What is critical illness cover?
This kind of policy pays a tax-free lump sum out in the event that you become critically ill. Each policy covers a specific range of conditions but most of the more common serious illnesses, such as cancer and heart attacks, are included. In order to qualify for your payment, you will usually need to survive with the condition for one month, although this varies from policy to policy.
Who needs it?
While many people don't consider critical illness insurance until they become parents, it can be a useful protection for many different people. For example, if you have financial commitments such as a mortgage, then having this kind of protection in place can give you peace of mind that you would be able to clear these debts if you do become seriously ill.
Critical illness insurance or critical illness cover is an insurance product, where the insurer is contracted to typically make a lump sum cash payment if the policyholder is diagnosed with one of the critical illnesses
listed in the insurance policy.The policy may also be structured to pay out regular income and the payout may also be on the policyholder undergoing a surgical procedure, for example, having a heart bypass operation.
The policy may require the policyholder to survive a minimum number of days (the survival period) from when the illness was first diagnosed. The survival period used varies from company to company, however, 28 days and 30 days are the most common survival periods used. In the India/UK /Australian Etc market, survival periods are set between 8 – 14 days.
The contract terms contain specific rules that define when a diagnosis of a critical illness is considered valid. It may state that the diagnosis need be made by a physician who specialists in that illness or condition, or it may name specific tests, e.g. EKG changes of a myocardial infarction, that confirm the diagnosis.