Finance Talk

It seems much cheaper to buy critical illness and life insurance in one combined policy rather than 2 seperate policies. What's the catch?

Yes critical illness insurance is chaper when you buy it as an extra within a life insurance policy. But this comparison can be misleading because you are comparing apples and pears.

With a combined policy, the whole policy finishes if a claim for critical illness is paid out. The policy will not payout again when the policyholder eventually dies. Hovever, if you buy critical illness cover and life cover on two seperate policies, these policies stand alone and a claim on the critical illness policy has no affect on the validity of the life policy. So with two seperate policies, you get two seperate payouts.

I'd also like to remind you of one point. All critical illness policies have what is called a "survival period". Survival periods are either 14 or 28 days depending on the insurance company and represent the number of days that a policyholder must live following the diagnosis of a critical illness. A critical illness claim cannot be made if the policyholder dies during the survival period.