Critical illness insurance pays a tax-free lump sum benefit upon the diagnosis of a critical illness covered by the policy. The benefit amount is selected at the time the policy is purchased. Before benefits are paid your physician's diagnosis must confirm the condition, and the insured individual must complete the survival period which is usually 30 days from the initial diagnosis. A few illnesses and conditions, namely, bacterial meningitis, paralysis and loss of independent existence stipulate 90 days, while loss of speech requires 180 days.
The insurance industry markets critical illness insurance in bundles ... basic, comprehensive and enhanced. The basic plan should cover the big 4 items which account for approximately 90% of all claims. These include heart attack, stroke, coronary artery bypass surgery and life-threatening cancer. The comprehensive package incorporates all the basic illnesses plus over 20 of the more serious illnesses, disorders and surgeries that affect today's world for approximately 20% additional cost. Please refer to the section on 'what is a critical illness' for more specifics on what illnesses would be included. The enhanced version adds a loss of independent existence condition to the comprehensive plan style in an effort to mimic the speciality product referred to as long term care insurance. There is a perception that one has both critical illness and long term care protection. The issue with this scenario is that the contract terminates upon claim settlement, and it is quite conceivable that one might make a claim on one of the other illnesses or conditions first, thereby eliminating the benefits of any long term care protection in the future. It is recommended that long term care insurance be considered on its own to avoid compromising eldercare and its associated issues and financial burdens.
Critical illness insurance can be purchased with additional features that include automatic increases in coverage, waiver of premiums, accidental death and dismemberment benefits, mortgage disability protection, hospitalization benefits and most importantly, an option to convert to a long term care contract, if one has not claimed benefits on their policy.
The more popular features are return of premium on death and return of premium on expiry or surrender. The logic behind these features is that if one dies before making a claim or one is fortunate not to have contracted a critical illness, all premiums paid into the plan will be returned.
Besides choosing the amount of coverage, selecting the benefit bundle type and adding features, coverage is also provided on either a temporary or permanent basis. Temporary plans present either 10 or 20 year term schedules with guaranteed rates that increase at either the 10 or 20 year intervals, until age 75, when the plan terminates. Permanent plans offer guaranteed level rates until age 100.
If one becomes ill, most contracts include access to Best Doctors, which connect you and your treating physician to world renowned specialists to confirm your diagnosis and treatment options without having to leave your home town. This feature often extends to family members and can be accessed even if you or one of your family members suspects a serious medical condition, even though it may not be a listed medical condition covered in the policy.
Selecting the appropriate plan design can be a daunting exercise. The team at MyDignity is happy to offer guidance, answer your questions and provide you with confidential quote(s) from the marketplace.