What is critical illness insurance?
Critical illness insurance is a type of insurance policy that pays out in the event of the policyholder suffering a serious illness. If that happens, the insurer pays out a lump sum of money, and then the policy is concluded. It is designed to cover the costs of treatment, specialised equipment, and the loss of an income that can follow a serious illness.
It is important to note that not all conditions are included, and that the amount of cash that a person will receive is not pre-determined; the amount is calculated on a case-by-case basis.
Who needs critical illness insurance?
Not everybody needs to have critical illness insurance. If you have enough savings to compensate for a loss of income, or you have a partner who could provide for you financially in the event of your being unable to work, then it may not be necessary.
Additionally, it is important to remember that life Insurance and critical illness insurance offer more than just a replacement of income; they also bring peace of mind that you and your family would be financially secure, even if the worst should happen.
What illnesses are covered in critical illness insurance?
In general, most illnesses that would prevent you from working are covered but it varies from policy to policy. For example, if you were to have a stroke, then you would receive a payment. There are certain illnesses that are not covered, even if they sound scary. Some cancers, for example, would not be eligible for payment if detected in the early stages and there is a high chance of a full recovery.
When a claim is made, they are fully investigated by the insurer, and then a decision is made. In some cases, requests for payment are denied because they had not been made aware of a pre- existing condition, or the condition just isn’t serious enough.
What can you do with the money?
The answer is quite simply, whatever you like. It is a no strings attached payment. Many people elect to invest the money, so as to generate an income, while others use it to make living with their condition more agreeable. It is entirely up to you, though: once the payment is made, the arrangement with the insurer comes to an end.
What affects critical illness insurance costs?
The cost of the policy depends on various factors. The insurer will assess your age, lifestyle (smokers and heavy drinkers pay more), and your job: some positions are more dangerous than others and therefore the worker is at greater risk. The rest will depend on the type of policy you want. For example, the amount of cover you want, the number of conditions included etc.
Like all insurance, you hope you never need it. But if the worst were to happen and you became unwell and unable to work, then critical illness insurance can provide financial support and peace of mind.