Things To Consider Before Purchasing Critical Illness Insurance

Life is full of uncertainties, one of the most catastrophic being critical health illness. Mental or physical, health illnesses take a major toll on the lives of the patients and their family members. While a lot of critical illnesses are curable now, they do put a lot of financial pressure on the patients until they fully recover.

Right from making mortgage repayments to paying utility bills along with taking care of medical expenses, patients and their families need to cater to multiple expenses while waiting for the concerned illness to be cured.

This is why people opt for critical illness insurance that provides them with financial cushioning when they encounter illnesses and the times get rough.

So, what is critical illness insurance?

What is critical illness insurance?

As the name suggests, critical illness insurance is a type of insurance policy that provides financial support to the insured if they are diagnosed with one of the illnesses listed in the policy. Here, the insured individual or their family members receive a one-off tax-free payment depending on the plan chosen and the premium paid.

Critical illness insurance allows you to make payments while you are unable to earn due to your illness, including paying your mortgage, rent, or incurring medical expenses until you get cured. If the insured suffers from an illness listed in the policy, they are paid the cover amount only once, after which the policy ends.

The specific illnesses and health conditions covered by the policy are different for different insurers. While some insurers would cover you for as many as 50 different illnesses, the others would be more limited in their approach. Make sure you go through the illnesses covered by the policy before purchasing it.

Here are some of the most common illnesses and health conditions covered by a critical illness insurance policy:

• Heart attack

• Stroke

• Cancer (specific types and stages)

• Multiple sclerosis (and similar conditions)

• Organ transplants (for specific organs)

• Parkinson’s disease

• Traumatic head injuries

• Alzheimer’s disease

• Permanent disabilities due to illness or injury

Important considerations before purchasing critical illness insurance

Here are some of the most important things you should consider before purchasing a critical illness insurance policy:

Know the purpose of the insurance

Before you purchase critical illness insurance, it is important to know what you would be using your cover for. People often get critical illness insurance for mortgage repayments and medical bills. Take into consideration all non-negotiable expenses that will be affected if you encounter a critical illness and purchase the policy accordingly. This will make sure that you and your family member get the support that is required the most. Moreover, make sure you consult relevant experts before purchasing a policy. For example, if you are getting a critical illness cover related to cover your mortgage, consult your mortgage broker before finalizing your decision.

Choose the most suitable type of policy

Depending on your budget, circumstances, and needs, make sure you choose the most suitable critical illness insurance policy. There are many different ways in which you can get yourself financially covered with the policy. Most people purchase a life insurance policy along with a critical illness rider. This takes care of their expenses in the event of critical illnesses and also pays their family after they have passed away. However, this is a more expensive policy.

If your budget is limited, you can opt for combined life insurance and critical illness insurance policy. Here, you (or your family) will be paid only once, either when you pass away or when you encounter a critical illness. If you already have a life insurance policy, you can choose to have a stand-alone cover for critical illness to strengthen the policy.

Know the illnesses covered in the policy

Do not make the mistake of purchasing a critical illness insurance policy without knowing all the illnesses covered in the policy. If you have a history of a specific illness, make sure the policy covers the same. If there is no such medical history, choose a policy that covers a good number of critical illnesses that are common and more likely to occur as compared to the ones you are less likely to encounter in your life.

Know the difference between traditional and severity-based critical illness cover

Understanding this difference will help you choose the right insurance policy. Traditional critical illness cover would provide you with the entire pre-decided amount if you suffer from a critical illness listed in the policy. On the other hand, severity-based critical illness cover would provide you with financial assistance based on the severity of the illness. This means that you would be paid more if the issue is more critical and less if it is not too severe. Severity-based critical illness cover is generally cheaper than the traditional cover.

Consider your medical history and existing medical condition

Your medical history and current medical condition play a very important role in determining the coverage you will receive and the premium you will be required to pay. In most cases, existing health conditions are either excluded from the policy or are included at a higher premium. It is advisable to get critical illness insurance when you are healthy as it would provide you with more benefits and a better pay-out.

Consider your existing financial situation

Never be too ambitious while purchasing a critical illness insurance policy and keep your existing financial condition in mind. If you do not have any outstanding debts and are financially sound to cater to most of your expenses, you can choose a lower level of critical illness cover that pays you a limited amount. On the other hand, if you have debts to pay and an illness will have a considerable impact on your expenses, it is advisable to go for a higher level of critical illness cover that pays you a substantial amount.

These were some important aspects worth considering before you purchase a critical illness insurance policy. Always keep the financial needs of your family and yourself in mind before you lock in on a policy and opt for a suitable cover.

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