Critical Illness Insurance Pros & Cons

There are multiple advantages and disadvantages associated with critical illness insurance. This article covers everything you need to know about this insurance.

One of the greatest fears in every person’s life is the fear of suffering through some critical illness. Any critical disease can turn your life upside down by taking away from you the ability to earn income for your family and all your life savings to treat an incurable disease that is going to live with you for a lifetime.

But you don’t need to worry anymore because critical illness insurance is the solution to overcome all your fears. Now, you must be wondering what disabilities and diseases are covered by critical illness insurance, and what are the things that you need to consider before buying one?

Hold on, you are at the right place because in this article we will discuss in complete detail what critical illness insurance is, how it works, what are its advantages and disadvantages and whether or not the high amount you are paying to get critical illness insurance is worth it.

Critical Illness Insurance Definition

Do you often wonder what is the best insurance available out there to cover your medical emergency needs? Before we dive into deeper discussion let’s first understand what critical illness insurance means:

“A critical illness insurance is one in which the insurance company makes lump-sum payment in cash form to the insurance holders who suffer from a disease or disability mentioned in the list of different types of illnesses that their specific insurance covers.”

You are allowed to use your money wherever you want to but there are certain limits and restrictions that we will discuss in detail below.

How Does Critical Illness Insurance Works?

No matter how high critical illness insurance rates are, it will provide you financial support and stability if you face any serious injury or suffer from the incurable disease at any time in your life.

Insurance Coverage

Critical illness insurance will cover your expenses after the diagnosis of the disease. However, you need to regularly pay all the costs and premiums involved that come with your insurance package. This regular pay-off will not only help you to pay for your unexpected accident or illness but will also grant support to pay your mortgages and debts in times of need.

Insurance Rates

There are different rates of insurance packages depending upon different factors like your age, gender, health condition, etc. Normally, the insurance offers a coverage package starting from $5000 and ranging up to as high as $50,000.

Insurance Limitations

However, if you are a smoker, then you need to pay high monthly charges as compared to those paid by non-smokers. One important thing to keep in mind here is that if you have high chances of getting a particular disease, then your insurance will not include that. You might need to pay premium prices to cover that.

Critical Illness Insurance: Advantages

Now that we have understood what critical illness insurance is and how it works, let us explore the benefits associated with this insurance.

Free Insurance Coverage For Children

Some insurance companies offer complementary children insurance free when you buy their critical illness insurance. This means that by paying for the insurance of one person only, you are getting extra benefits in return.

It is therefore recommended to buy from those insurance companies that offer promotional deals and discounts to maximize the benefits.

Freedom To Freely Spend Money

Once you have paid your lump sum amount as per the specific insurance requirements, you are now free to use your money however you want to. For example, you can use it to enjoy a vacation abroad or get a higher educational degree like a master’s or Ph.D.

However, it is important to ensure that you have the right money available to fulfill your health needs in case any emergency appears.

High Investment Opportunities

It helps in generating better saving options and you can use a certain proportion of your money to invest and generate more income.

Hence, critical illness insurance rates no matter how high they might be support you in covering the amount that you have paid to avail the insurance.

Recovery from Illness

If you recover from a critical illness, you can start a normal life, resume work, etc. There will be no effect on your benefit payment.

This benefit makes it a good choice for the people who decide to opt for this insurance.

Stackable

The critical illness insurance provides unlimited coverage which gives it an advantage over disability insurance policies where there are limits and restrictions to the coverage.

So the expensive rates associated with the critical illness insurance are justified as at the time of need this insurance gives you complete coverage without fear of giving up your savings.

Critical Illness Insurance: Disadvantages

Critical illness insurance might have several advantages but it also comes with certain disadvantages which are discussed below:

Expensive

It is hard for an average person to buy critical illness insurance due to its expensive rates. Moreover, an increase in the number of diseases covered by your insurance policy directly affects the critical illness insurance rate. Even the income protection policy is cheaper than this insurance.

Therefore, most people are hesitant to buy this insurance and prefer to stay uninsured.

Unaligned Disease Definition

If you suffer from a particular kind of kidney failure but the definition of the kidney failure disease fails to match with your doctor diagnosed disease definition then your insurance policy will not cover the expenses.

