Definition
Critical Illness Cover
Critical illness cover pays a lump sum on first diagnosis of a listed serious illness such as cancer, heart attack or stroke, regardless of treatment cost.
Unlike indemnity health insurance that reimburses hospital bills, critical illness (CI) is a benefit policy: it pays a fixed sum on diagnosis (subject to a survival period and definitions), which the policyholder can use freely for treatment, income replacement or debt repayment.
CI plans list the covered illnesses precisely, and payouts depend on meeting the policy's medical definition and surviving the specified period after diagnosis. They suit those wanting financial cushioning against income loss during a major illness, complementing rather than replacing a regular mediclaim policy.
Related terms
- Indemnity PrincipleThe principle of indemnity ensures an insured is restored to their pre-loss financial position but cannot profit from a claim, applying to general insurance.
- Morbidity TableA morbidity table shows the probability of falling ill, being injured or becoming disabled at each age, used to price health and disability insurance.
- Personal Accident CoverPersonal accident (PA) cover pays fixed benefits for death or disablement caused by an accident, on a benefit (non-indemnity) basis.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.