The policy may also be
structured to pay out regular income and the payout may
also be on the policyholder undergoing a surgical
procedure, for example, having a heart bypass operation.
The policy may require one to survive a minimum number of days (the survival period) from when the illness was first diagnosed. The survival period used varies from company to company, however, 28 days and 30 days are the most common survival periods used.
The contract terms contain specific rules that define when a diagnosis of a critical illness is considered valid. It may state that the diagnosis need be made by a physician who specializes in that illness or condition, or it may name specific tests, e.g. EKG changes of a myocardial infarction, that confirm the diagnosis.
In some markets, however, the definition of a claim for many of the diseases and conditions have become standardized, thus all insurers would use the same claims definition. The standardization of the claims definitions may serve many purposes including the decrease in policyholder confusion as to when they are eligible to receive benefits.
What Can You Use it For?
Because critical illness insurance pays you a cash benefit upon diagnosis of a covered critical illness or condition, you choose how to spend it:
- Make Payments on your mortgage
- Pay medical bills
- Hire help for around the house
- Take a family vacation
Conditions covered
The schedule of insured illnesses varies between insurance companies. In 1983, four conditions was covered by the policy, i.e. heart attack, cancer, stroke and coronary artery by-pass surgery. Since then various conditions were added and some policies have up to 26 conditions covered.
Examples of other conditions that might be covered include:
- Alzheimer's disease
- blindness
- deafness
- kidney failure
- A major organ transplant
- multiple sclerosis
- Need for organ transplant
- HIV/AIDS contracted by blood transfusion or during an operation
- Parkinson's disease
- paralysis of limb
- terminal illness
Due the fact that the incidence of a condition may decrease over time and both the diagnosis and treatment may improve over time, the financial need to cover some illnesses deemed critical a decade ago are no longer deemed necessary today. Likewise, some of the conditions covered today may no longer be needed a decade or so in the future.
The actual conditions covered depend on the market need for the cover, competition amongst insurers, as well as the policyholder's perceived value of the benefits offered.