Waiting Period

After diagnosis, your insurance company will not pay you immediately but after a period of almost 90 – 95 days. This means that you have to wait for a specific number of days to let your insurance company cover the expenses,

Is Critical Illness Insurance Worth It?

Many health experts and advisors recommend securing your health insurance by investing in critical illness insurance coverage. Whereas most people consider critical illness insurance rates as very high and unaffordable due to which they prefer to remain uninsured until some misfortune knocks at their door and they start regretting their decision.

Let’s begin by answering the common questions most people have regarding critical illness insurance.

Disability Payment

Critical illness insurance covers only those patients who suffer from incurable disabilities that are permanent and last forever.

Payment Amount

Your critical illness insurance covers the full amount.

Illness Types

When you purchase critical illness insurance, you sign up for a specific list of diseases and disabilities that your package covers. At the time of need, all illnesses mentioned in the policy will be completely covered while you have to pay for those not mentioned in the insurance contract.

Policy Effectiveness

The policy comes into effect after you make the lump sum payment required to claim insurance.

Bundle Deals

You can buy critical illness insurance coverage bundled with a life insurance policy.

Illnesses Covered

Critical illness insurance comes in different packages and deals. However, it does not cover all critical illnesses and is restricted to following diseases only:

  1. Stroke
  2. Heart Attack
  3. Sclerosis
  4. Alzheimer’s
  5. Transplant
  6. Parkinson’s
  7. Deafness
  8. Paralysis
  9. Head Injury
  10. Blindness
  11. Few cancer types
  12. Speaking difficulty
  13. Anemia
  14. Brain Tumor
  15. Lupus
  16. Angioplasty

Make sure that you choose the right insurance policy that covers the most common illnesses worldwide.

Allowed Number of Claims

You can only claim your insurance once. After that, the insurance expires and you have to renew it to avail of the services.

Before making the final purchase decision, it is important to keep this point in consideration that all your investment will be available for one time use only.

Alternatives to Critical Illness Insurance

Now that we have covered different aspects of critical illness insurance coverage and their importance, we are sure that some of you may still not be interested in investing in this insurance. To help you out, let’s look at other insurance options that might suit your budget and needs:

Insurance of Complete Cancer Coverage Only

Cancer is a disease that has affected almost 1 person in every 5 households. Most critical illness insurances do not completely cover expenses associated with cancer disease. Hence, it is important to invest in insurances that offer complete cancer coverage.

Insurance Deals

Some insurance companies offer customized deals that not only cover critical illness but also provide disability insurance, life insurance, etc. Hence, it is better to invest in such insurances to earn a higher payout ratio.

No Alternate Insurance

Most individuals that fall within the 20 – 30 years old age group have good health conditions and do not need any kind of health insurance. However, if you do not want to take any risks then you can choose from some cheap health insurances available.

Conclusion

Critical illness insurance has both advantages and disadvantages associated with high insurance rates that are not affordable by everyone. However, it is important to think about the fact that in absence of critical illness insurance, serious injuries and incurable diseases can cost you a loss of your entire life’s savings.

Critical illness insurance coverage can save you from going bankrupt in tough emergencies by offering you complete financial security against incurable illness. Therefore it is important to get some insurance to cover such unfortunate incidents.

The article discusses in detail how critical illness insurance works and the associated pros and cons. After a detailed analysis, we have presented our thoughts regarding the importance of this insurance and whether you should invest in it or not. Finally, we also presented you with certain alternatives that you can avail of if you think that critical illness insurance is not the right option for you.

We sincerely hope that if before reading this article you had confusions in your mind regarding the final decision about investing in critical illness insurance coverage, this guide has helped you in making the right decision based on your needs and requirements.

Nabeel Ahmad

Nabeel Ahmad

Nabeel Ahmad is the founder and editor-in-chief of Insurance Noon. Apart from Insurance Noon, he is a serial entrepreneur, and has founded multiple successful companies in different industries.

Leave a Reply

Insurance Noon is the world's leading source of insurance related content on the web, focusing on industry news, buying guides, reviews, and much more.