Terminal Illness Insurance vs. Critical Illness Insurance: What’s the difference?

When you decide to purchase life insurance, you will be faced with the choice to purchase various types of coverage in your policy.  A financial securities advisor such as Robert Yancovitch can help you to best understand the different options, but what follows here is a basic discussion of two of the options you may encounter: Critical Illness Insurance and Terminal Illness Insurance.  Knowing the difference is very important when you consider purchasing life insurance.

Basically, a Critical Illness Policy offers a broader scope of coverage than a Terminal Illness Policy would.  Generally, terminal illness coverage (or Accelerated Death benefit as it is otherwise known) pays out to the policyholder a capital sum if he is diagnosed with a terminal illness.  A terminal illness is defined as one from which the diagnosed person is expected to die within 12 months of receiving the diagnosis from a physician who specializes in that illness.  Often, terminal illness coverage is part of the umbrella of coverage offered by a life insurance policy, but this is not always the case.

Critical Illness Insurance, on the other hand, is generally a “stand alone” policy, as they cover those who have been diagnosed with any of a list of about 20 different illness.  It’s typical to have to pay an extra premium to have Critical Illness coverage.  Critical Illness insurance covers, for example, the loss of wages that may result from having to scale back hours due to a chronic illness.  Note that a Critical Illness policy covers things like losing one’s eyesight or suffering from stroke or heart failure, whereas Terminal Illness Insurance does not.  Critical Illness coverage would be paid out to you in the event of such an illness to cover things such as your living expenses and medical treatment needs.

Examples of the types of illnesses/injuries covered by Critical Illness Insurance include:

Severe burns


Parkinson Disease



Kidney failure

Blindness or deafness

And Alzheimer ’s disease

None of us knows what the future holds.  You can be healthy today and be diagnosed with a terminal illness tomorrow.  It is very costly to be sick, so it’s never a bad investment to purchase insurance coverage that will help alleviate the costs associated with your treatment, loss of wages, hospitals stays, etc.  Talk to your financial securities advisor today to find out what types of coverage are available to you and what your best course of action is.

Too often, people assume that they are invincible, and that they will never be diagnosed with a serious illness.  Unfortunately, none of us can make that claim with any authority.  We can’t change the future, but with Critical Illness Insurance and/or Terminal Illness Insurance policies, we can at least ensure the financial burden of what may be around the corner will be alleviated.