You may be aware that your private health insurance plan supports you financially if you get sick or injured. But what if you’re diagnosed with a life-threatening condition such as cancer or heart attack, and your standard health insurance plan doesn’t provide you with enough coverage?
In such a serious health event, having Critical Illness insurance in place might be helpful. Here’s what illness insurance is, how it works, and why you need it.
What is Critical Illness Insurance?
Critical illness insurance is a type of life insurance policy that provides you coverage if you’re diagnosed with a serious illness or condition listed on the policy. This type of insurance policy is meant to supplement a standard health insurance plan in the event of a big health emergency.
How Does Critical Illness Insurance Work?
Critical illness insurance works by paying a tax-free lump sum if you or your loved one is diagnosed with a life-threatening health condition. The idea behind this policy is that you may not be able to afford the costs of treatment and recovery if you’re hit with a serious health emergency. You may also not be able to work and earn an income.
The lump sum amount paid out by your insurer will help you deal with this scary situation. You can use the proceeds however you like—pay for out-of-pocket medical costs, household bills, mortgages, child care, etc.
To successfully claim the benefit, you have to pay a monthly premium over the agreed term length. Policy terms typically range from two to 50 years. The amount of monthly premiums and the benefit are decided when you take out the policy.
Worth nothing is that illness insurance does not provide life-long financial support. Rather, it grants a one-time payment when the policyholder is diagnosed with a critical illness listed on the policy.
What Illnesses Does Critical Illness Insurance Cover?
The illnesses covered will greatly vary between different insurance providers. The most common conditions and illnesses covered include:
- Certain types of cancer
- Heart attack
- Major organ failure
- Alzheimer’s disease
- Parkinson’s disease
- Traumatic head injuries
- Loss sight
The more severe your condition is, the more likely you are to receive a benefit. However, critical illness insurance generally does not cover chronic diseases like asthma, diabetes, and multiple sclerosis. Any pre-existing condition is also not covered.
Why Do You Need Critical Illness Insurance?
Critical illness insurance is good for you in many ways. Below are the benefits of investing in a critical illness policy:
1. Enhanced Medical Care
Critical illness insurance gives you peace of mind knowing that if you or your family member gets critically sick, you’ll have the money to spend on enhanced medical care.
Critical illnesses typically require extensive treatment and care. Without this type of insurance, you may find it difficult to pay for those bills, especially if you lack a savings account or an emergency fund.
2. Savings Protection
When a critical illness strikes, it can deplete your savings. This is because you would have to spend your savings on medical costs as well as day-to-day expenses.
At such times, a critical illness insurance policy comes in handy. It pays out a lump sum to offset the potential financial burden, eliminating the need to use your savings.
3. Income Replacement
If you become seriously ill and unable to work, the payout from critical illness insurance can replace your income. This holds true especially if you don’t have an employee benefits package to tide you over an extended time off work.
You can use the funds to pay for daily living expenses, allowing you to focus your time and energy on recuperating rather than struggling to pay the bills.
4. Debt Repayment
The payout can be used to ward off debts, including nonmedical expenses such as mortgage repayments, business loans, and other liabilities.
Terminally ill patients might need a lot of retrofitting to speed their recovery. You can use these funds to modify your car to carry a wheelchair or scooter, install lifts in your home to be able to navigate staircases, and so much more.
No one is immune to a critical illness and it’s better to be safe than sorry. Because critical illnesses are associated with exorbitant treatment and care costs, it’s worth taking out this type of policy.
Illness insurance can cushion you from a possible bankruptcy should you or your loved one become terminally ill.
Still have questions? Schedule an appointment with a licensed insurance agent for more information including critical illness insurance quotes.