Critical Illness insurance vs. Disability insurance: What are the differences?

Both insurance plans provide a level of protection against the financial losses brought about by sickness. However, disability insurance and critical illness insurance are not the same.

In a nutshell, disability insurance gives you a monthly benefit in the event that you are disabled while critical illness insurance gives you a lump sum payment when you are diagnosed with a covered critical illness.

Below, a table further outlines the differences (and similarities) of the two:

	Disability Insurance	Critical Illness Insurance
Payments	Monthly payments while the Insured is disabled, subject to a maximum number of months, as well as to a maximum percentage of the current income. Once the Insured recovers or has other sources of income, the benefits may stop or be reduced.	Payment is given as a lump sum once the Insured is diagnosed with a critical illness. Payment is not connected with the person’s ability to work. He may be able to continue with his work as long as he is diagnosed with a critical illness.
Waiting period	There is a waiting period from the time the person is unable to work.	There is a waiting period from the date of diagnosis. The Insured must survive this waiting period for the claims to be payable.
Reasons for the claims to be payable	It depends on the type of disability policy. There are various definitions: Any occupation, where the person is unable to find employment for any kind of work. If one can find other areas of employment, the claim won’t be payable. (i.e. A professional tennis player may be injured but the disability does not prevent him from performing standard work – his disability is not payable under this policy.) Regular occupation – total disability is defined as the inability to perform any ordinary occupation due to a medical condition. Own occupation – total disability is defined as the inability to perform one’s occupation.	Payment is upon diagnosis of a critical illness. Some of the critical illnesses are: Alzheimer’s disease Heart attack Major stroke Brain tumour Total blindness, deafness or muteness Major organ transplant Cancer HIV Kidney failure Coma Multiple Sclerosis Parkinson’s disease Paralysis or loss of one or more limb Motor Neurone Disease Third degree burns Traumatic head injury
Length of coverage	Coverage is usually at age 65. At retirement age, retirement benefits are expected to kick in.	Cover can be until age 75 or even above. But this cover stops once a lump sum payment is made.
Taxes	If premiums are paid by an employer, monthly benefits are subject to tax. If premiums are paid by the Insured, no taxes are charged.	This is usually tax-free.
Premium refunds	Partial refunds given if the benefits are not paid.	All premiums paid back if there is no claim (i.e. the Insured dies before making any claim).

Cover Details
Type of Insurance
Type of cover
Over what period?
Amount of cover
Type of premium
Personal Details
Title
First Name
Last Name
Date of birth
Do you smoke?	No Yes
Email address
Home phone
Work phone
Mobile Phone
Is this a joint application?	No Yes
App. 2: Title
App. 2: First Name
App. 2: Last Name
App. 2: Date of birth
App. 2: Do you smoke?	No Yes
House Number
House/Flat name
Street
Area
Town
County
Postcode