Insurance ; Critical Illness Insurance

Critical illness insurance pays you a lump sum either when you’re first diagnosed with it or after a surgery that the policy covers. This specific insurance is meant to cover post-hospitalization costs.

How is it normally sold: 

  • Stand-alone plan
  • In a whole life policy plan
  • Optional Rider to an existing whole life plan

Coverage:

  • Major Cancers
  • Heart Attack
  • Coronary artery bypass surgery
  • Stroke/Kidney Failure

Pointers to Note:

  • Waiting period; usually, during diagnosis or for surgery there would be a waiting period – Do consult your agent immediately to ask what is the best course of action. Negligence and naivety can make you lose your benefits if the waiting period is ignored.
  • Amount paid can vary depending on the stage of the cancers
  • Coverage duration is a key factor that you might want to consider (E.g Coverage till you’re age 99 is twice as expensive as compared to the coverage age of 65)
  • Watch out for specific coverage, e.g Death ( only cover death and Total Permanent Disabilities) and Death with critical illness (covers death/ critical illness/ terminal illness)
    • Coverage amount varies between the two categories: death with critical illness tends to have lower coverage amount

Average Cost:

  • Death (without CI) For aged 25-30: $500 – $800 Annually
  • Death (with CI) For aged 25-30: $732 – $1,200 Annually

Payout on Policy:

  • $500K / $1M (Depend on the payout you choose)

 

Conclusion:

The idea of having an insurance plan is to protect you from unforeseen future circumstances by contributing an insignificant amount of money in the present. If it exceeds the category of “insignificant”, you might want to pull up a statistical chart to gauge the possibility of such a situation happening to you.

Points to think about:

  • What is the future value of $500K/$1M when your 65 Yrs old or even 99 Yrs old?
  • What is the opportunity cost of purchasing it now and at a later year?
  • What is the investible amount that could justify a later purchase?
  • Is there an instrument or product that could diversify my need for an insurance?

“+1 Knowledge Point”

p.s my blog link is going to revert back to www.financialveracity.wordpress.com by Aug cuz inflation going up and I’ve no money

 

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