Your Guide to Critical Illness Insurance

Getting a critical ailment can take place quite fast and it typically happens when you are barely prepared for it. You can never imagine how much the medical treatment of such illnesses is going to cost you. Is critical illness insurance worth it? Here we have put together a practical guide on various aspects of insurance coverage of critical illness.  

1. What’s critical illness insurance? 

Critical illness cover is a kind of insurance that pays out the policyholder a lump sum following a diagnosis of a certain illness. As a policyholder, you can use the payout of critical illness insurance policy to clear out your medical costs and other daily expenses such as financial support for your family. Therefore, your health can get better and need not to be concerned about how your inability to work affects you.   

The reasons why critical illness insurance is important is that it can give peace of mind if you fall critically ill financial constraints aren’t an unwelcome added worry.    

2. How does a critical illness rider work? 

With critical illness rider you will obtain a lump sum payment on the discovery of a listed critical illness stated in the policy.  

Numerous insurance companies are currently developing innovative critical illness riders that also cover lifestyle diseases.  

3. Examples of Diseases Covered in Critical Illness Insurance 

Critical illness coverage typically includes the following ailments: 

• Cancer 

• Coronary Artery Bypass Surgery 

• Heart Attack 

• Stroke 

• Major Organ Transplant 

• Paralysis 

4. Factors determining the premium of Critical Illness Coverage 

Amount of the Payout 

The higher your payout amount with additional benefits, the higher your premiums. 

Age 

The older you are, the higher your premiums. For instance, a 45-year-old getting a 20-year term insurance policy will have a higher insurance premium than a 25-year-old securing the exact same 20-year term insurance policy. 

Medical History 

The premium is lower if you are in good health without any pre-existing medical conditions. 

Smoking status 

As you might already know, smoking increases the risks of getting diseases such as heart disease, lung disease and other respiratory medical issues. Therefore, insurance providers will see this as a key factor that boosts the frequency and amount of their payouts to policyholders, hence they might raise the premium accordingly.  However, due to the other life insurance companies may decide not to insure you at all. 

5. How much critical illness cover do I need? 

How much critical illness coverage you need relies on many different factors. As a golden rule, consider how much your daily bills are, including school fees, food, mortgage among others. Once you have a clear figure from this, you might also want to go with higher coverage in order to prevent any rises in medical expenses against the impact of inflation. Having higher coverage will give you and your family additional financial security. 

6. Who needs critical illness insurance? 

There are 3 main situations when you should get critical illness insurance: 

Your employee benefits plan may not provide cover for long term leave because of critical illness.  

You are the main provider of income to your family 

You have limited savings to use when your main source of income stops. 

Our Advice 

You may be thinking critical illness insurance sounds good. However, is critical illness insurance worth it? And when to buy critical illness insurance? Firstly, you may need to evaluate how much the plan costs you and figure out the amount of payout that you will get for critical illness. Then if you are in a situation where you are unable to afford your medical costs and daily expenses without relying on others for financial support then critical illness insurance policy is certainly right for you.