Critical illness insurance offers a financial cover to a family in case a policyholder suffers from a critical illness or dies. Although this insurance was originally meant to provide financial security for the family, the cover received can now be used to:
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Pay for the treatment and medical care costs
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Buy recuperation aids
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Pay off mortgage or other loans
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Replace the loss of income due to decreased ability to earn
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Fund a lifestyle change
Conditions Covered by Critical Illness Insurance
Originally, critical illness insurance covered heart attack, stroke, cancer and coronary artery bypass surgery. Since the early 1980s, insurance providers have been adding new conditions in an effort to provide extensive cover. Some of the key conditions that are covered under this policy are:
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Alzheimer's disease
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Kidney failure
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A major organ transplant
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Multiple sclerosis (MS)
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HIV/AIDS contracted by blood transfusion or during an operation
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Parkinson's disease
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Blindness
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Deafness
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Paralysis of limb
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Terminal illness
Types of Critical Illness Insurance Cover
There are two types of critical illness insurance cover:
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Fixed term life cover with critical illness: In this cover, the beneficiary will receive a lump sum amount in cash if a policyholder is diagnosed with a critical illness specified under the policy or dies within the policy period. The cover amount under this policy remains fixed during the entire term.
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Mortgage life cover with critical illness: This is a decreasing protection policy, where the insurance cover declines with each year during the term of the policy. This decline is roughly inline with the outstanding balance on a standard repayment mortgage.
Things to Consider While Buying a Critical Illness Insurance Cover
It is essential to consider the following before finalizing your decision on a critical illness insurance cover:
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Your mortgage amount
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The type of mortgage you have
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General living expenses of your family
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The period for which your spouse and/or children will be dependent on your income
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Extent of education commitments you need to meet
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Extent of support provided by your savings