What is critical illness insurance?
Critical illness insurance coverage can provide a one-time, tax-free lump sum payment if you’re diagnosed with a serious condition. Your policy will specify the conditions and requirements of your insurance coverage, but some examples include many kinds of cancer, heart attack and stroke.
What is disability insurance?
Disability insurance works when you can’t. If an illness or injury keeps you from working, disability insurance can give you a tax-free monthly benefit to help you pay your expenses by replacing some of your earnings.
What’s the difference between critical illness and disability insurance?
How each type pays
Critical illness insurance provides a tax-free, one-time payout. Disability insurance provides a monthly income replacement.
When do you receive the payment
Critical illness insurance pays when you’re diagnosed with a covered condition. Disability insurance pays if you can’t work because of injury or illness.
Will you have to wait for coverage?
With critical illness insurance, there may or may not be a waiting period depending on the covered critical condition experienced. With disability insurance, you’ll usually have to wait.
How long does coverage last?
With critical illness insurance, you can choose coverage for a period of time or your lifetime. Disability insurance ends at age 65.
What can you use the money for?
With critical illness insurance, you can use the payment for whatever you need including medical expenses, your mortgage, other debt, living expenses, travel for treatment, even domestic help.
Disability insurance payments are ideal for covering monthly expenses.
How much does it cost?
The cost of both types of insurance will depend on your unique situation and the amount of coverage you require.
Disability insurance premiums often range from 1 to 9% of your salary, but each case is different.
Do you need both critical illness and disability insurance?
Depending on your situation, you may need only critical illness or disability insurance but there are many situations when you need both to fully protect yourself.
Critical illness and disability insurance work together to help reduce the impact of disability or serious illness. And even if your workplace benefits offer some insurance, you may require additional insurance to properly protect your financial security.