10 Advantages of Having Life Insurance with Critical Illness Coverage in the Philippines

 

 

Introduction

Having life insurance with critical illness coverage is a crucial and versatile financial product that offers numerous benefits to policyholders, ensuring comprehensive protection for both the insured and their family. This type of policy provides a safety net that safeguards one’s financial stability during difficult times, especially in the event of serious health conditions. Life insurance with critical illness coverage goes beyond the traditional scope of a standard life insurance policy by adding a layer of financial protection against major health issues such as heart attack, stroke, and cancer, to name a few.

This combined coverage offers peace of mind to individuals at different stages of life, from young professionals to retirees, by ensuring that they and their loved ones are protected against unforeseen health crises that could lead to significant medical costs. With this in place, policyholders can face life’s challenges knowing they have a solid financial backup.

Here are ten compelling advantages of having critical illness coverage integrated with life insurance in the Philippines. These insights, drawn from financial experts like Wealth Arki and Ready To Be Rich, shed light on how this type of policy can serve as a cornerstone of financial security, providing long-term stability and aiding in personal wealth management.

Financial Protection Against High Medical Costs

Life insurance with critical illness coverage offers essential financial protection by providing a lump sum payment when diagnosed with a severe illness, such as cancer, stroke, or heart attack. This financial payout is particularly valuable, as it can replace lost income, cover the cost of medical treatments, or even pay off debts such as a mortgage, relieving some of the financial burdens that arise during a time of health crisis. Wealth Arki highlights that critical illness coverage helps policyholders manage future medical costs without depleting their savings. The medical bills associated with serious illnesses can be overwhelming, and the lump sum payment from critical illness coverage provides an essential financial cushion during these difficult times.

For example, consider Maria, a 45-year-old executive from Manila, who was diagnosed with early-stage breast cancer. Her treatment plan involved expensive chemotherapy sessions and medications, in addition to other medical care that could have drained her savings. However, with critical illness coverage included in her life insurance policy, Maria received a substantial lump sum payment upon diagnosis. This amount allowed her to pay for her medical treatment, cover her daily living expenses, and continue supporting her family, without worrying about draining her personal savings or going into debt.

Income Replacement During Recovery

A major concern when diagnosed with a critical illness is the potential loss of income, especially if the illness makes it impossible for the individual to continue working. The lump sum payment from critical illness coverage can serve as an income replacement, enabling the policyholder to maintain their standard of living and meet financial obligations without having to worry about working during recovery. Ready To Be Rich points out that integrating critical illness coverage with life insurance provides a vital layer of income protection during times when salary might be reduced or temporarily unavailable due to illness.

Take, for instance, John, a 38-year-old graphic designer, who was diagnosed with a heart attack. He was unable to return to work for several months due to his recovery. Fortunately, John had life insurance with critical illness coverage, which provided him with a lump sum payout. This payment served as his income replacement, covering his daily expenses and preventing any financial strain during his time off. Without this coverage, John would have struggled to meet his financial obligations while focusing on his recovery.

Comprehensive Financial Planning

Incorporating critical illness coverage into life insurance ensures that individuals have a more comprehensive financial safety net throughout different stages of their lives. This combination of life and critical illness coverage offers a more complete approach to financial planning, addressing both long-term financial goals and the immediate need for financial protection in the event of serious health problems. By having both forms of coverage in place, individuals can rest assured that they are not only protecting their family’s future in the event of death but also securing their financial well-being during a health crisis.

For example, Ana, a 32-year-old teacher in Quezon City, decided to integrate critical illness coverage into her life insurance policy to provide her with a more complete financial plan. By doing so, Ana ensures that her family would be financially protected if she were to pass away, while also having the added benefit of critical illness coverage to assist with medical costs and income replacement should she experience a severe health condition, such as a stroke or cancer. This holistic approach to financial security provides Ana with peace of mind knowing that she is well-prepared for both the unexpected and long-term financial needs.

Peace of Mind

One of the most profound benefits of having life insurance with critical illness coverage is the peace of mind it provides. With the assurance that you have protection against the worst health conditions, such as cancer, heart disease, or stroke, you can live your life more fully and confidently. Knowing that your family will be financially secure in the event of a health catastrophe or an unexpected death can greatly reduce anxiety, allowing you to focus on enjoying your life without constant worry. As highlighted by Ready To Be Rich, this peace of mind is not just about financial security—it can also improve your overall well-being by reducing stress and promoting mental health.

For example, consider Liza, a 40-year-old mother of two from Cebu. After securing life insurance with critical illness coverage, Liza felt an overwhelming sense of relief, knowing that if she were ever diagnosed with a serious illness or faced an untimely death, her family would not face financial hardship. This sense of security allowed her to focus on her career and family life with less stress about the future. Her coverage also gave her the confidence to pursue her health goals, knowing that any unexpected illness would not impact her family’s financial stability.

