Understanding Critical Illness Insurance
Critical Illness Insurance differs significantly from life insurance. With this coverage, you don’t have to pass away to benefit—it pays out upon the diagnosis of certain critical illnesses or specific surgeries.
Coverage Details: A Closer Look
- Payout Options:
- Lump sum or regular income (Family Income Benefit – FIB) based on the critical illness.
- Defined List of Illnesses:
- The policy pays out only for illnesses specified in your policy. Verify the policy wording for coverage details.
Is Critical Illness Insurance Right for You?
Unless you have substantial savings, Critical Illness Insurance can be crucial, especially with debts like a mortgage. Consider the potential financial impact of a critical illness and whether you can cover costs from savings.
Determining Coverage: Factors to Consider
- Financial Needs:
- Assess the sums required for scenarios like paying off the mortgage or home modifications.
- Premium Factors:
- Age, health, occupation, smoking status, coverage type, amount, and duration influence premium size.
- Family Health History:
- Premiums may be higher or certain illnesses excluded based on family health history.
Combined Policies and Total Permanent Disability Cover
- Combined Policies:
- Some policies combine Critical Illness with life insurance. Be cautious, as life cover may cease after a critical illness payout.
- Total and Permanent Disability Cover:
- Includes payout for permanent disability. Determine if it covers “any occupation” or “own occupation.”
Considerations for Total Permanent Disability Cover
- Overlap with Other Coverage:
- Critical Illness Insurance may overlap with Permanent Health or income protection insurance.
- Lump Sum vs. Regular Income:
- Critical Illness offers a lump sum, providing flexibility for debt repayment.