum amount in the event one gets diagnosed with an illness or injury listed in the policy.
The amount can be used to cater to other needs such as house bills or childcare and is not just limited to the treatment of the illness itself. In some cases, the policy offers cover for your children although at a reduced rate.
A critical illness policy term can run from two years to even 50 but will end the moment a successful claim is made against an illness. In certain instances, the coverage is terminated when the insured attains a certain age.
Read below to find out the coverage scope of a critical illness policy and why one may need it.
What illnesses does a Critical Illness Policy cover?
As a bare minimum, a critical illness policy should cover the insured against cancer, heart attack, and stroke. Not all types of cancers are covered so be sure to confirm with your insurance provider the extent of coverage.
In some cases, a comprehensive critical illness policy should cover over 40 conditions including serious head injuries, Parkinson’s disease, kidney failure, and even Alzheimer’s disease.
It may even cover an acute disability occasioned by an illness or injury. In this case, the scope of coverage will depend on your policy and insurance provider.
Do I need a Critical Illness Policy?
Whether you have a family that depends on you or are living alone, having a critical illness policy can be the only thing standing between you and financial ruin.
Having a critical illness cover gives you the peace of mind in knowing you won’t have to burden anyone with medical expenses should you fall critically ill.
As we mentioned, critical illness insurance not only covers the policyholder but extends to the children and planned children as well, albeit at a reduced level. It is an invaluable addition if your family solely depends on your income, you aren’t financially capable of meeting daily expenses should you become critically ill or lack an employees’ package to cover you in case you become unable to work for a long time due to severe sickness.
Benefits of taking out this policy
Typically, most insurance policies are specific on what the benefits of the cover can be used on. For instance, money paid on a critical insurance plan can be used to cater to your family’s daily expenses, transportation costs, seeking specialized care, and even vacations for terminally ill patients.
This flexibility shores up your financial ability by allowing you to take care of much more other than the medical expenses.
How much does a Critical Illness Policy cost?
The cost of a critical illness policy will largely depend on various aspects. Here are some factors that determine how much this policy will cost:
- Age – elderly people have an increased risk of critical illness and as such pay more
- The amount of cover you need (more cover means a higher premium)
- History of smoking or ongoing smoking
- Family medical history – healthier individuals pay less
- Your occupation – a high injury risk job will attract a high premium
In certain instances, other than being asked to pay more, a particular illness may be excluded from the cover if you are considered at a high risk of getting the illness.
Another aspect that will weigh in on how much you pay is whether your policy has a reviewable or guaranteed premium. Guaranteed premiums are comparatively slightly costlier due to their fixed nature.
If you are the sole provider in your family, or your family’s savings aren’t sufficient enough to pay for a huge financial demand, then you should consider getting a critical illness cover.
In the event you get rendered unable to work due to a critical illness or injury, the lump sum pay-out from the critical illness cover will insulate your family from a financial disaster.
Talk to an expert before purchasing critical illness insurance to understand the scope of coverage and payment plans.