Critical Illness Cover

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 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 cost.

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.
  
  

• 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 lifetime.

Decreasing protection: Here the amount paid out decreases every year in accordance with the amount that needs to be repaid on repayment mortgage.

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 with inflation.

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 the premiums.

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.

Joint cover

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 disabled.

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.