Most people shy away from the subject of insurance, even though it’s simply a risk management tool against unforeseen circumstances. Some find the numbers involved overwhelming, while others believe that insurance is strictly limited to life, cars, homes and retirements. While home and life insurance are the most common policies, there are other essential policies that individuals must explore to secure their future.
Critical Illness protection is one such policy that needs to be demystified.
Critical Illness is defined as being diagnosed by a life-threatening disease such as heart attack, stroke, cancer, Parkinson’s disease, Alzheimer’s disease, brain tumor, multiple sclerosis, renal failure, paralysis, blindness or deafness. An individual affected by any such conditions doesn’t suffer only from emotional or physical distress, but it is likely they will feel under financial duress too.
Critical illness protection is what we call a ‘living’ benefit insurance. Unlike life insurance, which pays in case of death – I haven’t come across anyone who needed money after death — a critical illness protection policy pays you money when you are alive. It protects your most valuable asset, your income.
The probability of someone being diagnosed with a critical illness before the age of 65 years is far greater than death. All the savings that you may currently be setting aside for your old age or your children’s education may not be available if you or a family member is diagnosed of a heart attack, cancer or another critical illness.
Let’s look at a case study to understand how critical illness can sneak into your life, uninvited.
Rakesh and his wife were happily married with two children and residing in Karama. With their combined income of Dh27,000 per month, the couple was saving Dh3,750 after taking care of expenses such as rent, education, food, bills etc. They had even invested in a property, a 1BHK apartment, in International City. Life was progressing decently well for this family of four until Rakesh suffered a heart attack.
He had to undergo bypass surgery and was hospitalised for a week after discharge and advised 90 days bed rest.
Bypass surgery and medicines — Dh160,000.
Rakesh’s wife on leave for three weeks.
Rakesh on leave for four months.
With the collective income of the household now on hold, how do Rakesh and family tackle the future?
This hypothetical scenario has been a nightmare reality for several families and individuals around the world. Critical illnesses are unpredictable in nature and can affect an individual anywhere, at any time. In Rakesh’s case, all his issues would have been better handled had he invested in a critical insurance policy.
The first reaction to being diagnosed is disbelief, followed by shock, sadness and anger, finally boiling down to the stressful questions of managing the treatment expenses. We all have enough worries in our lives; paying the bills if we get sick shouldn’t be one of them. This is why it is worth noting that managing a critical illness without proper cover could result in:
- Loss of income.
- Increase in household expenses.
- Childcare expenses.
- Shortfall between income and expenses.
- Retirement savings wipe out.
- Education fund of children wiped out.
- Sale of ancestral property at a loss.
Additionally there are the expenses of a private nurse in extreme situations, the home renovations to accommodate the new lifestyle, special transportation, non-covered experimental treatments and other medical expenses that are not covered by a standard insurance policy.
For someone battling a critical illness the expenses increase and income goes down. At that time it is more important to spend time with the family, spend time recouping and not worrying about finances. Worrying about finances could be one of the reasons causing a heart attack in the first place and is quite often one of the reasons of having a relapse while recovering.
While the potential recovery depends on the individual’s determination and family support, a comprehensive critical illness protection insurance policy will surely assist by alleviating the financial worries associated with these illnesses. The policy may not help with the emotional pain but it will certainly help ease the financial pain associated with surviving critical illness.
The right critical illness protection policy can provide you up to Dh4,600,000 on diagnosis of any of the covered illnesses.
Here are some statistics to get you thinking about securing you and your family’s financial future in the event of sudden critical illness.
- The UAE has the second highest rate of diabetes in the world.
- Cancer is the third leading cause of death in the UAE after cardiovascular disease and trauma.
- Smoking, stress, junk food and lack of exercise are creating heart-disease patients in the UAE 15 years earlier than in the west.
A critical insurance protection policy is planned to protect you and your family from unforeseen circumstances. Monthly investments towards the insurance policy can range from Dh65 upwards, depending upon age, the cover amount and health and lifestyle of the individual.
How often do you go on holidays and for how long? For 15 days, a month? Have you gone on a three-month holiday? Quite often people say they can’t afford it. One day your doctor could ask you to take a three-month holiday. How will you afford it then?
Here is another example for you to ponder over — your salary is Dh25,000 a month. Your employer offers to pay you Dh24,000 a month and gives you two options for the Dh1,000 per month being deducted.
- In case you fall sick with a critical illness, he’ll continue to pay your salary for one year while you recover and provide you your job on recovery
- He will return the deducted amount to you in 15 years, which amounts to a saving of Dh180,000.
Would you opt for such an option?
Protect your savings, your wealth, your portfolio, your financial future by ring fencing it with a critical illness protection plan.
Like a healthy lifestyle, critical illness protection can be your biggest gift to yourself. Talk to us or e-mail us at email@example.com to learn more.
By Savitha Shetty, Vice President
“Why do I need Critical Illness cover? I have Medical Insurance” This is the typical reaction I get when I ask friends if they have a critical illness cover?
Let’s start with the very basic- What is a critical illness cover? This is a cover which pays out a lumpsum (sum assured) when one is diagnosed with a major listed illness. Most of the insurance companies’ critical illness list typically include about 32 illnesses like cancer, stroke, first heart attack, motor neuron disease and more.
Let us look at two real life examples which illustrate how this lumpsum payout could have significantly helped these individuals.
Story 1: Mrs. Sultan, an Arab national, was recently diagnosed with breast cancer in 2018. She has an above average enhanced medical insurance policy which was sufficient to met her regular medical insurance needs. However, when she got diagnosed with breast cancer the doctor prescribed many tests which aren’t typically covered by most insurance policies. The cost of treatment has now surpassed the available limits on her medical policy. Mrs. Sultan and her family are now digging into their savings to pay for these medical tests. Not only that Mrs. Sultan has young school going kids. Though she received some support from her family, she has had to hire some additional help at home to help take care of kids and manage the household while she is undergoing treatment. The financial stress in addition to the emotional stress of the illness has taken a significant toll on the couple.
A critical illness policy would have saved a lot of the agony, at least the financial ones, for the Sultans.
Story 2: Mr. Majumdar, aged 35 years,was working as one of the Directors at a large financial firm in DIFC. Due to economic stresses the company decided to shut operations in 2010. All employees were made redundant. Back in 2007,I had asked Mr. Majumdar to consider having a critical illness policy but after a lot of back and forth, he concluded that his medical insurance provided him sufficient cover and that he didn’t see the need to buy a critical illness policy.
As destiny would have it Mr. Majumdar was diagnosed with stomach cancer soon after he was made redundant. The timing
couldn’t be worse. He had NO MEDICAL INSURANCE to start with;two young kids with one ready to start schooling and; a household living expenses that won’t take a break.
Buying a new medical insurance was not an option as medical insurance gets more expensive when a severe medical condition is already diagnosed. Mr. Majumdar had to depend on social service organizations to fund his cancer treatment and all his savings were exhausted to ensure that his family is comfortable.
Had he CHOSEN TO BUY A CRITICAL ILLNESS policy, the scenario would have been different. He would have been paid a lumpsum (for eg. USD 250,000) as soon as he was diagnosed with cancer. He would have paid for his treatment without having the stress of where money for his treatment would come from. Instead of losing sleep over what has happened, he could have recovered faster, with his savings still intact.
Hope the above real-life stories help answer the question of “Why do I need critical illness cover when I have medical insurance?”
*We have disguised the names of the actual persons to protect their privacy
** Premiums will vary depending on every individual’s unique circumstance