Preparing for the unexpected: The importance of Critical Illness Insurance

4-minute read

This can lead to a ripple effect on one's lifestyle, impacting everything from bill payments to the physical and financial support of one's family. Critical Illness, whether stemming from accidents, illnesses, or unforeseen circumstances, has the potential to disrupt lives in unforeseen ways.

Critical Illness insurance, also known as Trauma insurance, is a form of life insurance cover that grants a financial payout if the specified condition and its severity are covered by the policy. In the event of a payable benefit, it can assist in covering daily living costs, enable the insured to pursue necessary medical care and related options for their illness, and contribute to maintaining the quality of life for the insured's family during the treatment period. This financial support acts as a 'cushion,' allowing the individual to concentrate on recovery without the added concern of the financial consequences of the illness or injury.

Benefits of having Critical Illness Insurance (Trauma Insurance)

The versatility of a Critical Illness benefit offers the freedom to use the funds according to one's needs, whether for medical treatment, rehabilitation, mortgage payments, or other expenses. Insufficient insurance coverage can rapidly deplete an individual's savings when faced with these financial burdens. Critical Illness cover extends to specified serious events like heart attacks, cancer, or strokes, though this list is not exhaustive.

Opting for Critical Illness Insurance (also known as Trauma insurance) may be a practical and responsible decision, depending on the situation. It can help to ensure financial stability and a sense of reassurance during the recovery process. Possessing a Critical Illness insurance policy may offer the means to financially assist with the expenses associated with treatment and recovery in unforeseen life-altering circumstances. Additionally, there might be extra benefits and customisable options available for inclusion in a Critical Illness insurance policy at an extra expense. These features, which vary among insurers and policies, may include but are not limited to:

• Inflation protection: An option to annually increase the insured amount to account for inflation.
• Premium Freeze: An option to lock in the premium while decreasing the insured amount.
• Guaranteed future insurability: An option to boost coverage without the need for underwriting, triggered by specific life events such as having a baby.
• Grief support: A service assisting customers and their families.
• Financial planning: May provide a payment to aid customers and their families in working with a financial planner.

Critical Illness Insurance is generally available as a stand-alone policy or can be associated with a Life insurance or Total and Permanent Disability policy. Choosing linked policies might result in overall lower premiums compared to maintaining each insurance type separately. The reason behind this is that, in linked policies, a payout on one policy (such as Critical Illness) tends to decrease the coverage amount on the interconnected policy (like death cover). In contrast, stand-alone policies operate independently, meaning a claim on one policy (e.g., Critical Illness) does not affect the coverage amount on another policy (e.g., death cover).

Critical Illness Insurance for children is a life insurance alternative offered by many insurance providers. It offers a lump sum benefit in the event that a child experiences a Critical Illness (or Trauma) meeting the severity criteria. This can offer essential financial reassurance if the policyholder's child faces a critical illness, and the policyholder is unable to work. This financial support may empower the policyholder to assist their child during medical treatments and recovery without the added stress of work commitments. It's important to note that there are usually limits on the coverage amounts. For further information contact the insurance provider or visit the TAL website.  

Exclusions in Critical Illness and Trauma Insurance for illnesses and injuries

When acquiring any insurance cover, it's crucial to comprehend the terms, conditions, and exclusions outlined in each policy. The Product Disclosure Statement (PDS) serves as a valuable resource for obtaining more detailed information about each type of coverage. Key aspects to consider encompass common terms, conditions, and exclusions, such as:

Pre-existing conditions

Pre-existing conditions refer to health issues that the insured person had before obtaining the policy. Critical Illness policies might not provide coverage for pre-existing conditions, making it essential to understand the policy's terms. Additionally, many Critical Illness policies impose a qualifying period for specific Critical Illness events. This implies that if the specified Critical Illness occurs after purchasing the policy but within the qualifying period, the policy may not cover that particular Critical Illness.

Excluded medical conditions

Cover is not universal for all Critical Illnesses, and the severity of illnesses are defined. The specific illnesses and their definitions can differ from one policy to another. For instance, it's important to note that not all types of cancers may be included in the coverage.

Bridging the gap in health insurance with Critical Illness cover or Trauma Insurance cover

Although health insurance covers numerous medical expenses, it might not encompass all the costs related to a critical illness (or trauma event). Non-medical expenses that are not addressed by health insurance can create financial strain. Critical Illness cover becomes valuable in bridging these gaps, assisting with out-of-pocket expenses and alleviating financial burdens.

When contemplating Critical Illness Insurance (or Trauma Insurance), it's imperative to meticulously examine policy terms and compare offerings from various insurers to select the most suitable coverage. With the appropriate policy, individuals can confront life's uncertainties with increased confidence and resilience.