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Critical illness cover is not cheap, but it's essential

 

LET US discuss or shed some light on modern medicine and its impact on financial planning.

There is a high probability of someone being diagnosed with a critical illness today and there is a high probability of his survival.
However, survival comes at a cost.

Let us look out for a solution called as "critical illness insurance". Critical illness insurance is an indemnity insurance which pays the face amount of the policy to the insured in a lump sum upon the diagnosis of specified illness.


We can even name it as a loss of income insurance. This was designed by Maurice Barnard, brother of Christiaan Barnard.

Medical insurance will hopefully take care of all the direct expenses of the hospitals and pharmacy bills. But the lump sum money which comes upon the diagnosis of critical illness might help them to take care of liabilities and responsibilities of family.

Having a critical illness insurance plan can offset some of the financial stress and help an individual focus on recovery.

A critical illness plan protects your income. We need critical illness benefit not because we are going to die but because we are going to live! The difference between health and medical insurance and a critical illness benefit is your medical insurance pays for your ongoing medical expenses. A person suffers a heart attack; the medical insurance company will pay for all the covered expenses in the hospital. Your critical illness benefit, on the other hand, is one-time lump sum payment upon diagnosis of illness. It does not depend upon severity of the sickness. One could have a heart attack or cancer or stroke; the critical illness benefit will pay the entire amount, as long as, under the medical terminology it is classified as a critical.

But we should absolutely not replace medical insurance with critical illness insurance as they both have different benefits and they complement each other.

The benefits of including critical illness in our financial planning is to provide a lumpsum funds. This helps us to retrain for a less stressful career and lifestyle which will reduce or eliminate debts.

Lumpsum money helps us pay off our mortgage balance if we suffer from any of the critical illnesses such as a heart attack, stroke or cancer. Finally on the event of a critical illness we can be rest assured that all your routine financial obligations are met.

Having a critical benefit insurance is costly, but it is costlier if you do not have it.

The premiums are based on age, sex and health. Factors like smoking and family history play a very significant role in our critical illness benefit. People with family history of diabetes or heart attack or cancer run a 40 per cent higher risk of contracting one of the three major sicknesses.

Critical illness is costly living benefit and since the probability of claiming on a critical illness policy is much higher that life insurance the cost of the policy is also higher.

Critical illness insurance is becoming more expensive than a life insurance because with medical advancement because of which chances of survival are higher today. Critical illness insurance is not cheap, but it is an essential part of financial planning.

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