Critical Illness or Disability Insurance. What to have?

Published by on

When I meet with my clients to talk about their risk management, the conversation invariably comes around to what is the better coverage; Disability or Critical Illness Insurance.


In my insurance practice I try to keep things as simple as possible, so instead of talking about different insurance policies that cover different life needs such as mortgages, education, disabilities, serious illnesses, etc., I ask the simple question: "What is your biggest and most important asset?" The answer is of course your income and your ability to earn it, so if that is your biggest asset, then that is how you should be looking at designing your appropriate insurance coverage.


Disability and Critical Illness Insurances are not the same, although they have similarities. A disability can arise from many causes such as depression and other mental illnesses, accidents, arthritis, diabetes and many other physical ailments including heart attacks, strokes and cancers. The result is a reduction or complete elimination of your ability to earn an income because of a loss of time from work, or a loss of income or from being unable to perform one or more of your important occupational duties, qualifies you for Disability Income Benefits that are paid to you on a monthly basis.


Critical Illness Insurance on the other hand, is triggered by a medical diagnoses of a limited list of up to 28 specific illnesses, with the most claims arising from Heart Attaches, Strokes and Cancers. On the diagnosis of these specified illnesses, A lump sum equal to the insured amount is paid after surviving the initial diagnosis by 30 days. Once the benefit is paid there are no further benefits. Sometimes these illnesses may also trigger the disability insurance claim but not always. However, by insuring 1 or 2 years of your income in a Critical Illness Insurance policy, your spouse or care giver to take a leave of absence from their work to assist you in your treatment and recovery. Of course, there can be many other uses for the Critical Illness benefits that you receive, such as paying off debts, seeking alternative treatments or therapies, modifying accessibilities, or even taking a vacation to help reduce the stress that accompanies such illnesses.


From a Risk Management point of view, both Insurance coverage’s should be part of your program and hopefully, by understanding where and how they provide coverage helps to make your decision easier.