Understanding critical illness and disability insurance

Written by: Vivek Jacob
September 0, 2021
Understanding critical illness and disability insurance

Hard conversations, people, that’s what we’re here for. Finances can often get messy but if you’re open and up front about how you manage your money and where it goes it can help avoid a lot of pain and suffering later.

We’ve previously discussed life insurance, but it’s important to know the difference between that and critical illness insurance. They are not the same. Life insurance is, simply, the coverage you can get to cover your death. Critical illness, though, isn’t contingent on a person passing. It is designed to provide support to those who are seeking coverage for potentially disastrous circumstances such as cancer, stroke, and heart attack that can still leave you alive but with a completely altered life. This is where you have to do your research! Depending on who you seek insurance from and the extent of coverage you select, you may have as little as five or six illnesses covered or as many as 30-40.

Critical illness protection would provide you with the amount you’re insured for as a lump sum and that can alleviate the stress of not being able to work as well as treatment costs. This type of coverage is certainly more expensive than term life insurance, but especially as you age and those unforeseen circumstances appear more of a possibility, there’s no doubt that it’s at the very least something to consider.

Then there’s disability insurance, and this shouldn’t be confused with critical illness insurance either. Unlike critical illness, disability insurance provides a monthly payment that covers a percentage of your salary if you can’t work due to injury or illness and could potentially last until the current retirement age of 65. You may get it through your employer so make sure to check if you do and the level of coverage you have!

In addition to limiting physical illnesses, disability insurance also covers mental illnesses like depression or post-traumatic stress disorder. Unlike critical illness, it also protects you in case of an injury that prevents you from working.

In both cases, there is a waiting period. For disability insurance, before you receive monthly payments that help make up for a portion of your income, there is a time frame depending on the coverage you have that must pass before it’s determined that returning to work isn’t a possibility. With critical illness, the waiting period is just for a confirmation of the diagnosis and so is usually shorter.

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