What is Critical Illness Insurance?

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Critical illness insurance is a type of insurance which will pay a lump tax free benefit to the insured if he is diagnosis of one of the critical illnesses covered by the policy. The benefit is intended to help insured persons maintain their quality of life and financial independence after suffering a life-threatening illness.
Be sure to understand that critical illness insurance is not
1. based on the inability to work or the death of the insured.
2. needed to be a specific expense that is incurred to qualify for the benefit.

It is designed to pay a lump sum benefit when a person is diagnosed with a covered condition and subject to a waiting period.
This type of insurance creates a great deal of financial flexibility for insured who suffers a major illness.
Critical illness insurance can fill the gap left by more traditional forms of insurance, such as
1. Life Insurance is designed to provide financial assistance to surviving family members after the death of the insured. Payment of the benefit is made as a lump sum.
2. Disability Insurance is designed to replace income loss that results from a disability arising out of an accident or sickness.
(a) It pays a percentage of the insured's income.
(b) It pays after a waiting period.
(c) It pays for a defined benefit period. Not everyone qualifies for this type of coverage.

3. Medical Insurance is designed to reimburse specific medical expenses incurred by the insured. Medical Insurance usually contains both
(a) Deductibles and
(b) A co-insurance requirement. The effect of these factors is that insureds are required to pay part of these expenses.
Now you can see that critical illness insurance is a need for insurance that paid a living benefit to the insureds who survived a major illness to off set the lost of income and pay additional expenses.

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