Critical Injury Insurance
It may sound like a form of health insurance, but critical injury insurance doesn't pay for medical costs. It is an insurance policy that helps pay for costs such as mortgages, lost wages and other costs that come from serious life-threatening injuries that deprive the policyholder of income. In other words, it is designed to fill the gaps in lost wages, traditional long-term care and disability insurance.
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Not Disability Insurance
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Unlike disability insurance, which is a very expensive form of insurance designed to cover medical costs associated with long-term or life-threatening illnesses that can drag on for months and years, critical illness policies most always provide lump-sum payments within a specified time of a diagnosed illness like stroke, heart attack or cancer. The exact ailments and payment amounts to a claimant are specified in the specific policy selected by the policyholder.
Odd Insurance
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Most insurance providers offer two kinds of critical injury coverage. One requires no underwriting questions or physical. This type pays out a lesser amount for a lesser premium. The other requires a thorough medical history to evaluate the actuarial odds of becoming afflicted with a particular disease; it is more expensive but offers a higher payout. Few single people take advantage of critical injury insurance, according to statistics compiled in several countries where the policies are offered.
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Survive to Collect
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Most policies specify that the claimant survive specified periods for designated illnesses. The survival period varies by insurance company, but as the insurance is increasingly used the waiting periods are becoming more standardized industry-wide. The survival clock starts ticking at the time of diagnosis, and payment typically won't be made for 28 to 30 days after the required surgical procedure.
Relatively New
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Critical injury insurance originated in South Africa and spread to Britain, Australia and, more recently, Canada. The United States have been the latest to offer the policies, but it is expected that similar products will spread from those countries. Its apparent resistance to widespread acceptance may be tied to its relative lack of popularity (not widely accepted by single people).
Age Dependent
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Obviously the age of those interested in critical injury insurance plays a significant role in the cost of its premiums--the older the applicant, the more expensive the premium due to the decreased likelihood of survival.
Two Advantages
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For one, the lump sum payment is tax deductible in most countries, although that varies. It is recommended that the deductibility issue be explored before purchasing this form of insurance. Depending on the illness, tax deductibility may be a secondary issue. The second advantage is that the lump-up payments can be used at your discretion to pay those bills deemed most pressing. The idea behind the insurance is to be able to continue as normal a life as possible without severe financial constraints during your recovery period.
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References
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