Critical Illness Cover and Life Insurance: Necessary Protection for Consumers
Critical illness cover can be purchased separately or as a rider to life insurance. This cover is intended to pay benefits in the event that the policyholder is diagnosed with specified serious illnesses during the coverage period. When critical illness cover is combined with a life insurance policy, the covered individual pays one premium for both covers, allowing more accurate budgeting and management of available funds.
What is covered
The critical illness policy or rider will spell out the exact conditions covered. Generally, cancer, coronary artery bypass surgery, heart attack, stroke, kidney failure, major organ transplant and multiple sclerosis are covered at a minimum; other policies may add coverage for certain other diseases or enforce strict requirements in order to pay out benefits for the covered ailments. In most cases, policyholders must be between the ages of 17 and 70 in order to qualify for this cover and must not have been previously diagnosed with any of the covered illnesses. Critical illness riders can be added to term and whole life policies and typically increase in cost as the age of the applicant increases.
The application process
Applicants for critical illness cover must fill out an application form detailing past and current health issues for themselves and members of their immediate family. The application is then reviewed and evaluated and a premium amount determined based on health, age, and whether or not the applicant uses tobacco products. Applicants should be scrupulously honest in filling out this application, since failure to provide accurate and truthful information can render the entire policy invalid. The policy must usually be in effect for three months before any claims can be made against it.
Critical illness cover can provide much-needed funds during a time when policyholders may be short of money and out of work for an extended period of time. Benefits are typically available one month after the diagnosis is made and the claim is approved, allowing access to funds rapidly and providing financial security when it is needed most.
Some combined life insurance and critical illness policies pay only once; a claim for critical illness or disability can essentially take away the life insurance cover, leaving the policyholder’s beneficiaries vulnerable in the event of death. The cost of acquiring new life insurance coverage can be catastrophically high for patients under treatment for covered critical illnesses. In order to protect against these eventualities, applicants should read the fine print and arrange a plan for the worst case scenario.
While the cost of this cover can be discouraging, not having any kind of cover can leave individuals vulnerable in the event that they become seriously ill and require financial support in order to meet their obligations. Financial experts recommend maintaining both life insurance and critical illness cover in order to protect assets and provide funds when major illnesses arise.
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