You will find obvious differences between life and critical illness insurance. Yet additionally they share very common principles in the way in which they work. It is perhaps unsurprising, therefore , that some insurers offer a combined, two-in-one package of each life and critical illness insurance plan.
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The benefits of such a combined policy may prove a financial boon to both you and your family, so it is worth briefly evaluating how the two forms of cover operate tandem.
Both sorts of insurance have at heart the concept of danger to the individual – on the one hand associated with dying; and on the other, of being diagnosed with an illness. In each case this is actually the insured risk. In return for payment of a regular monthly premium, the insurance policy then guarantees the payout of a predetermined, single lump sum benefit.
Both in cases, the most common model is a “term insurance” form, in which the defined risks are insured for a given period of time (the “term”). If you survive the insurance term, or if you survive this without being diagnosed with a critical illness, the insurer pays out nothing at all.
Both in cases, you choose the level of cover which is most suitable for your needs. For many individuals, this is usually a balance between the estimated financial safety required in the event of death or fatal illness and whatever can be afforded in terms of the monthly premiums payable.
The most obvious difference, of course , lies in the nature of the risks insured. In one situation, it is the policy holder’s life; on the other, it is the risk of that policy holder being diagnosed with a critical illness;
The death of the policy holder during the covered term, naturally, requires no more definition. Just what is a “critical” sickness, however , typically varies quite widely from one insurer to another. Each insurer publishes their own list of those ailments and medical conditions covered by CI insurance coverage, so it is obviously important to study cautiously just what is offered by any plan in which you are interested;
In the event of a claim under a life insurance policy, the covered benefits are paid out to whomever you named as the beneficiary. Regarding critical illness insurance, the benefit is definitely paid directly to you, the client. Because of their close association, however , both life and critical illness insurance plan might be seen as playing their respective parts in securing your family’s future financial stability;
Combining living and critical illness insurance
The evident advantages of combined life and critical illness insurance cover are twofold: the financial fallout from 2 major risks might be averted. For as long as the insurance is in place, you and your family are reassured that if you fall victim to a critical illness (as described in the policy documents), or even expire, the level of cash benefit which you have selected becomes immediately payable. It should be borne in mind, however , that in the conditions of such combined policies, only one potential payout is available. In other words, should you have claimed the insured benefit of the particular critical illness insurance no additional benefit is typically payable under the combined policy in the event of your subsequent demise.