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When Do You Need Critical Illness Insurance?

Critical illness insurance is an insurance policy designed to provide you a tax-free lump sum payment should you be diagnosed with any of the critical illnesses covered in the policy, such as stroke, heart attack, certain types of cancer, and multiple sclerosis. However, payments are not always guaranteed and you should meet certain criteria to make a claim. The seriousness of the condition would be assessed and diseases which you already had or chronic conditions that could prevent you from working will not be eligible for coverage.

Value

The upside with critical illness is that you can do whatever you wish with the money you claim. You can use it to pay off your debts, the mortgage, or even spend it on a long-dreamed vacation. Moreover, you can use it to pay for treatment or recuperation costs, travel expenses, and for any home alterations needed in response to your disability such as installing lifts.

When Do You Need Critical Illness Insurance?

  • If you don’t have sufficient employee benefits package to provide coverage during time off from work due to illness or disability
  • If you don’t have enough savings to support you if you suddenly become ill
  • If you are self-employed
  • If you have a high-risk job

When Do You Not Need Critical Illness Cover?

  • You have adequate savings or another source of income to pay off your existing obligations
  • Your spouse can cover your living expenses and other shared financial obligations such as mortgage payments

Factors that Affect the Price

  • Family medical history
  • Age and gender
  • Health condition
  • Amount and extent of coverage
  • Any known health risks or high-risks occupations and hobbies

Restrictions

Just like any other types of insurance policy, critical illness has restrictions that could prevent the payment of benefits. Under certain conditions specified in the policy will payments only be made. For example, a diagnosis of stroke does not automatically guarantee payment until the damage persists for more than 30 days, just like a diagnosis of cancer does not warrant payment if the cancer has not spread or is not considered life threatening. Some policies also include certain number of days wherein the insured should remain ill or should survive after the diagnosis. Furthermore, some policies limit payouts depending on the age. For example, people who are over 75 years old become ineligible to receive payments.

Conclusion

Depending only on your particular circumstances does critical illness insurance become good value for your money, although successful claims can make a huge difference when you need it most. It might be expensive to sustain this type of insurance for the long-term, especially if you have other obligations to pay such as your home. Because critical illness only pays out for illnesses included in the policy, you won’t be able to get anything if you become disabled and unable to work due to other conditions. You also have to consider how to survive if you acquired an illness which is not eligible for a critical illness cover.

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