Critical illness insurance is a special policy that pays a lump sum settlement to a person who is diagnosed with a certain condition. The condition has to be listed in the policy for the person to be eligible for the payout. Some conditions that may fall under this special insurance are multiple sclerosis, blindness, deafness, heart attack, stroke and cancer. Many other conditions may also fall under the policy.
The way a critical illness policy works is simple. The person who receives the diagnosis would call the insurance company to file a claim after he or she passes the survival period. The average survival period is between eight and 14 days. The survival period is the length of time an insured person must survive with the condition before the company will pay a claim. Additionally, the insurance company may ask that the diagnosis come from a medical expert who specializes in the field of the diagnosed illness. For example, the insurance company may not accept a heart disease diagnosis from a family doctor.
Once the person files the claim, the insurance company will investigate. If the person is eligible for compensation, then the insurance company will pay a lump sum settlement directly to the policyholder. Some alternative policies pay the medical providers for the services rather than the policyholder. These alternative policies are excellent for cases of cardiovascular disease and cancer because the illnesses carry large medical bills. Alternative policies are meant to protect the policyholder from having out-of-pocket expenses.
The major benefits of having a critical illness policy is that the person is covered during medical emergencies. The policy pays for medical treatment, therapy and lost work wages during incapacitation. It relieves stress for the sick person, which can accelerate that person’s recovery.
A person should evaluate his or her risks of developing an illness before taking a policy. There is a chance that he or she may not ever fall ill with an eligible illness. However, it is better for that person to be financially safe than sorry.