Critical illness insurance is an insurance product designed primarily to provide protection against critical illnesses, providing a lump-sum benefit to an insured person for financial support. In general, if the insured person is unfortunately diagnosed with a critical illness (including severe illness or surgical procedure) that meets the definitions specified in the policy, the insured person can receive a lump-sum cash benefit with no restriction on its use (e.g. to pay for medical expenses or to support their and their family’s living expenses).
Product features
Coverage：
Commonly covered critical illnesses include cancer, stroke, heart-related diseases, and severe illnesses related to major organs. Coverage is determined under the terms and conditions of each policy.
Issue age：
Normally from 15 days to 65 years old. Some policies may offer lifelong protection.
Claims settlement：
In general, claims settlement is provided in a lump-sum cash, and in the form of a “single claim” or “multiple claims”, depending on the individual policy terms:
“Single claim” means the insured persons will receive a one-off lump sum claims settlement provided by the insurer in the event of a diagnosis of critical illness covered by the policy; after claims settlement, the policy will be terminated.
“Multiple claims”, refers to an insurance policy that provides multiple claims settlements. If the insured persons suffer a recurrence of a covered illness or are diagnosed with another covered illness, they can receive claims settlements twice or more according to the policy terms. The exact number of claims and the benefit limit depend on the terms of each policy.
Common types of policies
In general, there are two types of policies: "term critical illness" and "whole life critical illness".
Term critical illness policy：
Generally, this is a pure protection product and does not comprise a savings component.
The coverage period is generally 1, 5, 10 or 15 years, and the policy can be renewed up to a specified age. The insured person is protected within the specific coverage period as stated in the policy.
Whole life critical illness policy：
This policy has a savings component.
(For a participating policy, policyholders can receive a cash payout (comprising guaranteed and non-guaranteed amounts) upon policy surrender. For a non-participating policy, only the guaranteed amounts are provided upon policy surrender; there are no additional returns. The amount of the cash value is affected by the claims settlement amount. Click here for more information about participating policies.)
Generally whole-life coverage is provided (or until 100 years old).
It has a level premium structure and a fixed payment period. In general, the premium remains unchanged regardless of attained age after policy issuance.
Its premium level is normally higher than that of a term critical illness insurance policy because of the savings component, with the same insured amount.
Mode of application：
Most critical illness insurance policies can be purchased as a stand-alone policy or as a rider attached to a life insurance policy. Please note that once the critical illness claim is paid, the sum assured of the life insurance policy may be reduced accordingly.
(Click here for more information about life insurance.)
The above information is for reference only. For the coverage, exclusions, benefit limits and premium levels of a specific insurance plan, please refer to the relevant policy terms.