Cancer, kidney failure, stroke – no one can make sure that they won’t ever contract these in their life. Buying critical insurance is one way to prepare for that scenario.
Fatal diseases such as cancer or cardiovascular diseases are a nightmare for everyone. In fact, statistics from WHO reveals that by 2040, the rate of cancer is projected to be 29.5 million, with the estimated mortality rates of 16.4 million. Death aside, there’s a well-founded fear of facing bankruptcy given the exorbitant cost of treatment. Understanding this, insurance companies propose a solution known as critical illness insurance.
What is critical illness insurance?
Definition
Critical illness insurance is a medical coverage in which the insured will receive a lump sum on diagnosis of life-threatening illnesses and diseases. These include: cancer, heart attack, stroke, coronary bypass and organ transplants.
Eligibility
In most cases, teenagers from 18 are eligible for a policy. The age limit, however, varies between companies, from either up to 75 or 100.
Rider
One can buy a standalone policy or purchase a critical illness rider that connects with his/her term insurance or health plan, which is more affordable. Yet, remember that there might be some limitations or conditions accompanying a rider.
Why do we need critical illness insurance?
As stated from the beginning, we can’t predict if or when we will suffer from these critical illnesses. Not only do they deprive us of our normal life but they also put a heavy strain on our finances. Patients get depressed as their medical bills accumulate while their savings are running out. In these cases, critical illness insurance acts as a lifeboat that can at least free you from your financial burdens.
Critical illness insurance is especially crucial for those who are the sole bread-winner of a family. In case the income-earner passes by, a critical illness policy will act as a safety net for other members of the family. Also, since critical illnesses cover hereditary ailments such as cancer, a policy might be helpful if your family members used to contract any of these.
Critical illness insurance versus health insurance
The key difference between critical illness insurance and health insurance is that while critical illness insurance will give you a payout upon your diagnosis of a critical ailment, health insurance will reimburse your medical bills.
Health insurance might not be enough because it is dependent on your company. As these days, people change their jobs very often or choose to be their own boss, a critical illness policy is more flexible.
How does critical insurance work?
As you have been diagnosed with a critical illness, you need to register for a claim of your diagnosis. Documents for this will include:
- Claim form
- Test Reports
- Medical certificate : A certificate which confirm you are diagnosed with a critical illness with specific description
- Certificate from medical practitioner: A statement which proves that your illness does not relate to any prior injuries or illnesses before your purchase (normally within 60-90 days of reinstatement)
Once you manage to get your claim, you can use the money to cover for:
- Medical services: Any medical fees including medicines and treatments
- Living expenses: Money to make up for the lost income that the insured can no longer earn
- Transportation expenses: Travel costs such as going to hospitals, installing lifts, adding wheelchairs, etc.
- Accommodation expenses: Accommodation bills in places that can help patents recuperate
How much does critical illness insurance cost?
Generally, the cost of critical illness insurance might vary. Apart from these factors, the number of illnesses in your coverage will affect your premium. The more illnesses covered in your policy, the more money you have to pay. One might apply for cancer-only coverage, which costs around $20-$25 per month for a $25,000 coverage.
One good news here is that the cost of a policy is affordable, when compared with other types such as whole life insurance. Premiums under a critical illness policy are tax-deductible as well.
Three reminders that can help you save money on critical illness insurance
1. Make sure you understand what is covered under your policy
Stipulations
Some people consider critical illness insurance as a scam since the stipulations and conditions associated with it are misleading and complicated. For example, a diagnosis of cancer might not be claimed if the cancer is in its initial period and is not fatal.
The number of illnesses
Besides, the number of covered ailments also matters because sometimes your illness (classified as a chronic disease or neurological disease) is not included in the coverage. In many cases, the illnesses covered by different companies might not be the same. You need to work very closely with your agent, and have a clear list of what is included in a plan.
The process of getting a claim might be frustrating since it can last for weeks or months, and require lots of specific documents. Alex – a policy holder shares with us that it took him one month to get claimed. “I have to go back and forth between my hospitals and agents in order to gather all the documents. It’s a real hassle.”
2. Decide how long that you will pay for your coverage
Critical illness insurance is a term insurance that you can decide upon the duration of your term. Calculate your needs carefully to decide how long that you will pay for your premium.
For example, if you are about to get married and have children, you may need some protection for your spouse and children in the next 20 years. This way, you can make sure that should you contract a critical disease, your family members can help get some support to get by.
3. Decide how long that you need to be covered by your policy
This means that you need to calculate how long you want to benefit from your policy upon your diagnosis. For instance, you might need coverage that lasts 5 years so that during that time, you don’t need to be stressed about paying expenses.
Remember that each policy might be different and so do your needs. Do your research and calculation carefully before making the final decision. Please refer to the site on Canada insurance for more information.
