Critical illness insurance is a policy that pays the policyholder if they contract a particular disease. It’s also known as a dread disease policy because it covers dreaded conditions, such as cancer and heart disease.
The diseases are highlighted in the policy so you’ll know which diseases are covered. As the policyholder, you must survive for a particular period for the policy to become active. This is the survival period, and it varies by company.
Optional Coverage
Critical illness coverage isn’t mandatory. It only pays if you contract a specific illness, so you can’t use it to pay for general medical expenses. If you’re at high-risk for a terminal disease, then you might want to consider this policy. In most cases, the policy will pay for medical bills directly to the provider. But in some cases the policyholder will receive cash. The policyholder can use the cash in any way they see fit. If receiving cash, then it might be paid immediately upon diagnosis. In a standard policy, the policyholder receives a pre-determined amount.
If the money is going directly to the healthcare provider, then you’ll likely have to select a specific hospital where you’ll receive treatment. Alternatively, you might be able to get coverage that pays for travel and accommodation expenses when traveling for treatment.
Benefits
No one wants to have a critical illness. But at least with critical illness insurance, you’ll receive financial assistance. Benefits include the ability to pay for treatment and care, the ability to replace lost income, and the ability to pay for lifestyle changes caused by the illness.