When I ask people, I noticed that most of them confuse disability insurance and critical illness insurance. Although these types of insurance have similarities, they are different and are complementary in any financial planning. I have therefore prepared this little comparison of the five mDIn points you should be able to establish the uniqueness of these two important insurance coverages.
1. Scope of Coverage
Disability Insurance (DI): You will be covered for any event, accident or illness that prevents you from working your job.
Critical Illness Insurance (CI): You are covered only when serious illness or medical condition covered by your policy.
2. Type of benefits
Number: Monthly Income. Benefits will be pDId for the duration of your disability. The maximum number of months is defined by contract. The benefits are tax free if you have pDId the premiums with after tax dollars.
CI: Lump sum payment. This payment will be made between 30 and 90 days after diagnosis usually. The benefits are usually tax free. You must live 30 days after diagnosis in order to get the sum of money.
3. Amount of benefits
DI: The maximum benefit is defined in the contract. It usually can not exceed 80% of your gross income.
CI: The maximum amount of benefit is defined in the contract. It usually can not exceed 9 times your gross annual income.
4. Integration of benefits
DI: Benefits could be reduced in whole or in part if other plans (private or public) also pay benefits for the same disability.
CI: No integration possible.
5. Age of termination of the contract
DI: Most disability insurance policies expire at age 65 or the insured person ceases to be employed full time (more than 20 hours per week) or the employed retires.
CI: Most insurance companies offer critical illness insurance can cover you until age 100 or life. Normally at age 100 they are considered paid up and no premiums after age 100 but the coverage continues.
In Summary, disability insurance and critical illness insurance are both relevant, we must just make sure to choose a protection that meets your needs and your budget. On average one in three will experience at least one period of disability of 90 days or more before age 65 years In addition, the number of cancer cases and serious illness increases dramatically year after year. In this context, it is best to guard against these situations and to choose coverage that meets your needs.
About the Author:
Barrie Conrod is an independent licensed Insurance Agent in Waterloo Ontario. He has worked for 11 years in the business and has extensive knowledge of the risk management business, along with guaranteed investment products for these unstable financial times. For more information and a no obligation discussion either email at barrie@jantzifinancial.com or call toll free 1-800-878-1952 Ext 0.
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