What is critical illness insurance?

Critical illness insurance is designed to provide financial support to policyholders upon the diagnosis of specific severe illnesses, such as cancer, heart attack, or stroke. This type of policy typically pays a lump-sum benefit, which can be used by the insured for various purposes, including medical expenses, mortgage payments, or any other living expenses that may arise during recovery. The crucial aspect of this insurance is that the payout occurs only when a policyholder is diagnosed with one of the covered serious conditions, thereby offering significant financial relief during what can typically be a challenging time.

Understanding the nature of critical illness insurance underscores the importance of having a safety net in place, particularly for unforeseen health challenges that might severely impact one's ability to generate income. The focus is squarely on serious illnesses rather than minor conditions or comprehensive coverage for all medical needs. This distinct focus differentiates it from other types of insurance policies that may cover a broader range of medical issues or injuries.