Contracting a serious illness or disease can be devastating – both to your health and to your finances. Should you be unable to work due to failing health, you may find yourself unable to pay for basic needs or necessary medical care, adding worries about money to worries about your health. Critical Illness Policy is designed to alleviate your financial concerns should you find yourself facing life-threatening health problems. It’s no cure-all, but if you fall prey to a bout of very ill health, at least you’ll be able to focus your attention on getting well, rather than on making ends meet.
Definition and History
Critical illness insurance provides a lump sum payment within 30 days of the time the policyholder receives a diagnosis. Such policies cover a host of diseases, including:
This type of insurance was first offered in South Africa in 1983. It has since become quite popular in Europe, Australia and Canada. Its popularity is particularly high in countries that offer nationalized healthcare. Citizens in these countries know that their healthcare bills are paid, so they take this insurance to cover living expenses while they are unable to work. Critical illness insurance policies are starting to gain popularity in the United States, where inadequate health insurance is a national problem that financially devastates thousands of families each year.
The value underlying critical illness insurance is that the money can be used for a variety of things:
Like all insurance policies, critical illness policies are subject to a host of stipulations. They only cover the conditions listed in the policy and only under the specific circumstances noted in the policy. A diagnosis of cancer, for example, may not be enough to trigger payment of the policy if the cancer has not spread beyond the initial point of discovery or is not life-threatening. A diagnosis of stroke may not trigger a payment unless the neurological damage persists for more than 30 days.
Other restrictions may include a specific number of days the policyholder must be ill or must survive after diagnosis. There may also be limits for payout on some policies, with persons over a certain age (such as 75) being ineligible for payment.
Shopping for Coverage
Critical illness insurance is often purchased by:
Policy pricing is impacted by a number of factors, including:
A number of insurers offer these policies, so comparison shopping will help consumers identify the most appropriate policy for their needs. For full article read” http://www.investopedia.com/articles/pf/08/critical-illness-insurance.asp