No
one becomes ill intentionally but if it happens it
can be upsetting for many reasons. For one, you have to deal
with the illness of a loved one, but you also might
have to worry about a loss of income. If you don’t
plan ahead you won’t be prepared for the
unpredictable. This is when critical illness cover
can come to your
rescue.
Let us understand what illness insurance is all about. Basically
there are a range of policies designed to provide a monthly
income if you are unable to work due to sickness, accident
or injury. There are some that will cover you till you are
able to re-join the workforce.
Critical
Illness or 'Serious Illness Insurance' pays out a lump
sum if you are diagnosed with one of a number of specified
'critical' illnesses during the term of the policy. The critical
illnesses you are insured against will be specified in the
documents provided by your life insurance company. You are
free to use the lump sum payment the way you like.
You should select a policy that suits your specific concerns
for the future, and that covers you for the things that are
important to you and your family. Many policies have a crucial
option called Critical illness cover. It provides coverage
and protection to your family just in the insured becomes
critically ill and is rendered unable to earn an income.
While
taking the life insurance cover you have to first decide
upon an amount that would be enough as a payout to
your family in case you become seriously ill. You will have
to take in account how much you will require in that situation
to take care of expenses like bills, loan
payments, credit
card payments, mortgage or rent, even expenses that you have
to pay on a regular basis, such as food and clothing. Look
out if your plan has a death benefit, since a critical illness,
such as cancer, may result in death of the insured. Before
you make the final decision make sure you know which critical
illnesses are covered by the policy. You may not qualify
for coverage if you are ill due to something not listed in
the critical illness cover policy. The longer the list of
illnesses covered, the better the policy. Your selected life
insurance company will provide a full list of the illnesses
covered within their Key Feature Document.
Various types of critical illness policies are available
in the market that can either be taken as an optional extra
with a life assurance product or can be purchased separately.
One can opt for different bases for cover ranging from premium
levels guaranteed from the outset to premiums which are reviewed
every five or ten years. Usually policies taken out today
are on a guaranteed basis. Once a premium is decided during
underwriting, it cannot change for the duration of the policy.
Initially
you may find that costs seem to be higher with a fixed
rate policy than a policy that may have its premiums
reviewed. However, the plan can be budgeted for since it
is guaranteed that the premium will not increase in the future,
even if the client’s health starts to deteriorate.
Fixed premium policies tend to exist only for a set period
of time. Policies that give cover during the whole of an
investor’s life will usually have a renewable premium.
For instance the premium might increase after ten years.
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