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Critical Life Insurance - What is Critical Life Insurance and What is it Good For?

policy insured term illness

When people become ill and need to procure a life insurance policy because they are sick, many turn to a type of insurance policy called critical life insurance, also known as critical illness insurance or critical illness and life insurance. This is not your ordinary life or illness insurance policy. It is purchased with the understanding that premiums are typically higher and that the only payout happens if the insured becomes sick with an illness as specified on the policy itself. This will also only happen if the insured becomes ill before the term of the insurance policy is expired. These policies are almost always term policies.

A typical life insurance policy comes in either a term or whole policy. The term life policy I one in which the coverage lasts for a term of years, from one year to 25 years or more. A whole life policy will last for the insured’s entire life, provided he makes premium payments continuously over the life of the policy. One large difference between the two policies is that whole life insurance policies always pay out, with few exceptions and a term life policy may or may not pay out and depends on whether the insured has dies within the term of the policy. If he does not, then he can renew the policy.

Critical life insurance term policies are the type of policies that will pay out if the insured contracts a critical illness such as cancer or other illness that is deemed critical and outlined within the specific policy clauses or amendments. If, within the term of the policy, the insured does not become sick but dies instead, a benefit may or may not be paid out and depends on whether or not the policy specifies the death benefit within the policy itself.

Critical life insurance requires that the insured pay a premium every month. The amount of this premium is based on averages and the health of the insured in addition to the length of the term purchased. These types of polices can typically cost at least twice as much, especially if the insured is a smoker or has a predisposition for certain critical illnesses that are covered in the policy. This is because of the price tags associated with contracting a major illness of which can easily cost up to the millions of dollars for treatment, especially if treatment is a prolonged one, such as cancer or end stage renal disease.

The base average premium for a healthy person aged 40 who does not smoke is typically about $20 to $30 a month, although women will typically pay up to 15 to 20 percent more. This premium increases if the critical policy is purchased later in life. Increases in the base premiums are also warranted and based on family history and whether certain medical conditions are present at the time of purchase or if these conditions are likely to occur during the term of the policy. Additionally, insurance companies will most likely not sell a policy of this type to anyone over the age of 65 because of the likelihood of that person becoming critically ill.

The illnesses typically covered in a critical life insurance policy include (but are not limited to) cancer, kidney failure, kidney disease, organ transplant, heart attacks, strokes, MS and many others. The specific illnesses that are covered vary according to the specific from which the policy is purchased, but the more illnesses that are covered, the higher the premiums are likely to be.

If the insured is eventually diagnosed with one of the illnesses covered within the critical life insurance policy, after a certain period as specified by the policy, the insured can make a claim for benefits as spelled out under the clauses in the policy. However, for most insurance policies, the period the insured must wait is usually about 28 calendar days from the onset of the diagnoses. If the insured becomes well again after the onset or diagnoses and the time period has not elapsed yet, then no benefits are paid for the illness.

Additionally, if the insured become ill with something other than what is listed on the policy, benefits will not be paid. If the policy expires and the benefits were never used, the money paid for premiums is forfeited and the insured must purchase another policy to gain more coverage. He could also renew the existing policy, but many times when an insured renews a policy, the rates typically increase.

The best bet when searching for and considering a critical life insurance policy is to shop around and be sure that the prospective insured has considered all options and illnesses before settling on a particular policy. Not only are these polices somewhat expensive, but many times the illness contracted by the insured are not covered. Always try to receive various quotes form reliable agents or brokers who specialize in critical life insurance before making a final decision.

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