Updated: Dec 10, 2019
Critical illness insurance may be effective at covering costs that disability insurance doesn’t. The most compelling reason to buy a critical illness policy would be if someone isn’t eligible for disability insurance — for instance, a stay-at-home parent who doesn’t have an income to replace.
But it could also help someone unprepared for the financial hardships that may come with a critical illness diagnosis such as the cost of medical treatment or for a spouse to take time off work.
Unlike disability insurance, which protects your income to age 65 and generally kicks in after 90 days of disability, critical illness insurance pays out a lump sum in the event of critical illnesses such as cancer, a stroke or a heart attack.