The difference between disability insurance and critical illness insurance
March 7, 2016
You probably don’t think twice about purchasing insurance for your car and home, but the most
valuable asset you have—you may not even think about insuring, and that’s your earning power.
Disability insurance and critical illness insurance are both types of living benefits you can set up to
protect yourself, your families and your financial assets in case of physical hardship.
While the two share similarities, these two types of coverage address entirely different needs. Knowing the specific reasons for Critical illness insurance and how it differs from long term disability can help you avoid a costly mistake that may affect your family’s financial security.
Below are the major differences between the two:
Disability Insurance: Disability insurance covers your earned income against the risk that a disability creates you to complete the core functions of your work.
Critical Illness Insurance: Critical illness insurance attempts to fill the gap between life and disability insurance. While disability policies cover lost employment income due to an accident or illness, Critical illness insurance policies pay a benefit when you’re diagnosed with a serious, life-altering illness or condition.
Payout: Replaces a portion of your income monthly
Flexibility: Smaller payments used in place of salary
Loss of income: Need to provide ongoing proof of loss of income
Continuation: Can stop when you are back to work and earning money
Critical Illness Insurance
Payout: Paid in a lump sum
Flexibility: Large payment can be used for treatment or any way you see fit
Loss of income: No ongoing proof of loss of income needed
Continuation: Is not effected by other income
Educated decisions are easier to make when you’re armed with the facts, and the fact of this matter is, you can now choose the best coverage to cover your family.