Critical Illness Insurance Policy

By: EconomyWatch   Date: 26 May 2010

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Critical illness insurance becomes a lifeline of sorts and offers financial cover to a family and beneficiaries in case the policyholder suffers critical illness or death. A general health insurance policy has an upper limit for payment of indemnification. Covering the medical expenses of a person who suffers critical illness is difficult. It may cost over and above the total face value amount of a general health policy. High risk factors coupled with the ever increasing cost of medical treatment makes it vital for individuals to buy a critical illness cover.

Remember, a person is more prone to suffer critical sickness than death. So, the demand for critical illness insurance is highly increased in recent years. This surge in demand has forced insurance providers to reduce the cover prices pertaining to critical illness insurance.

What Does Critical Illness Insurance Policy Cover?

A critical illness insurance policy starts to pay out as soon as the sickness is diagnosed. The policy will pay for the medical tests, the treatment and for any other daily expenses.

Usually, an insurance company conducts comprehensive medical tests of the applicant before confirming the critical illness insurance policy. Factors that are checked include the individual’s health record and family’s medical history. The insurance company can reject the application in case the individual does not disclose correct personal information or family’s medical record.

A basic critical illness insurance policy covers five to six sicknesses such as follows:

  • Cancer
  • Traumatic stroke
  • Quadriplegia
  • Loss of limbs
  • Heart attack

Many insurers do not cover major illnesses such as HIV/AIDS, angina, drug abuse and self-caused injury. It is best to read the policy document to understand the extent of cover.

Group Critical Illness Insurance

A group critical illness insurance policy is meant for employees who work in the same organization. A group critical illness insurance policy offers several advantages vis-à-vis an individual policy, especially when it comes to higher coverage and lesser premium. The policy of the insurance company and the size of the group determines the terms and conditions of the policy.

A critical illness insurance policy should not be mistaken as cheap, but it is definitely affordable. In some countries, tax waivers are offered on the annual premium amount paid for this policy. One should opt for a cost-effective policy that extends cover for all major sicknesses.


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