“Critical Illness” (CI) is a type of insurance policy that pays a single lump sum if the insured person is diagnosed with one of a list of specified medical conditions that are listed in the policy. The insured person does not need to die to collect. The insured person does not need to be disabled to collect.
In most policies, the listed medical conditions are heart attack, stroke and cancer. Depending upon the exact policy, other conditions can include paralysis, MS, Parkinson’s, ALS, and several other diseases. Almost 75% of claims are for cancer. Cancer plus heart attack and stroke make up 90% of all claims.
In the event of a claim, the sum is paid directly to the insured regardless of any other sources of income (job-related and non-job-related). It is paid regardless of how the insured person plans to spend the money. It is paid regardless of what medical expenses are incurred by the sick person.
CI can be purchased as a separate policy or as an add-on to a Life Insurance or Disability Income policy. Since the intent of CI is to provide funds to people who survive a serious diagnosis, the insurance amount is not paid if the insured person dies within 30 days of being diagnosed with the covered illness. For example, if an insured person dies quickly from a heart attack, their family will not have a claim. If the person survives the heart attack for more than 30 days, they will collect their CI. As well, there is usually a waiting period of 90 days before coverage for cancer goes into effect. In other words, if somebody starts a CI policy, they cannot file a claim for cancer in the first 90 days of the policy. After that cancer is fully-covered.
PLEASE NOTE: The above is just an overview and does not apply to any specific policy. The specifics of your policy will be found in your Critical Illness insurance policy contract.