What You Need To Know About Life And Critical Illness Cover Insurance

It happens so fast.  No one expects to be seriously hurt or worse, die in the course of daily living.  Yet, it happens and all too frequently.  As populations grow, so does the risk of unintentional injury or death.  Added to this, is the ever increasing chance of contracting potentially life threatening physical conditions such as cardiovascular and cancer related diseases.  Thankfully life and critical illness cover insurance is available to help prepare you and your family for the potential financial hit one you may face during a life time.

The peace of mind experienced by knowing, in case of the unexpected you have at minimum, prepared you and your family financially.  Alleviating the stress that comes from overwhelming medical bills is half the battle of getting back to health.  The burden of living without you is partially eased in case of fatal disaster.

However, before you run off to purchase life and/or critical illness cover it’s important to know just what these two programs offer, how they differ and what package will best suit you and your families needs.

Let’s start by looking at Life Insurance cover first.

Historically, Life cover has been around since the period of the Roman Empire.  Termed “burial clubs”, this antiquated form of Life cover would supplement the cost of the deceased funeral expenses and provide some monetary assistance to the survivors family.

A more modern version was introduced in the 1600’sby a the now famous Lloyds of London Company, but was more specifically designed to service the shipping and trading industry with it’s many related risks.

Though policies have become a bit more complicated today, Life cover has spanned the globe and has become an important addition to every civilized society.

What exactly is Life cover?

In its purest definition – Life Insurance cover is a legal contractual agreement made between Insurer and a Policy owner.  The Insurer agrees to pay according to the agreed upon terms a lump sum (benefit) to the policy holders designated parties (beneficiaries) at the time of his death in exchange for the Policy owner paying the required monetary amount (premium) determined at time of entering contract.  These premium payments are usually set to be paid monthly, some policies will allow a lump sum payment.

Here is where death insurance can become complicated and it is vital to take some time to identify the differences in the various forms of cover before investing in protection.

Listed below are the differing options with a brief description to give you any idea of how these options will affect you as a potential Life cover holder.  Please note due to lack of space we will not be including investment and annuity type policies in this article.

Temporary Term Life cover Insurance – Life cover for a specific length of years.  The premium may vary over time increasing or decreasing.  The terms of this life cover plan can be a minimum of one year (which may be renewed annually) with premium buying protection only in the case of death.  If the policy owner dies before the term has expired, payment will be made.  If she outlives the policy, no money is paid out to the beneficiary or policy holder.

Permanent Life cover Insurance – Policy remains active up to the time of death of policy holder.  The cancelling of this policy cannot be initiated by the Insurer other than in the case of application fraud.  Policy holder will have money management options as the policy builds over time.

Whole Life cover Insurance – This policy contracts a fixed premium price with a fixed and guaranteed death benefit.  This plan also allows for additional terms ( riders) to increase cover or provide greater monetary amounts to beneficiaries.  Also “loans” may be granted but will decrease the benefits given to the designated survivors.

Universal Life cover Insurance – This is the newest option and is a form of investment life cover.  Combining a cash account with the premium payments and related interest will be applied to these sums in order to increase the beneficiaries payout.

Limited Pay Life cover Insurance – this policy provides for a limited number of premium payments.  Once the contracted period of payment is met, between any variation of time starting at a minimum of 10 years or up to the age of 65, that policy has been paid for and no further premium payments are required.

Endowment Life cover Insurance – This is basically a savings plan.  The accumulated amount this plan the exact amount of the payment received once the policy owner reaches a certain age.  His being dead or alive is not a condition to distribution of the contracted amount (endowment).

Accidental Death Life cover Insurance – This policy is a limited life cover plan that will only cover death by accident which most often does not include suicide or health problems.

Keep in mind all of the above optional policies can include riders (policy add on), specific terms of contract, and confusing terminology that could disqualify a policy holder from receiving the expected benefits.  Be sure to read thoroughly through your policy before signing.

Taking a look at Critical Illness Cover Insurance

In 1983 a South African cardiac surgeon, Dr.  Marius Barnard presented a plan to the insurance world that would protect an individual’s life rather that providing for his death.  Today it is known as critical illness cover and is slowly growing in demand around the world.

Despite the benefits of nationalized health care, critical illness can create an overwhelming financial burden for anyone.  The ability to work may be at risk due to the illness itself or the stress it brings can make it difficult to hold a job.  The basic functioning of any home can take a hit; bills, utilities, fuel, food are all dependent upon a steady income.  When dealing with a serious illness you could loose more than just your health.

Critical illness cover was created to minimize some of this burden by paying a lump sum within a 30 day time period the policy owner is informed of his illness.  The money is paid directly to the policy holder and can be used in any way.  The critical illnesses covered usually includes: stroke, heart attack, cancer, organ transplants, blindness, organ failure, Parkinson’s and Alzheimer’s along with several more serious conditions.

Critical illness cover assumes you will survive your illness and is designed to help with your expenses while in recovery.  HOWEVER, the explanation here has been simplified for clarity so be careful.  Many policies have some very tricky stipulations to your critical illness that must be met before your funds are released.  Read and discuss carefully any and every policy you may be considering.

“The principle of life is that life responds by corresponding; your life becomes the thing you have decided it shall be.” Raymond Charles Barker

How does your life correspond to critical illness cover insurance and death? That is the question we all must consider for ourselves and our families.

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