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Facing the challenges of critical illness

Critical illness can affect us when we least expect it...

The consequences can be devastating for the patient and their loved ones.  During these challenging times, access to financial support can be crucial, as a serious illness in your family can often impede your ability to work, in addition to introducing a range of unexpected costs.

A critical illness policy can help you to manage these challenges by providing a financial buffer that you can access when you need it most. While many life insurance policies only pay out in the event of the life assured’s death, critical illness cover allows you to access a lump sum while you focus on your recovery.

How do critical illness policies work?

Critical illness policies are available in a range of options depending on your needs and the terms of the provider.

One common method of taking out critical illness cover is to combine it with another product, usually life insurance or a long-term savings scheme. However, it can also be available as a standalone product.

What does a critical illness policy cover?

The exact terms of a critical illness policy may vary from one provider to another, but typically they will be available to people dealing with conditions such as cancer, a heart attack, kidney failure or a stroke. They can also cover recovery from surgical procedures such as coronary artery bypass or a major organ transplant.

Before taking out a policy, it is important to carefully review the exclusions and conditions, as not all types of serious illness or surgeries may be included in the policy.

How do I draw money from a critical illness plan?

The way a critical illness policy pays out can also vary depending on the plan or provider. Some plans will pay out a lump sum on diagnosis of a covered critical illness, while others will pay out on a scale linked to the severity level of your condition.

Certain policies also come with additional benefits such as guaranteed life assurance or an extension of the policy to also cover your spouse or children.

How does a critical illness cover differ from health insurance?

As a rule, health insurance is usually intended to be used to cover the specific costs of medical treatment.

On the other hand, critical illness cover can be used to help you to cope with the wider implications of long-term illness or incapacity. For example, you could use the pay-out to clear existing debts or to help with your living expenses while you focus on recovery.

You can also use the sum assured to pay for any other medical or treatment-related expenses that may not be covered by your health insurance or those which contribute towards rehabilitation costs.

Is critical illness cover affordable?

The cost or premium for a critical illness cover is calculated on the basis of several factors, including the age, occupation, the medical history of the life assured and also the level of cover that you need. Health and lifestyle factors can also be important – such as whether the life assured  smokes or is overweight.

For this reason, you will usually be asked to answer a number of health and lifestyle related questions when you apply for the policy. Your exact premium will then be confirmed after your answers have been reviewed.

Please note that your cover will only commence after the company has informed you that your application has been accepted.

As everyone has different medical and personal circumstances, it is important to get a quote for a more accurate idea of your premium.

At HSBC Malta, our financial planning advisers can also help you work out the cover you require and provide you with a quotation for the cost of the cover.

This article was written by Josef Camilleri, Head of Products & Distribution at HSBC Life Assurance (Malta) Limited. It originally appeared in the Times of Malta on 30 August 2022.

Approved and issued by HSBC Bank Malta p.l.c., (116, Archbishop Street, Valletta VLT1444).  HSBC Bank Malta is a Tied Insurance Intermediary for HSBC Life Assurance (Malta) Ltd under the Insurance Distribution Act (Cap. 487 of the Laws of Malta) and is regulated by the Malta Financial Services Authority.

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