Better Health Care

Critical illness coverage can also significantly improve access to better healthcare options. The lump sum payment from the coverage allows individuals to seek the best possible treatments and access high-quality medical facilities, which might otherwise be out of reach due to financial constraints. Wealth Arki emphasizes that the ability to access top-tier healthcare can improve both recovery rates and the overall quality of life during treatment. With critical illness coverage, individuals are not limited to the basic treatments provided by public health insurance and can seek advanced medical care that enhances their chances of recovery.

Take the case of Victor, a 50-year-old businessman from Davao, who was diagnosed with advanced cancer. Due to the financial support from his critical illness coverage, Victor was able to travel abroad to receive cutting-edge cancer treatment that would not have been available locally. This access to superior healthcare significantly improved his chances of recovery, allowing him to continue managing his business and leading a normal life. Without critical illness coverage, he might have been restricted to more limited local treatments, potentially affecting his overall outcome.

Protection from Inflation

Another significant advantage of critical illness coverage is its ability to provide financial protection against inflation. Medical costs, like most other expenses, tend to rise over time. With the lump sum payment from a critical illness policy, policyholders can be assured that their medical and living expenses will be covered—even if the cost of treatments or basic necessities increases due to inflation. Ready To Be Rich points out that it is essential to factor in the rising costs of healthcare when considering the benefits of critical illness coverage, as medical inflation can greatly affect the affordability of treatments and healthcare services over time.

For example, Janet, a 45-year-old schoolteacher from Iloilo, had a critical illness coverage policy that helped her cover the costs of her medical treatments for a stroke. However, when her health deteriorated further, the cost of ongoing treatments and medication had risen significantly due to inflation. Luckily, her insurance lump sum payment took into account the rising cost of healthcare, which ensured she could continue to afford the medical care she needed. Without this foresight, Janet may have struggled to afford the necessary treatments, especially as inflation steadily increased healthcare costs.

Tax Incentives

One of the lesser-known advantages of life insurance in the Philippines, especially when combined with a critical illness rider, is the potential for tax incentives. Depending on current tax laws, policyholders may be able to enjoy tax deductions or exemptions on the premiums they pay for their life insurance policies. This can be a valuable benefit that helps reduce overall tax liabilities while providing long-term protection. However, as tax laws are subject to change, it is crucial to consult with a financial advisor, such as those from Wealth Arki, to determine the exact tax privileges attached to your specific life insurance policy.

For example, Carla, a 38-year-old entrepreneur in Manila, took out a life insurance policy with a critical illness rider for herself and her family. When consulting with a financial advisor, Carla learned that she could claim a tax deduction on her premiums, which helped her lower her taxable income at the end of the year. This tax break gave Carla extra funds to reinvest in her business and provided her with additional savings. Without the tax incentives, she might have had to allocate more of her income toward insurance costs, leaving her with fewer resources for other financial goals.

Use of Benefits on Any Circumstance

The lump sum omnibus benefit payable to the insured upon critical illness diagnosis isn’t designated to just pay for medical expenses. The claim may be used for the insured’s benefit in any way, such as paying off debts, a child’s education, or covering the costs of lifestyle adjustments. Ready To Be Rich notes the flexibility this feature permits in using your benefit, allowing you to direct it to the areas that will need it most.

Enhanced Stability

Having both life and critical illness policies provides for enhanced financial stability for both you and your family. This is the key that assures you do not lose all your savings and assets due to higher medical bills or the loss of income because of that illness. Wealth Arki captures this better, that stability secures long-term financial health.

Enhanced Policy Value

Better value comes to a life insurance policy when you add critical illness coverage to it. In fact, it transforms a plain life insurance policy into a truly financial product with serious protection and many benefits. Ready To Be Rich highlights that this value makes the policies more attractive and worth buying.

Final Thoughts

Life insurance critical illness offers a lot of benefits like financial protection from high medical costs, replacement of income during recovery, comprehensive financial planning, peace of mind, access to quality healthcare, protection from increasing inflation, tax benefits, flexible use of benefits, enhanced policy value, and enhanced financial stability. By securing critical illness coverage into their life insurance, the Filipinos can secure an overall financial cover for both them and their family. Would you like to learn and maximize the advantages through these two sources, Wealth Arki and Ready To Be Rich?.

A multi-award-winning blogger and advocate for OFWs and investment literacy; recipient of the Mass Media Advocacy Award, Philippine Expat Blog Award, and Most Outstanding Balikbayan Award. Her first book, The Global Filipino Bloggers OFW Edition, was launched at the Philippine Embassy in Kuwait. A certified Registered Financial Planner of the Philippines specializing in the Stock Market. A recognized author of the National Book Development Board of the Philippines. Co-founder of Teachers Specialist Organization in Kuwait (TSOK) and Filipino Bloggers in Kuwait (FBK). An international member of writing and poetry. Published more than 10 books.  Read more: About DiaryNiGracia