Critical Illness Insurance

Insurance policy that pays a face amount/ lump sum if the insured is diagnosed with a specified critical illness. This sum is paid directly to the insured regardless of any other sources of income (job-related and non-job-related), expenses incurred (medical and nonmedical), and any other factors. Generally, critical illnesses include stroke, heart attack, cancer that is life threatening, paralysis, deafness, organ transplant requirement, blindness, and kidney failure. Some policies pay a percentage of the face amount, for example 15 to 30%, if a less serious illness occurs or medical procedure such as a coronary bypass must be performed. The illness does not have to result in the disability of the insured (total or partial); the insured still receives the face amount payment. This type of insurance can be purchased as a separate policy or as a rider to a LIFE INSURANCE or DISABILITY INCOME policy. The face amount is not paid if the insured dies within 30 days of being diagnosed with the covered illness and there is usually a WAITING PERIOD before the coverage is in force. This coverage may be purchased on both a personal and business basis.