Critical Illness Insurance

Why would a claim not be accepted by an insurer?

Some of the common reasons why an illness claim wouldn’t be paid out include:

• Pre-existing medical conditions Many policies will not cover illnesses that arise from pre-existing medical conditions.
• The exact illness is not covered. Most critical illness policies will have a set list of what conditions are covered. If you don’t check the exclusions in your policy, you’ll be in the dark if it comes time to make a claim — always know what is and isn’t covered.
• Nondisclosure. Your claim can be declined if you failed to disclose a pre-existing medical condition, meaning if the sickness or injury started or was diagnosed before the insurance was purchased.
• Self-inflicted. Any injuries that were caused by the person insured from attempted suicide or any other situation would typically result in a rejected claim.

What are the key features of critical illness insurance?

Critical illness insurance allows you to concentrate on recovery instead of finances if you’re diagnosed with a serious illness. Common features include:

• Coverage for common critical conditions and illnesses. Some policies have coverage for over 30 different illnesses. If you receive a diagnosis, you can begin the claim process.
• Access to premium treatment. Some insurers will also provide access to medical specialists, as well as other support services.
• Lump sum payment. This could range from $25,000.00 to to over $2 million (if fully underwritten) depending on the illness.
• Wider range of coverage. With higher premiums, the range of covered conditions increases to include things like organ failure, HIV, loss of independent existence or loss of senses.
• Children can be insured. Some insurers bundle the policy with added coverage for your children.

Are critical illness premiums tax-deductible?

Generally, premiums paid toward critical illness insurance are not tax-deductible. However the benefits paid from the claim are tax-free. Talk to your tax advisor to verify the tax benefits for your specific situation.

When would a critical illness policy be canceled?

Consult the terms and conditions for your plan for a full list of circumstances, but be aware that your policy will likely end if:

• The policy is canceled.
• You are paid out the full amount of insurance benefits.
• The life insurance coverage that the critical illness insurance is attached to ends.
• Non-disclosure of important details (a pre-existing medical condition) when you apply.
• Premiums aren’t paid.
• The termination date is reached — either as part of the policy or age of the insured.
• A fraudulent claim is made.
• The individual dies.

Traps to look out for when it comes to critical illness insurance

• An added cost. If you’ve been looking at general insurances, you may find that critical illness insurance is added in as an extra. This means you should consider if you really need this supplemental protection so you’re not over extending your finances. Read our guide to learn more about what to consider when purchasing life insurance.
• Pre-existing conditions. If you’re already in poor health, or you’re a smoker, then odds are good you’ll be paying high premiums — that’s if you can even find coverage. So, if you’re already suffering from a critical illness, this type of insurance may not make the most sense because you won’t be eligible to claim for a pre-existing condition.

Is critical illness insurance worth it?

Critical illness insurance is important to consider for multiple reasons. It can help you cover the costs of bills, childcare, groceries and other expenses like mortgage payments or rehabilitation while your incapacitated.

Essentially, critical illness is a useful form of life insurance that can protect your assets and allow you to continue with your way of life if you’re ill and unable to work.

FAQ

• What is not included in critical illness insurance?

  Your claim may not be eligible for payment in certain circumstances:

  • If the condition is a result of a self inflicted injury.
  • If the illness is a result of a previous medical condition.
  • If the application was made on behalf of another person.

• Is critical illness insurance the same as disability insurance?

  They’re similar insurance products, but they do differ slightly.

  In the event of serious illness or injury, critical illness insurance pays out a lump sum that can be used to pay debts or medical bills, make home modifications or be used as an income.

  A disability policy pays out a monthly income (usually 60% to 85% of your paycheck) in the event that the insured is injured and unable to return to work — the money can be used pay monthly expenses.