What is provided by critical illness insurance upon diagnosis?

Critical illness insurance is a type of coverage that pays out a lump sum upon the diagnosis of specific serious health conditions. This benefit is designed to provide financial support when an individual is faced with a significant health challenge, such as cancer, heart attack, or stroke. The lump sum payment can be used at the policyholder's discretion—whether to cover medical expenses, replace lost income, or address any financial obligations that may have arisen as a consequence of their illness.

The nature of the payment being a lump sum is crucial, as it gives the insured individual flexibility and immediate access to funds, which can be particularly important during a time of crisis. This stands in contrast to other forms of insurance that may provide regular payments or limited-term coverage, which is not the primary function of critical illness insurance. Thus, the focus is on the one-time financial support that aids in managing the significant burdens that come with serious health conditions.