A leading cause of death and disability worldwide is
critical illness and injury. How to manage and treat systemic inflammation,
hyperglycemia, heart ailments or kidney failure or even Alzheimer is quite
literally, a million dollar question.
Although many do hold insurance protection, many a
time they are left in the lurch when major health issues such as a stroke or
cancer occurs with no coverage at all. In America about 1.3 million new
cancer cases are diagnosed each year; every 29 seconds someone suffers a
coronary event; alarmingly every 45 seconds someone suffers a stroke.
Critical illness cover gives the policy holder the
much needed solace and 'peace of mind' when major illness strikes. Critical
illness insurance provides cover for the members and their family should they
suffer any serious illness.
Critical illness cover (CIC) pays out on diagnosis
of a specified condition during the policy term, after surviving at least for
fourteen days ( the stipulated number of days may differ according to the insurance
company and type of policy).
Critical illness insurance coverage
Critical illness cover should be suitable for
anyone who shall suffer financially if he/she were affected by a critical
illness so as to permanently and totally disable them. Critical insurance
coverage should also help fill the gaps and cover the costs related to recovery
from major illnesses.
Income protection feature is also
available and it pays a regular amount so as to replace one's income should he/she
become too ill to work. A combined critical illness insurance policy should be
the right plan for an individual and family as it pays a lump sum if they are
diagnosed with an illness or critical condition and covered by the policy.
Additional assurance of critical illness cover
Sometimes a person may be suffering
from an illness that can be treated relatively easily. This does not affect the
quality of life over long term. But there are times when he/she may suffer from
such an illness that can become permanently and totally disabling affecting the
rest of the life. In such cases, it becomes important for the client to receive
a lump sum to pay off the mortgage and make required modifications in their
homes; in addition to meeting the expenses for medical treatment.
This policy can help reduce
financial worries as it can pay off mortgage or moving house if one is wise
enough to choose inflation linked or decreasing policy. Children are covered
for free under this policy. The critical illness cover can be combined with
life insurance and one can enjoy waiver of premium as well.
In case, a child is diagnosed with critical
illness and the parent has to stay in this hospital many miles away or should
visit them everyday, critical illness policy includes benefits that would cover
such circumstances without affecting one's personal benefits and at no extra
Essential terms and conditions of critical illness cover
- If one stops paying premium for the critical illness
cover, then they will be not covered when they need it most necessarily.
- Any cancellation in the plan does not warrant any
refund of premiums paid so far.
- The plan pays only for the illnesses covered under
the policy and not for others.
- The claim is paid if the person lives for at least a period
of fourteen days after being diagnosed.
Illnesses covered under critical illness cover:
- Aplastic anemia, bacterial meningitis, benign brain
tumor that results in permanent symptoms, blindness that is permanent and
irreversible, life threatening cancer except skin cancer, cardiomyopathy,
coma with permanent symptoms, permanent and irreversible deafness, heart
attack of specified severity, HIV infection if caught from blood
transfusion or a physical assault or at work, kidney failure requiring
dialysis, liver failure, loss of hands or feet and speech, and loss of
independent existence, multiple sclerosis, motor neurone disease,
paralysis of limbs, progressive supranuclear palsy, Parkinson's disease,
severe lung disease, or stroke that results in permanent symptoms,
terminal illness, third degree burns where atleast 20% of the body's
surface area is covered, traumatic head injury, permanent and total
disability, and surgeries such as aorta graft, by-pass grafts, heart value
replacement or repair.
- As every assurance policy contains definitions of
each of the illnesses listed, one would essentially need to ensure that
their condition matches with the definition of the policy.
Quantum for critical illness insurance cover
The amount of critical insurance
cover will vary from one individual to another. However, it is construed that
an emergency fund equivalent to one time of one's annual income should be
sufficient. As such one will need to pay out-of-pocket expenses and it should
be enough to begin with.
How expensive is critical illness cover?
The price of critical illness
cover should be normally twice or thrice the price of a life insurance policy.
The reason for this is that a person is much more likely to suffer a critical
illness than die during such a period.
Insurance companies calculate the
premiums after assessing the risk of the client making the claim. A
whole-of-life critical illness policy may be less than life assurance, as one
will die but might not suffer critical illness all the time during their
Types of protection
Decreasing protection: Here the amount paid out decreases every
year in accordance with the amount that needs to be repaid on repayment
Level protection: The amount paid is fixed and does not change even
if one starts paying the premiums. It simply means that it will not keep up
Inflation-linked/ increasing protection: The premium payments keep
rising every year in keeping with the rising prices or inflation.
Critical illness life cover
When life cover is included in
the policy for critical illness, the beneficiary receives the payout when the
life insured dies during the term of the policy.
Permanent health insurance is
designed so as to replace one's income; it will naturally stop at the time of
retirement. Whereas critical insurance cover can be bought on a whole of life
basis, such that the cover will continue until the client dies and stop paying
Critical illness cover and life insurance
A life insurance policy is one in
which the benefit will be paid only after the policy holder dies. In some
policies, if the client is terminally ill and might die within twelve months,
the benefit is paid.
Whereas in the case of critical
illness cover, the benefit is paid to the policy holder should he/she be
diagnosed with any of the various serious illnesses that can leave them
permanently and totally disabled.
While the life insurance policy
is based on how likely the policy holder is to die during the term of the policy,
the critical illness cover is based on how likely the policy holder is to
suffer from one of the stated critical illnesses during the term of cover.
The cost of critical illness
cover is higher than life insurance as one is likely to suffer a critical
illness than die during a set number of years.
Most of the time, people take a
critical illness policy that also includes life insurance. This way they can
get a lump sum benefit on either the death of the policy holder, with them
suffering a critical illness and becoming permanently and totally disabled.
Critical illness cover and permanent health insurance
It should be ideal for someone to protect their income with a permanent health insurance policy that has
sufficient cover for critical illness to at least repay their mortgage. This is
because, most often than not, people go for critical insurance cover to repay
their mortgage and pay for medical treatment or to alter their homes should
they become seriously ill.
Although it would be best to take
the maximum income protection so that there is enough critical illness cover,
in reality many cannot afford this and they work out what they can afford
according to their priorities.
Stand-alone critical illness cover
Here, the critical illness policy
will only pay the benefit amount when the client suffers critical illness or
becomes permanently and totally disabled. A combined policy is a lot more
economical than a stand-alone policy. But when one is single with no dependents,
they may want a stand-alone policy and they may not even go for life insurance.
The joint life assurance or critical illness
assurance will pay a lump sum benefit to the first of either one partner when
another dies, or suffers a critical illness or becomes permanently and totally
The benefits here are usually paid in full once
and then the policy ends. But it is also possible to have a life cover that
continues after critical illness claim has been made. However, such policies
are offered only by a limited number of assurance companies and so they
naturally tend to be more expensive.