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What is the difference between Disability and Critical Illness Insurance?

Updated: Feb 8




By Kaylin Fitzsimons


The two different types of insurance coverage, disability, and critical illness insurance, provide financial protection in the event of unique health-related issues. While both are designed to offer support during challenging times, they differ in their focus and the types of situations they cover.


1) Disability Insurance:

Purpose: Disability insurance provides financial support if individuals become unable to work due to a disabling illness or injury. It replaces a portion of your income during the period of disability.

Coverage: Disabilities covered by this type of insurance can include both short-term and long-term disabilities, which may result from accidents, illnesses, or other health conditions.

Payment Structure: Disability insurance typically pays out a percentage of your pre-disability income monthly.


2) Critical Illness Insurance:

Purpose: Critical illness insurance is specifically designed to provide a lump sum payment upon diagnosing a covered critical illness or medical condition. This lump sum can be used for various purposes, such as medical treatments, lifestyle adjustments, or other financial requirements.

Coverage: Critical illness insurance covers specified critical illnesses or conditions, which may include cancer, heart attack, stroke, and other major health issues defined in the policy.

Payment Structure: The benefit is a one-time lump-sum payment, and it is not contingent on the insured's ability to work. The payout is made upon the diagnosis of a covered condition, regardless of the duration of the illness or the insured's ability to work.


In summary, the main difference lies in the purpose and coverage. Disability insurance focuses on providing income replacement if you are unable to work due to a disability, whether short-term or long-term. On the other hand, critical illness insurance provides a lump-sum payment upon the diagnosis of specific critical illnesses, irrespective of your ability to work. Both types of insurance can complement each other to provide comprehensive coverage for different health-related scenarios. It's important to carefully review the terms and conditions of each policy to understand the specific coverage and limitations.




This publication contains the opinion of the writer. The information contained herein was obtained from sources believed to be reliable, but no representation or warranty, express or implied, is made by the writer, Mandeville or any other person as to its accuracy, completeness or correctness. This publication is not an offer to sell or a solicitation of an offer to buy any securities. The information in this publication is intended for informational purposes only and is not intended to constitute investment, financial, legal, tax or accounting advice. Many factors unknown to us may affect the applicability of any statement or comment made in this publication to your particular circumstances. Hence, you should not rely on the information in this publication for investment, financial, legal tax or accounting advice. You should consult your financial advisor or other professionals before acting on any information in this communication.

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