Choosing Between Disability Insurance and Critical Illness Insurance

Ian C. Langtree - Writer/Editor for Disabled World (DW)
Published: 2010/08/22 - Updated: 2020/12/22
Topic: Disability Insurance - Publications List

Page Content: Synopsis - Introduction - Main

Synopsis: Disability insurance or income-replacement insurance provides a monthly benefit if you ever should become disabled. Your insurance policy may cover as few as 3 to over two dozen critical illnesses.

Introduction

Disability insurance is also known as income-replacement insurance. It provides a monthly benefit to you if you ever in case you ever should become disabled, rendering you unable to operate in regular daily tasks. The disability is defined by the policy itself.

Main Item

These are the usual 3 categories of disability insurance:

• Any Occupation:

  Total disability to perform any occupation occurs when you are unable to work at absolutely any occupation whatsoever. Thus, if you are working as a professional golfer, and your disability does not allow you to perform your standard work tasks, but you can still work as a helping force in a local depanneur - you will not see any money from your insurance company.

• Regular Occupation:

  Total disability under this definition means the inability to perform at one's ordinary occupation as a result of an illness or an injury.

• Own Occupation:

  This specific definition is the gold standard. Under this definition, total disability is one's inability to perform at one's habitual occupation regardless if one is working in another gainful position.

Ceteris paribus, which means "all other things being equal", the stricter the definition of disability, the more expensive the payment. Such terms are reasonable since the insurer is facing an increased likelihood of paying you your insurance claim.

As for Critical Illness insurance, it pays out in a lump sum if you are found to have a critical illness which is covered by the plan. Your insurance policy may cover as few as 3 to over two dozen critical illnesses. The definitions are similar among carriers, but it is a good idea to contact your broker who works with several carriers.

Another difference is that Critical Illness payouts aren't dependent on your ability to peform employment duties. Instead, the price is generally even for 10 years, the first 20 years, to age 75 or up to age 100. The longer the premium guarantee period, the higher the initial premium.

Life Insurance Calculator: Calculate Amount You Should be Insured For : Free online life insurance calculator provides the amount you should be insured for in event of your death accident or disability.

Author Credentials: Ian was born and grew up in Australia. Since then, he has traveled and lived in numerous locations and currently resides in Montreal, Canada. Ian is the founder, a writer, and editor in chief for Disabled World. Ian believes in the Social Model of Disability, a belief developed by disabled people in the 1970s. The social model changes the focus away from people's impairments and towards removing barriers that disabled people face daily. To learn more about Ian's background, expertise, and achievements, check out his bio.