Dread disease cover is a long term insurance product that pays out in the event that the policyholder is diagnosed with a serious and often persistent illness. It is usually offered as an additional benefit on a life insurance policy catering for the risk of illness, but can be taken out as a standalone policy. The types of disease covered by the policy are usually listed and limited by the insurance company. (That is, they only cover certain types of disease.)
The payout for a dread disease insurance policy is usually equal to that of the life insurance payout, but how much the insurance company pays out, depends on the disease and the impairment. For example, if a qualified medical practitioner diagnoses the disease and gives the policyholder 12 months or less to live (that is a terminal illness), then the full benefit will be paid out. At times the dread disease is manageable (such as diabetes or heart attack) in which case the insurance company may opt to pay out a portion of the dread disease benefit.
What does dread disease cover covers?
Dread disease covers a range of illnesses including cancer, stroke, heart attack, coronary artery bypass and others, depending on the insurance company. The amount of the policy should provide enough money for you and your dependents to live off should you be diagnosed with a dread disease and unable to work. This means it should cover the following:
- Expenses such as home loans and car instalments
- Income lost during recovery periods
- Hospitalization fees and home care if needed
- Travel costs for treatment at specialist healthcare centres
Each disease also differs in severity and insurance companies will pay out varying amounts for the different stages or severity of the illness. This amount should is usually a percentage of the overall amount. Make sure the principle amount is high enough for the percentage amounts to provide help for recovery.
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