What is Critical Illness Insurance?
If you want to protect yourself and your family from a loss of income, you have a few different options. Life insurance is one of them but what if you get a serious illness which impacts your ability to make a living? That’s where critical illness insurance can step in.
Critical illness insurance will give you financial support if you receive a life-altering diagnosis. While healthcare costs may be covered, the indirect financial impact of serious illness can be devastating. Read on as we discover what critical illness insurance is all about.
What is Critical Illness Insurance?
Simply put, critical illness insurance is a lump-sum payment given if the policyholder is diagnosed with a covered illness. Common examples of this include cancer, heart attack, or stroke. This payout can then be used for whatever the policyholder needs.
The exact illnesses covered will be detailed in the policy, but usually include what you’d expect. Unlike life insurance which pays out upon death, critical illness insurance will assist you while still alive.
Why is Critical Illness Insurance Important?
Even if your basic medical expenses are covered, a critical illness usually comes with a loss of income. Along with this can be many other costs. Here are some key reasons this coverage can be a great idea.
Income Replacement – A serious illness will mean you need to take time off work for treatment and recovery. Critical illness insurance will help to replace this lost income.
Flexibility of Use – You can use the money for whatever you wish. There are no restrictions, which means you can use the money to pay off the likes of debts or everyday expenses.
Supplement to Health Insurance – Health insurance may not cover everything you need. You may need the money for drugs, home care, or specialized medical equipment.
Peace of Mind – Knowing this insurance is in place will give you peace of mind. If you do get a critical illness, you won’t have to worry as much about the financial impact.
Stages of Critical Illness Insurance
If you’re interested in critical illness insurance, here are the stages you need to go through:
Choosing a Policy – No two policies are the same, and neither are two quotes. Make sure you choose a policy that matches your budget and risk factors. Using a broker can be helpful in having an expert who can guide you toward a policy that perfectly matches your circumstances.
Medical Underwriting – You will often undergo a medical evaluation to determine both your eligibility and premium. Pre-existing conditions may affect your coverage but it’s vital to be honest about your medical condition.
Coverage and Payout – If you are diagnosed with a covered illness, you can then submit a claim. After the insurance company checks out and confirms your claim, you will receive the pre-agreed lump sum. This is, however, usually a survival period as this isn’t life insurance. That period is typically 14 to 30 days.
Factors Affecting Premiums
Everyone will pay a different premium depending on their circumstances. Here are all the factors that will go into your quote.
Age – This is often the biggest factor as younger individuals will typically pay lower premiums. This is because they are at a lower risk of being diagnosed with a serious illness. Due to this, it’s always better to get a policy sooner rather than later.
Health Conditions – Pre-existing conditions or a history of illness will result in either higher premiums or exclusions. Not fully disclosing your medical history can lead to your claim being invalidated further down the line.
Coverage Amount – The coverage amount is the lump sum you’ll receive after a successful claim. The higher this is, the higher the premiums you be. Due to this, it’s important to balance your needs with affordability.
Riders and Add-Ons – There are additional features you can enjoy, such as a return of premium waiver. These riders will increase the cost of your policy.
Smoking Status – Smokers will usually face a higher premium due to the increased risk of critical illness.
Choosing the Right Policy
Choosing the right critical illness cover isn’t just about selecting the first quote you’re given, Here’s are some tips to get the right policy.
Assess Your Risk – Consider your family medical history along with your personal health status. If you are concerned about a specific health condition, then make sure it is covered as part of your policy.
Calculate Necessary Coverage – Consider all the expenses that will need to be covered if you become critically ill. This can include the likes of mortgage payments and living expenses. This will help you choose the right level of coverage.
Compare Policies – To get the best deal for you, compare multiple quotes to find the right premium and coverage options. Using a broker is an excellent way to do this as they will answer any questions you have
Read the Fine Print – You should do this with every policy, but especially critical illness coverage. Before signing up, you want to ensure exactly what is covered and what isn’t. This will prevent you from having any nasty surprises.
Final Thoughts
By now you should have a clear answer to the question of what is critical illness insurance. It provides you with a crucial safety net. Should you be diagnosed with a critical illness, you can prevent finances from being added to all your other worries.
However, it’s vital to be careful when you’re getting coverage. You want to ensure it meets your needs and a broker can help you with this. Contact Ron Johnston Insurance today and we’ll be happy to guide you through the process.