What is it?
This kind of insurance covers you if you get one of a limited number of illnesses.
In this event, it pays you a lump sum (ie a one off payment).
When you get a pay out, you can do anything you like with the money. (In other words it doesn't have to be spent on medical bills or whatever).
There's a significant problem with Critical Illness in that you may get an illness which is not one of those covered. This is why it may be a better bet to protect yourself from all health eventualities with Permanent Health Insurance
Where critical Illness polices may be useful is to provide
"business protection" type cover
ie it can insure your work in the event of your getting
Critical Illness - Summary of Cover
Critical Illness pays out a lump sum on diagnosis of a serious illness.
The term and sum insured are agreed at the start of the policy.
If a Critical Illness is diagnosed during the term then the sum insured is paid. However if the illness is not on the agreed list of ilnesses the insurer doesn't have to pay anything.
If you don't suffer any serious illness by the end of the term then the plan ends and nothing is paid out. In other words it's not an investment policy. You're simply paying to be insured. When you stop paying, that's it; you stop being insured.
A Critical Illness plan can be set up on a single or joint
life basis and can be added to either Life
and Contents Insurance
Payment Protection Insurance
Protection Decreasing Term Assurance
Insurance Tie Ins