Catastrophic Illness Insurance
What Does Catastrophic Illness Insurance Mean?
Catastrophic illness insurance is a type of coverage that protects the insured for a specified period if they develop one of the major health conditions or issues outlined in the policy. Typically, the benefit is paid out as a lump sum. Coverage may include conditions such as stroke, heart attack, cancer, and long-term hospitalization, among other serious health issues. This insurance can provide supplemental coverage in addition to an existing health or disability policy.
Catastrophic illness insurance is also referred to as critical illness insurance.
Insuranceopedia Explains Catastrophic Illness Insurance
Health insurance covers many medical expenses, while disability insurance provides partial income replacement in the event of a catastrophic illness. However, these two types of insurance do not necessarily allow an individual to maintain their full pre-illness income or cover all necessary medical treatments and other expenses. In this context, catastrophic illness insurance can be beneficial by providing additional funds to the policyholder following a critical illness diagnosis. Its primary purpose is to prevent bankruptcy resulting from costly or prolonged health issues.
Although restrictions vary by provider, most will reject claims due to a pre-existing condition, if the policyholder does not survive 30 days after the diagnosis, or if they receive a critical diagnosis within 90 days of the policy coming into effect.
