The insurance industry is definitely a complicated one, and the different types of coverage can get very confusing. When it comes to purchasing a Critical illness Insurance policy, you’ll want to know exactly what you’re looking at.
Critical Illness policies tend to cover any type of illness that poses a threat on your life. This can range from cancer, to any other type of condition that tends to be terminal. If you’re reaching the end, a critical illness insurance policy can be your family’s saving grace.
You should also know that critical illness insurance is not the same as Long-term care, health insurance, life insurance, or disability insurance. While all of these insurances have a time and place, critical illness insurance will not pay out unless you have a critical condition.
So, while you may have a health insurance plan in place, it might not be one that covers critical illness. There are no health insurance riders for this coverage, so you’ll need to obtain coverage on your own.
Let’s take a look at some of the conditions this insurance covers, and how the money gets paid out.
What Does It Cover?
Critical illness insurance will cover any illness that is critical. Critical is essentially the companies polite way of stating that your condition is terminal. The most common need for critical illness insurance is cancer, because a lot of cases can easily progress to the terminal level. Critical illness insurance is not limited to cancer, and can also cover any other condition that the company deems “critical.” So when you sign up for a policy, make sure you know what you’re getting into and what it covers. Read more about what is covered by critical illness insurance.
How the Money is Paid In and Out?
The way that you pay for critical illness insurance is very similar to how you pay for any other insurance plan. Depending on the rating that the underwriter assigns you, you will be assigned a premium price for the amount of coverage you’re looking for. This process may include a medical exam, so you should also be aware of that. You can decide whether or not you want to pay monthly, annually, or quarterly in most cases.
Critical illness insurance works in a similar way to life insurance when the money is paid out. Unlike health insurance, it is not exactly pay as you go. Once you are diagnosed with a critical illness, the company will assess the situation. If they deem the case applicable to their coverage, the company will pay out a lump sum of money. You should also know that payment is tax free, and that once the policy pays, your coverage is terminated. If this type of policy is paired with a term life insurance policy, once the payment is paid out, the life insurance term will likely end as well.
When the lump sum is paid out, you can decide how you want to be paid. This means that if you want the money to pay the medical expenses you can, but if you want the money to send your children through college you can do that as well. This is one of the main reasons a critical illness policy is combined with term life insurance, because you can customize what the money in the policy is for.
Recap, and Why You Might Need It?
Critical illness insurance may sound like a frightening policy, but it definitely has a time and a place. It can be useful for dealing with thermal conditions, and can allow you to dictate where your money goes when you pass away. The money is also tax free, so you will not need to worry about incurring any estate tax penalties. If you’re someone who has a mortgage, a family, and a family history of cancer, a critical illness policy might be a good idea. The premium price is generally not as expensive as long-term care. Read more about why you need critical illness insurance.