Many people confuse life insurance with critical illness and vice versa. Knowing which insurance to purchase is of utmost importance, so to help you out, here are the basics for these 2 popular insurance coverages:
The most commonly purchased insurance is called critical illness. The monthly payments you invest for this insurance, guarantee a tax-free lump sum in the case you are diagnosed with a serious or critical illness. Each critical illness policy covers different diseases and you will be paid the sum only if you are diagnosed with those illnesses mentioned on the coverage list (you choose which ones). To provide a better explanation for this policy, here are the benefits of critical illness insurance:
- Tax-free lump sum which you decide how to spend, there aren’t limitations, you can even use the money to go on vacation.
- The sum you get will be more than enough to cover your bills like mortgage or rent while you are receiving treatment.
- Besides covering your day-to-day spending, the critical illness will also cover any treatment or medication required for your health to improve.
- Even though the covered diseases vary, the ones found in almost every policy are a heart attack, stroke, multiple sclerosis, cancer, organ transplant, Parkinson and Alzheimer.
- The best thing about this insurance is that you can enjoy the benefits while you are still alive (unlike life insurance). Additionally, you can pay lower monthly premiums if you aren’t a smoker and if you are in great physical condition.
As mentioned before, with life insurance you won’t be able to enjoy the benefits. This insurance doesn’t cover you while you get well but offers a tax-free lump sum to family members after your death. Talking about death can be uncomfortable, but one must think of the practical sides as well. When someone dies, he/she leaves all debt behind and usually family members have to fully repay it. What life insurance does is that it reliefs family and friends from additional burdens such as paying for funeral services, an unpaid mortgage, and credit cards. To sum up, here are some of the benefits:
- A tax-free lump sum paid to family members. Just like for critical, this sum is no strings attached or family members decide amongst themselves how to spend the sum.
- Unlike critical, life insurance doesn’t have a strict age limit. One can purchase this kind of insurance even in their 70s.
- Cancelation or decreasing/increasing the coverage is almost always possible.
- Life insurance can be combined with other types of insurance like critical. Some life policies even offer discounts for pairing up with a spouse or relative.
Which One to Choose?
To choose between these 2 policies, one must know that there are lots of factors involved. For instance, life is better for older people since critical has certain age limitations (usually 60). Additionally, each person is vulnerable to different conditions so even if you decide to purchase critical, you must choose which one or which diseases to be covered. To get the best out of an insurance policy, always consult with medical experts and insurance agents. Advice and suggestions from certified experts will surely do you good since you don’t want spending money for insurance that won’t be able to cover what you need when the time comes.