Pros and Cons of Critical Health Insurance Coverage

Insurance is a profitable business model because life is very unexpected. One moment you are living a happy, healthy life, and the next you are plunged into disease and misery. 

A Critical illness life insurance is one of the safety nets that protect its buyers from unexpected critical illness and gives them peace of mind that in case of when the going gets tough, their families will be provided for.

However, people often overlook it or think they do not need it due to it being expensive. In our opinion, we suggest buying it just in case an illness like cancer or heart disease hits your family. This will not only help in covering the treatment cost but also give a lot of time for recovery. 

One does, however, need to thoroughly weigh the pros and cons of whatever insurance they need to buy before committing to pay those costs. Hence, we have compiled a list of pros and cons for critical health insurance so that you can take an informed decision.

Advantages of critical health insurance coverage

LUMP SUM PAYMENT

Critical health insurance payments are paid out in a handsome lump sum. This means you do not have to wait for various instalments of payments when you need them the most. Healthcare costs around the world are rising at breakneck speeds, so when one is diagnosed with a critical illness, they do not have to delay their treatment as all the amount promised will be paid all at once.

HIGH PAYOUT RATE

Critical health insurance payout rates are very high. This means that once someone is diagnosed with a critical illness, there is more than a 90 per cent chance that the insurance claim will not be denied and they will be able to start their treatment as soon as possible. 

CHILDREN CAN BE COVERED FOR FREE

If you have bought critical insurance or are planning to buy it, ask the insurance company what does the policy says about your children. The odds are that your children will be covered for free with no additional costs to you or your premiums. However, one caveat that might come from this is that coverage for your children will affect your overall payout by lowering it.

THE PAYMENT IS TAX-FREE

When you are given the lump sum insurance payout, you will not be made to pay any form of tax on it. The payout is entirely tax-free, and the government will not ask for a single cent out of it. 

THE PAYMENT CAN BE USED FOR THINGS OTHER THAN YOUR CRITICAL ILLNESS

Once you are given the payout, it is entirely yours to use as you please. There are no restrictions or barriers on what the money can be used on, or all the funds should only go for treatment. So, you can rest easy, taking time off work with your family while you are recovering from your illness.

YOU CAN INVEST THE MONEY

As I mentioned earlier, you are free to spend the lump sum payment as you like. You can also use that money to make more money for you by investing it. So, once you have paid for your treatment cost, a portion of the funds can be used to create or further the investment portfolio you maintain so that income can be generated.

Disadvantages of critical health insurance coverage

EXPENSIVE

Critical insurance might have a lot of benefits, but one thing that contributes to it as a disadvantage is that vital health insurance policy is costly. The premium cost is higher than almost any other form of insurance. Hence one thing you can do is when buying critical insurance is that you should shop around and see which provider can give you the best premium price while keeping the coverage high.

NOT ALL CRITICAL ILLNESSES ARE COVERED

Depending on the policy, not all illnesses might be covered under the plan you have. Hence you must check your contract about which condition your insurance can cover and which one they cannot. 

CLAIMS CAN BE LIMITED

One thing that needs to be considered is that when one opts in for a critical health insurance policy, they will be ensured a payout only once. Once that payout is made, no other payments will be made. However, there might be a chance that one may be able to receive additional payouts with the help of industry specialists who will be able to negotiate on your behalf.

CONCLUSION

Critical health insurance coverage can be essential for people once they find themselves suffering from an illness that does not let them work or generate income. In these circumstances, you may rely on your insurance provider to give you a lump sum to cover your treatment costs or other outstanding bills. Even though critical health insurance policies are a godsend, it can be costly and sometimes not even cover the illness you have. It is recommended hence to weigh the pros and cons before making the purchase altogether.