In life we all encounter the unexpected. Although these events are unfortunate and can cause added stress in our lives, to some they are simply a part of life. In contrast to Life Insurance where the benefit is realized after the death of the policy holder. Today, the world of insurance has expanded to also provide benefits while the policy holders are alive – illness insurance or living benefit insurance. These plans are insurance policies that provide financial benefits to survivors who face issues due to aging, illness, accidents and dependency.
Just like Life insurance, this type of insurance, works by spreading financial risk among a large group of people, who pay into a pool or fund. This minimizes cost for an unexpected event like illness or other life conditions. Think of it like depositing money into a safety net that will provide the benefits when you need it.
Your Illness insurance policy is a contract between you and an insurer. You agree to pay a fee called a premium, and the insurer agrees to pay a lump sum or monthly payments as living benefits. The payout to you will receive, known as the living benefits are tax-free.
Just like life insurance getting Illness Insurance at a younger age is a benefit to you. When you apply for insurance, the insurer assesses the degree of risk that you represent. They look at things like your age, gender, weight and medical history and then place you into risk categories which help determine your premiums and your coverage. Usually, the younger and healthier you are, the lower the risk and the lower the premiums.