What is critical illness insurance, and for whom is it important and relevant?
Critical illness insurance is relevant for everybody, but especially to children; unlike the adult population, the child population doesn’t have vacation days or sick days, and the loss of work capacity does not affect them.
Statistics show that about 13 out of 100,000 children have cancer; the good news is that the chances of recovery are between 80%-90%.
Most of us have known or heard about a family with a child that has or had cancer or any other rare illness that leads to immune system failure. Nearly every day, we encounter a family asking for monetary aid to save their child from this terrible illness, and some of us do indeed help because we know the child in one way or another or because the story touched our hearts, and so we donate.
Nowadays, the period of complete recovery for a child that has cancer ranges from half a year to two years, depending on the type of cancer and on whether the child has to undergo surgery between treatments and an additional round of treatments.
In these unfortunate situations, at least one parent immediately stops working, devoting themselves to the process of treating and healing the child.
Famously, a pension insurance or an independent policy that covers the component of the loss of work capacity component only covers it if it results from an illness of the insured themselves, but not if it results from an illness of a family member.
Let’s say that an employee has accumulated many vacation days as well as payment for their child’s illness – on average, using those days will cover, at most, three months of absence.
The new situation facing us
As mentioned above, recovering from the illness takes longer than three months. According to the Central Bureau of Statistics, the average Israeli family has more than two children; in addition, there are the current costs of mortgage, which are not small, and the reduction of the family unit’s income due to the loss of one salary.
The existing solution
Children’s critical illness insurance gives the insured a one-time sum when the serious illness is discovered; this coverage provides a financial solution to the family from the moment of discovery, usually until the child’s complete recovery (depending on the insurance amount that was bought for the child).
Important points
- In most insurance companies, the policy will be cancelled after one claim; in adult policies, on the other hand, one can claim once for one illness and once again for another illness.
- Qualification period: from the child’s entry into the insurance until the day in which a claim can first be made, there is a qualification period of three months.
- The policy is automatically renewed every two years.
- At age 21, the child is automatically moved to the adult policy, without an additional medical underwriting.
- Children, of course, aren’t smokers, but if a smoking teen is added to the policy, or if a child becomes a teen or an adult (21+) and then starts smoking, we must declare this fact to the insurance policy – there is no obligation to declare any other component to the insurance policy, even if the child’s/teen’s/adult’s medical condition becomes worse at any point in time in which the policy is active. However, in most insurance companies there may be a new qualification period; on the other hand, the adult policy is more extensive than the child policy, and the former allows an additional claim for another illness (for example, if the insured has cancer, they can claim for another illness, one that is not cancer, in the future).
After prior warning from the insurance policy, the price becomes more expensive when the child/teen turns 21.
