Know The Typical Features Of Critical Illness Insurance

When you hear the term “Critical Illness Insurance”, what comes to your mind?

If you are envisioning a coverage which offers a payout when the policyholder is diagnosed with a critical illness (e.g., stroke or cancer) then, you are correct!

Critical Illness Insurance or Dread Disease Policy is a lump sum payout given in the event that the policyholder is diagnosed with one of the specific illnesses covered by the policy. It can either be sold as a stand-alone policy or a part of a main policy in life insurance or investment insurance. The guidelines and definitions of the 37 critical illnesses are predetermined by the Life Insurance Association of Singapore. This definitions are fixed across the board.

Unlike other forms of health insurance, the benefits of Critical Illness Insurance is paid out in lump sum so that the person can use it not only for medical expenses but also for other living expenses that can result from the ongoing treatment.

COMMON FEATURES

Here are some of the usual features of the Critical Illness Insurance:

1. Its premium is adjusted based on the policyholder’s age-band.

2. The policyholder is allowed to claim no more than one of the critical illnesses listed.

3. There are no restrictions on the utilization of the benefit payment.

4. The critical illness rider will be terminated once you give up the basic policy.

5. A type of health insurance (with a critical illness rider) has an expiration once the policyholder reaches a maximum age.

6. To reduce the risk of moral hazard, there is a limit on the total amount that you can purchase.

7. Upon purchasing the Critical Illness Insurance, there is a waiting period before you can make a claim.

POSSIBLE ISSUES

Given the fixed definitions of the critical illnesses as well as the common features of the Critical Illness Insurance, there are several issues that can possibly happen in different situations. For starters, the benefits can only be paid if the disease EXACTLY meets the standard definition stated by the policy.

For example: Coma is defined as…

“A coma that persists for at least 96 hours. This diagnosis must be supported by evidence of all of the following:

• No response to external stimuli for at least 96 hours;
• Life support measures are necessary to sustain life; and
• Brain damage resulting in permanent neurological deficit which must be assessed at least 30 days
after the onset of the coma.

Coma resulting directly from alcohol or drug abuse is excluded.”

In reference to the definition above, say your beloved spouse had been in a state of coma for the past 48 hours due to substance abuse and you cannot do anything about it because he is not qualified to claim the insurance payout. It will be difficult for you to fork some money at a relatively short notice.

Another issue that can happen is when two or more diseases transpire (co-morbid diseases) and you can only claim for one of it.

Image Credits: pixabay.com

Image Credits: pixabay.com

Furthermore, claiming of the benefits usually has a waiting period. If a critical illness is carried out during the waiting period then, you cannot be paid for its benefits.

Sources: 1, 2, & 3

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Must Read: Simple Money Hacks To Improve Your Financial Life Now

You deserve to achieve understanding, awareness, and especially control over your life. Everyone does. And, “Psychology Of Love, Money, & Life” book might just be the answer!

Money is one of the book’s three sections. Adding the Psychological factor, you will be able to realize that money has effects on your well-being and that you can control its effects. You hold your financial present and future!

So, take a peek inside some of the valuable tips you can get from the #PLMLBook

1. GAIN PLEASURE FROM MONEY THROUGH ANTICIPATION

If you want to gain positive feelings toward your spending then, ensure that you always have something to look forward to. Let us say you get a raise, treat yourself by buying the designer bag you have been wanting for months. The anticipation of purchase, no matter how small the item is, can increase pleasure enormously.

2. SAVE UP FOR TRAVEL FUND

If you are in a Long Distance Relationship, it can be very expensive. Which is why it is essential to follow a strict budget to save up for your travels. Be responsible enough to spend your money only to what is necessary.

3. SHALL YOU BUY IT OR NOT? STOP THINKING! TAKE THE SWIFT TEST INSTEAD.

When you are thinking twice on purchasing an item especially an article of clothing, ask yourself if you are willing to try it on the dressing room swiftly at that particular moment. If there is no sense of immediate excitement, do not bother to buy it.

4. ONE SIZE MAY NOT FIT ALL

Everybody’s financial situation is unique to the person so, be wary of the “one-size-fits-all” investment strategies from media’s financial gurus. Many factors such as your consumer personality, financial goals, age, etc. should be considered. This is why it is best to listen to your personal financial adviser instead.

5. AVOID THE STATUS QUO BIAS

As I was looking for a new laptop online, my choice leaned towards the brand that I’ve been using for 4 years – the MacBook. Although its competitor had touch screen, 360 bendable monitor, and it’s running on the new Windows software that enables you to download countless of Apps. Certainly, for functionality, the latter was the best choice but I still preferred Macintosh.

This cognitive bias is called the status quo bias. It occurs when you are more likely to prefer the product that you know more of even if there are better options available. Changing your buying habits to avoid this cognitive bias start with the awareness!

Image Credits: misspsychobabble.blogspot.com

Image Credits: misspsychobabble.blogspot.com

Psychology of Love, Money, & Life is now available on Google Play BooksKobo, Amazon (Kindle), Apple IBooks, and M1 Learning Centre. Find the platform and price that suits you best!

This is written by Anna Agoncillo. She graduated under Cardiff Metropolitan University (UK) with Honors. Combining her passion for psychology and writing, she started a successful blog called “Miss Psychobabble” and has contributed to other platforms including Bored Panda, Psychology Matters Asia, Thought Catalog, Money Digest, and so much more.

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