Even though progress in medicine makes it possible for many to recover from serious illnesses like never before, we are all afraid of getting critically ill. People’s wisdom says that an illness comes by the pound and goes away by the ounce. As you recover, you may not be able to earn your income. In this situation a Critical Illness Insurance Plan can be of tremendous help.

Critical Illness Insurance is a reliable product that can protect you and your family should you be diagnosed with:

• Alzheimer’s disease
• blindness
• deafness
• kidney failure
• A major organ transplant (e.g. heart, lung, liver, pancreas)
• multiple sclerosis
• HIV/AIDS contracted by blood transfusion or during an operation
• Parkinson’s disease
• paralysis of limb
• terminal illness
• Heart attack
• Cancer
• Stroke

Due to 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. For these reasons conditions such as diabetes and rheumatoid arthritis, among others, may become the norm cover provided in the future.

Need for critical illness coverage

Critical illness cover was originally sold with the intention of providing financial protection to individuals following the diagnosis or treatment of an illness deemed critical. Critical illness may be purchased by individuals in conjunction with a life insurance or term assurance policy at the time of a residential purchase, known as a ‘bolt-on’ benefit.

The finances received could be used to:

• pay for the costs of the care and treatment;
• pay for recuperation aids;
• replace any lost income due to a decreasing ability to earn; or even
• fund for a change in lifestyle.

This insurance can provide financial protection to the policyholder or their dependents on the repayment of a mortgage due to the policyholder contracting a critical illness condition or on the death of the policyholder. In this type of product design, some insurers may choose to structure the product to repay a portion of the outstanding mortgage debt on the contracting of a critical illness, whilst the full outstanding mortgage debt would be repaid on the death of the policyholder. Alternatively, the full sum assured may be paid on diagnosis of the critical illness, but then no further payment is made on death, effectively making the critical illness payment an ‘accelerated death payment’.