Critical illness insurance is a one-time lump sum payment when one is diagnosed with a critical illness.

There are about 22 illnesses defined as critical illnesses.  The big three are - cancer, heart attack and stroke.  Cancer accounts for about 60% of all claims made. Statistically about one in two people will have to deal with cancer in their lifetime.

The role of critical illness insurance is to help relieve the financial stress so that you can deal with the illness itself.  Critical illness insurance was first brought to the attention of the insurance industry in the early 80s by a heart surgeon.  He noticed that he did good surgeries, but his patients were not staying home long enough to recover as they had bills to pay and thus were going back to work too soon.  He encouraged the insurance industry to come up with a plan that would pay out so the patient could financially afford to stay home and recover well. 

Quite often people will use the critical illness insurance payout to go out of province or country for medical help that is not available locally.  If someone has a stroke, they may use the money to renovate the house to make it wheelchair accessible.