Critical illness insurance is hugely misunderstood. And if you’re not reading the fine print on your policy, you could be relying on inaccurate myths when deciding how much you’ll need. Luckily insurEye, a Canadian insurance education site, has compiled a list of several critical myths that need to be busted. We’ve picked eight that we think are most prevalent and need the most clarity.
1. MYTH: Critical illness insurance and disability insurance are the same thing.
FACT: No. The aim of disability insurance is to substitute your lost income due to your disability. Critical illness insurance provides a lump sum payment if you are diagnosed with a critical illness, such as cancer or an immunological disease. The benefit is that you can decided how to use these funds so you can either pay for your treatment with the money, or, if self-employed, use the money to pay for family expenses. This means you are in fact, compensating yourself for your lost wages.
2. MYTH: Once I have critical illness insurance, I am covered in case of ANY critical illness.
FACT: It’s important to realize that you will be covered only for those diseases that are clearly stated and defined in your critical illness policy. Pay attention to the details.
3. MYTH: If diagnosed with a critical illness listed in your policy, you will be surely paid the claim amount.
FACT: Not exactly. Each critical illness comes with a precise definition. This means that if your condition is not falling within that definition, your insurance claim might be rejected. For instance, the policy may say you are covered for breast cancer, but only for Stage 4. These details are important to be aware of.
4. MYTH: If I have a critical illness, I would need life insurance more because my chances of survival are very low.
FACT: Even if you have cancer, over 60% of Canadians are expected to live longer than five years. In case of heart attack, over 90% of Canadians survive but in this case, you need to recover.
5. MYTH: If my critical illness insurance covers cancer, then it covers all types of cancer.
FACT: You need to be clear about what types of cancer are covered by your insurance policy. Not all cancer types are “equal” and so critical illness insurance treats them differently.
6. MYTH: Once diagnosed with a critical illness, you will be paid immediately.
FACT: No. You need to survive the initial 30 days of the disease and only after that will you be paid.
7. MYTH: If I have health issues or medical pre-conditions, I cannot get critical illness insurance.
FACT: Like life insurance, critical illness insurance comes in different forms. For some policies (known as ‘standard critical illness’), you need to pass a medical exam. Others, also called ‘no medical critical illness’ insurance policies, come without medical exams and sometimes, even without medical questionnaires. That has its price, as you will need to pay higher rates and your coverage will typically be capped at a low level.
8. MYTH: All critical illness policies go up in cost.
FACT: Some companies have a critical illness policy with a level policy for life, meaning that your costs will not go up.
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