Critical illness insurance

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Critical illness insurance is an insurance that makes a lump sum cash payment if the policyholder is diagnosed with one of the critical illnesses listed on the insurance policy and survives a minimum number of days (the “survival period”) from the date the illness was first diagnosed.

The schedule of insured illnesses varies between insurance policies, so make sure you know what illnesses are covered.

The “survival period” also varies between insurance companies. 30 days and 28 days are the most common survival periods but some companies have adopted a 14 day survival period.

Insurance companies insist that the diagnosis of a qualifying critical illness must be made by a physician who specialises in that illness or condition.

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Risks

The risks covered by Critical Illness Insurance are significant. For example:

In America, about 1.3 million new cancer cases are diagnosed each year, every 29 seconds someone suffers a coronary event and every 45 seconds someone suffers a stroke. (Sources: American Heart Association, Heart and Stroke Statistical Update 2003; and American Cancer Society, Cancer Facts and Figures 2003.)
In Canada, more people will experience a critical illness before they reach 75, than will die before that age. (Source: Munich Re, 2000)
In the United Kingdom, 1 in 5 men and 1 in 6 women will experience a critical illness before their normal retirement age. (Source: Munich Re, 2003)

Though relatively new to the North American marketplace, critical illness insurance is growing in popularity.

In the UK, Critical Illness Insurance is a well established form of insurance and is frequently purchased in conjunction with a life insurance policy. The sale of all insurance in the UK is regulated by the Financial Services Authority.

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