Critical illness insurance is important because it provides financial support when you are diagnosed with a serious illness covered by the policy.
Importance of Critical Illness Insurance:
1. Financial Protection: Critical illness insurance pays out a lump sum if you are diagnosed with a covered illness such as cancer, heart attack, stroke, or organ failure. This lump sum can be used to cover medical expenses not covered by health insurance, replace lost income during recovery, or even pay off debts or mortgage payments.
2. Coverage for Serious Illnesses: Unlike traditional health insurance, which typically covers medical expenses such as doctor visits, hospital stays, and prescription medications, critical illness insurance focuses on providing financial support upon diagnosis of specific serious illnesses. This ensures that you have funds available when facing a major health crisis.
3. Support for Lifestyle Changes: A critical illness diagnosis often requires significant lifestyle adjustments, such as modifying your home or vehicle to accommodate disabilities, or seeking alternative treatments not covered by health insurance. The lump sum from critical illness insurance can help cover these costs.
4. Peace of Mind: Knowing you have critical illness insurance can provide peace of mind, allowing you to focus on recovery rather than worrying about financial obligations or the cost of treatments.
5. Complements Health Insurance: While health insurance covers medical expenses, critical illness insurance provides additional financial resources to manage the broader impacts of a serious illness. It can also cover costs that health insurance may not fully address, such as travel for specialized treatments or experimental therapies.
Difference Between Health and Critical Illness Insurance:
1. Coverage Focus: Health insurance covers the costs of medical treatments, hospitalization, surgeries, and preventive care. It reimburses or directly pays for medical services as per the policy terms. In contrast, critical illness insurance pays a lump sum upon diagnosis of specific serious illnesses listed in the policy, regardless of actual medical expenses incurred.
2. Payout Structure: Health insurance typically reimburses medical providers or pays them directly based on the treatment received. Critical illness insurance pays out a lump sum directly to the insured person upon diagnosis of a covered illness, which can be used at their discretion.
3. Purpose: Health insurance focuses on maintaining and restoring health through medical treatments. Critical illness insurance is designed to provide financial stability during a health crisis, covering expenses beyond medical treatments such as loss of income, home modifications, or lifestyle changes.
4. Event Trigger: Health insurance claims are triggered by medical treatments and expenses incurred. Critical illness insurance claims are triggered by the diagnosis of specific critical illnesses listed in the policy, irrespective of the treatment costs or medical expenses.
In summary, critical illness insurance is important because it provides financial protection and support during a serious health crisis, complementing the coverage provided by health insurance. It ensures that you have financial resources available to manage the broader impacts of a critical illness and maintain your financial stability during a challenging time.