Critical Illness Ins. (Blue Circle Tab)

What is Critical Illness Insurance?

Critical illness insurance provides clients with a tax free, lump sum payment should they be diagnosed with a critical illness that is covered under the insurance policy. The policy can be structured in a way that replaces income to pay for mortgages, debts, or for any surgical procedure.  It is a way for an individual to ensure that any mortgage payments, debts, wheelchair accommodations, or other ancillary expenses that emerge due to their illness are paid for. The policy usually requires that that policyholder survive a certain number of days after the initial diagnosis, a period known as the survival period. In addition, some policies may require that a physician who is a specialist in the diagnosed illness be the one to confirm the result.

What Is Covered?

Critical illness insurance usually covers three primary conditions: cancer, heart attacks, and stroke. Other illnesses usually covered include multiple sclerosis, coronary bypass surgery, kidney failure, and major organ transplants. There are other more comprehensive policies that would provide coverage for loss of sight, loss of limbs, permanent loss of hearing and permanent disability that stops someone from working. The insurance policy would also specify how serious the condition needs to be in order the person to receive the benefit.

How Much Coverage is Needed?

When thinking about how much insurance coverage a person will need in case they get a serious illness, it is important to gauge the extent of the loss of income, and the potential loss of future earnings as well. A physical handicap, for example, could potentially require more or less extensive alterations such as special ramps for wheelchairs. The amount of compensation and the level of security offered by the critical illness policy is dependent on the insurance premiums that the individual can afford. So while it would be nice to have the rest of the mortgage paid off by the insurance policy, the individual needs to be able to afford such a premium that would allow him to do so. In addition, the amount of premium paid is dependent on the health of the individual and whether they are a smoker or involved in another activity that is known to cause health problems. It is also important to note that critical illness insurance will not cover any pre-existing medical conditions. These policies will also exclude any illnesses or conditions that are historically known to run within the family.

An additional option that is available for consumers is known as the Waiver of Premiums insurance. This extends additional protection to the life insurance policy by assuring that premiums continue to be paid if the policy holder is unable to continue their employment due to the critical illness.


Critical Illness insurance policies vary widely in the type of coverage that they offer. To help navigate the multitude of options and variations of each plan, it is highly recommend to hire the services of an independent financial advisor or a broker who specializes in protection insurance. In addition, advisers and brokers can help determine how much coverage is needed, how long the policy should last, and whether or not critical illness and life coverage should be combined.

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