Q. Would critical illness insurance be a reasonable substitute for disability insurance?

The correct answer is:

No (or absolutely not!)

 

Not at all. Only 15 per cent of disability claims would also trigger a critical illness claim, according to course material for prospective life insurance agents.

 

How do the two insurances differ?

 

Disability insurance (or LTD - Long Term Disability) is designed to replace a portion of lost wages due to illnesses or accidents that meet the policy's definition for benefit eligibility. The benefit is paid on a monthly basis, and can often take up to three months for payments to begin.

 

Critical illness insurance provides tax-free lump sum benefit that is usually paid out 30 days after the initial diagnosis of a policy-defined illness.

 

Tip of the week:

 

If budget is tight, purchase a comprehensive disability plan first, then buy a critical illness plan with the remaining dollars. Some companies offer discounts if you purchase the two plans combined. The critical illness plan can be tweaked and modified to suit your budget. Purchase only the features that are most important to you.

 

Keep in mind, you own your critical illness plan. It cannot be cancelled by anyone but yourself. Once you obtain your policy, it becomes completely independent from any changes in your life, such as a loss of employment, change of career, or deterioration of health.

 

Next page >

 

Go to question #7.

 

 

 

Click a link below to jump to another related article:

 

Learn more about life insurance.

 

Learn more about critical illness insurance.

 

Learn more about disability insurance.