Critical Illness Insurance Basics
Critical illness is more common than you think. Cancer, multiple sclerosis, the need for an organ transplant, a stroke – these strike when least expected and can devastate, not just your health, but also your family’s finances. But with critical illness insurance, you can have the funds you need to pay for treatments, as well as for any other expenses you might deem necessary.
What is Critical Illness Cover?
Critical Illness insurance will pay a specified lump sum upon the diagnosis of a serious illness that is covered in the policy. The purpose of the cover is to provide the Insured with funds that he can use to spend for his treatment and recovery, as well as other necessary expenses. The advantage of this cover is that once the payout is given, you are free to spend the money however you wish.
Critical Illness insurance is typically offered to people from ages 17 to 65, though the minimum and maximum ages vary from insurer to insurer.
Critical illness cover can be bought as a separate policy or as part of a life insurance policy or mortgage life insurance policy. In the case where critical illness is included in a life insurance or mortgage life insurance policy, you can essentially expect two lump sum payments – one when you are diagnosed with a critical illness and one upon your death.
Critical illness will cover common medical conditions such as:
- Heart attack
- Kidney failure
- Organ transplant
- Alzheimer’s disease
- Blindness or deafness
- Multiple Sclerosis
- Heart valve surgery
- Certain kinds of cancer
- Loss of limbs
- End stage lung disease
- Dissecting aortic aneurysm
- Major burns
- Progressive muscular atrophy
- Benign brain tumor
This will vary from policy to policy. There are some insurers that exclude critical illnesses caused by self-inflicted injury, refusal or failure to follow reasonable medical advice, drug abuse or resulting from criminal or illegal activities. Other exclusions may also include the diagnosis of Parkinson’s disease or Alzheimer’s disease after the age of 60.
- Top 5 reasons why a critical illness claim is denied
- Do critical illness insurers really pay out: what the statistics shows
- Top 10 critical illnesses that will pay out
- When are you suspected to get critically ill?
Why Take it Out?
With today’s medical advances, people are living longer and enjoy higher survival rates when diagnosed with a critical illness. However, the cost of treatments may not just devastate your health but also your finances. For one, your critical illness may render you unable to keep your job and earn an income. Also, medical treatments for critical illnesses are sometimes quite expensive and may drain your family’s finances. You may find yourself unable to avail of the treatments you need and may even be beset by worries due to mounting bills.
With critical illness cover, you can have the means to pay for the treatment that will ensure your complete recovery and may even be able to pay for home treatment and to have your vehicle and house equipped with adaptive medical facilities that will make life easier for you during your recovery. You can even earmark a portion of the payout to go on the trip to Europe that you have long been saving up for.
Similar to life insurance, critical illness cover will depend upon your selected sum insured and extent of coverage, health condition, your age, gender, your occupation and other factors. Your family’s medical history and your health records will also be examined. Also, smoking will significantly increase premiums as this habit is considered a health risk factor. To help determine your medical condition, some insurance companies may require a medical exam.
Please note that your policy will be priced based on the information you have provided. It may be tempting to hide some facts about your health condition, but we advise against this since failure to disclose pertinent information may affect your claim.
You have the option of either getting a reviewable or guaranteed premium. Reviewable premium policies start out with a lower premium but the policies will be up for review, usually every 5 years and the insurance company will determine whether an increase in premiums is warranted. This may mean that the premiums remain as is or will increase. Meanwhile, guaranteed premium policies are more expensive at the onset but this provides guaranteed premiums for the entire duration of the policy.
Waiting Period and Coverage
Note that there is usually a waiting or survival period after the diagnosis. The Insured should survive the waiting period for the payout to be provided. The waiting period is usually 14 to 28 days. For instance, if the Insured has a heart attack, he has to survive the waiting period in order to receive the payout.
Things to Look for When Choosing
To help you get the kind of policy you need, you should:
Read the policy, including the fine print so that you know the exact definitions of each critical illness and know what are covered and what are not. You actually have a free-look period where you can review the details of the policy and may decide to cancel the policy within the free-look period and get your money back.
Availability of joint cover. If you want your spouse to also be covered, you should ask your insurer about it. The policy may pay if either you or your spouse is diagnosed with a critical illness. You may also opt for separate coverages where payment of one claim will not affect the coverage of the other spouse.
Consider coverage for your children. Some insurers have started offering this product.
Making a Claim
It is important to inform the insurance right away once you have been diagnosed with a covered critical illness. There are also guidelines that you need to follow. For instance, it is also required that a doctor will confirm the diagnosis and oftentimes, the guidelines stipulate that the doctor is a specialist with a focus on the medicine that is appropriate to your illness. There may be some tests required (EKGs, blood tests, biopsies) to confirm the diagnosis.
The illness should also be diagnosed within the coverage period of the policy. Also, the critical illness diagnosed should match the definition of the critical illness as described in the policy.
Critical Illness Insurance Can Be a Lifeline
Preparing for an illness is not something we are wont to do. We would like to think that nothing bad will happen to us. However, it is nearly impossible to foresee the future and what may happen. This is when hoping for the best but preparing for the worst is a wise decision.
Recommended useful information to read:
- Dos and Don’ts when making critical illness insurance claims
- What you should know about your critical illness cover: the exclusions to your policy
- Things to consider before getting a critical illness insurance policy
- Are you at risk? Critical illnesses you may be susceptible to
- Save up on premiums: factors that affect your critical illness insurance premiums