While Health Insurance in the past was often about coverage for hospitalisation costs, Critical Illness Insurance provides the next layer of financial protection in the form of an independent insurance product, designed specifically to offer a lump-sum cash payout at the time of diagnosis of certain life-changing critical illnesses, to assist individuals in dealing with the enormous costs (both direct and indirect) of the critical illness and subsequent life adjustments. Building a complete and effective financial plan requires an understanding of Critical Illness Insurance.
The Unique Role of Critical Illness Insurance
Typical Health Insurance policies provide benefit payments to you based on the amount you incurred for your actual medical expenses for your hospitalisation. In contrast, a Critical Illness Insurance policy pays you a predetermined amount of money as soon as you are diagnosed as having a covered condition (e.g. Cancer, Heart Attack, Stroke, Kidney Failure, and Major Organ Transplant) once you have completed the waiting period.
The primary difference is that with your standard Health Insurance policy, the benefit payments are associated with hospitalisation expenses. But with a Critical Illness Insurance policy, the benefit payment is for the many indirect and significant costs associated with a critical illness and the subsequent changes in lifestyle and life adjustment costs associated with life after suffering from a critical illness, which are typically NOT covered by your standard Health Insurance policy.
Critical Illness Insurance is Important Now More Than Ever
Recent societal developments have made Critical Illness Insurance an even more important form of insurance in today’s world for many reasons.
Increase of Lifestyle-Related Illnesses: Due to the increase in sedentary lifestyles, unhealthy levels of stress, and additional factors in our environment, the number of individuals suffering from serious medical conditions, such as cancer or heart disease, is rising at younger ages than in many prior generations.
Increased Costs of Recovery (not just treatment): While a major surgery and related hospital stay is covered by a Health Insurance policy, what happens after that? A Critical Illness Insurance policy can provide a financial “lump sum” to use to cover:
Lost Wages: If you are sick and unable to work for any period during your recovery, you will have to replace those lost wages.
Experimental Treatments: If you have a serious medical condition requiring advanced experimental treatment not covered under traditional health insurance.
Home Modifications: Your home may require modifications, such as ramps or home nursing assistance.
Travel for Treatment: Travelling to find specialists will involve some financial expense.
Daily Living Expenses: You will want to ensure you are able to pay to maintain your mortgage, other loans, and support your family’s lifestyle while you focus on getting better.
Critical Illness Insurance functions as Capital Preservation: A serious illness can force you to use all that you have worked so hard for your savings, your mutual funds, and possibly the money set aside for your child’s education. Critical Illness Insurance acts as a safeguard to protect your long-term financial goals if and when you find yourself facing a health care crisis.
Critical Illness Insurance vs. Health Insurance
You should think of Critical Illness Insurance as not being a substitute for Health Insurance but as an addition to it. Critical Illness Insurance is a great complement to your main source of Health Insurance.
Health Insurance pays for the immediate medical bills associated with your diagnosis (the “what” of treatment).
Critical Illness Insurance only pays for the life and income-related costs of your diagnosis (the “what comes after” diagnosis).
Conclusion
Being underinsured today poses a substantial financial threat to an individual. The core of a strong Medical Insurance Plan is to cover but does not cover enough of the problem presented by Critical Illnesses; therefore, you still need to protect your income, lifestyle, and future with Critical Illness Insurance.
Critical Illness Insurance gives you peace of mind, knowing that if you suffer from a Critical Illness, you won’t have to worry about the financial aspects of your recovery. The obsolete model of Health Insurance based on how well you recover from injuries and illnesses, functions as a band-aid on the real problem. It’s time to rethink the way we healthcare. Expand your horizon and analyze the financial consequences and implications of acquiring Critical Illness Insurance for yourself and your family. Look at your financial picture now and determine how much Critical Illness Insurance can fit into your financial picture.
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