The Pros and Cons of Critical Illness Insurance

What is an illness insurance policy? Critical illness insurance covers you in case you are diagnosed with a serious or life threatening illness. You would be financially protected by a tax free lump sum payment. Illnesses that qualify for this insurance include; cancer or a heart attack. The type of illness covered depends on each individual insurance company and their products.

After your doctor has diagnosed the illness, then the insurance policy will pay you a tax-free lump sum that can be used to cover your financial overhead and monthly bills. Having this type of insurance helps bring the policy holder peace of mind in the sense that they will not be stressed out about money. Critical illness insurance is often combined with term assurance; this kind of  policy pays out on whatever happens first.

Below are a few short descriptions of advantages and disadvantages of being insured under a critical illness policy.


The insured policy holder receives a cash lump-sum after the illness is diagnosed. Within a certain time frame, usually a thirty-day period once a formal diagnosis has been made, the policy will pay out a tax-free cash lump-sum payment to the policy holder.

The policy provides family protection, critical illness insurance guarantees that the policy holder and family are protected and are able to take care of financial necessities, such as rent, bills and general living expenses.

The policy covers a comprehensive list of illnesses. The individual illnesses that a critical illness policy covers will vary for each insurer and policy. These policies can cover over 35 different medical conditions. A good policy should always cover illnesses like heart conditions, strokes and cancer and most policies do.

The insurance policy has the option of guaranteed premiums. Some insurance premiums are reviewable and at the time of taking out a policy, these premiums will be less expensive. The consumer has the option to take out a policy with guaranteed premium, so that the premiums do not rise over time, and the amount per month or year is locked in. Reviewable premiums might be less expensive, however it is better to ask for guaranteed premiums as reviewable premiums usually will rise at the insurers discretion.


Additional costs can be a financial burden for a family. Those families who are struggling financially and are barely unable to meet the cost of the premiums find it difficult to afford the policy. Critical insurance is often more expensive than life insurance because of the amount of illnesses it covers and their insurance companies risk the insurer is taking on.

The policy may exclude certain diseases. Always check a critical illness policy thoroughly and read all of the fine print. The illnesses that it covers can vary significantly. Perhaps the family are aware of Crohn’s disease in their medical history, and they may be after a policy that covers it, some policies do not. While this may not be a deal breaker for some, a person with Crohn’s disease within his or her family runs a twenty percent chance of contracting the illness, which is why some policies carry this illness and others do not.

The policy probably will not cover life threatening illnesses if the consumer has already have suffered a certain disease in the past. If the illness is within the family’s medical history, then this illness may be excluded from the policy. The policy holder may have had a brush with a nasty kidney infection or someone in the family might have kidney trouble. Any illness relating to the kidneys may not be covered. It was reported some time ago that breast cancer and prostate cancers were being eliminated from some policies because the survival rate for both of these cancers is so high now.

The underwriting process once the insurer has gathered all of the information for the policy can be tough. The insurer will assess the policy bases on what information they are given. If the consumer is over weight, or a smoker or a heavy drinker, all of these bad habits will raise the premiums, so much so that the consumer may think that it is not affordable. This can also happen if there is a history of serious illness within their family.

If the consumer can afford to take out a policy, then it is probably in their best interest, especially if there are serious illnesses lurking within the family. No one wants to be struggling financially when they are seriously ill and trying to recover. Critical illness cover is something you as a consumer want to consider to protect themselves and their family. Premiums and illnesses covered will vary from insurer to insurer, so it’s important to shop around for the best deal.