Updated: Oct 14, 2020
So, what is critical illness insurance? To put it as simple as possible, critical illness insurance is an insurance product that will pay you a lump sum of money, tax free, if you are diagnosed with an illness that is covered by your policy.
Illnesses range from cancer, to Alzheimers. But, the top 4 critical illnesses that are covered by every policy are: cancer, heart attack, stroke, and coronary bypass.
If you were to be diagnosed with one of the "Big 4", you would receive a lot of money, tax free.
Do I need it?
Being diagnosed with a critical illness can pack a huge punch on your finances. Whether it be your savings, or even making you unable to return to your job to have an income, being sick can cause unwelcome stress in a time where you need to rest.
If you have sat down and looked at what you currently have in place for insurance (group benefits, disability plan, etc), you need to ask yourself: Will I still be able to meet my retirement and other financial goals if in 5 years I am diagnosed with an illness?
Ask yourself if you can afford the loss of income. Often, the answer is no.
Critical illness insurance may be just what you need to help protect your family and yourself.
What do I do with the money?
Unlike disability insurance, you have the freedom to do what you would like with the benefit you receive from the insurance company. It can be used for any of the following reasons:
Medical services that are not covered by your health care plan, or government.
Treatments that are not covered
Daily living expenses, enabling you to focus on getting better and not worrying about the stress of money
A vacation for you and your family or friends to recuperate
What if I don't get sick?
There's a huge chance that you won't be diagnosed with a critical illness and you might feel like you wasted a ton of money on premiums over the years. There is a really cool feature called 'Return of Premium'. Depending on your insurance policy you might be eligible to add on this feature.
Return of Premium means that if you never made a claim on your policy you can receive all of the premiums back that you have paid over the years. Think of it as a savings plan.
If you're younger, this is definitely something that you should look into.
If you are thinking about purchasing insurance, and you aren't sure what you should start off with, think about critical illness insurance.
More and more people are surviving life altering illnesses than ever before. If you have critical illness insurance, your finances are one less thing you have to worry about.