A Dread Disease Insurance is a personal insurance policy that pays a fixed amount to the insured person in the event of a serious illness or other serious health event. For which illnesses or events the benefit claim applies, the insurance contract is recorded.
Dread disease insurance as an alternative
The Dread Disease Insurance is useful for those who can not take out disability or occupational disability insurance because of their previous illnesses. This is especially true for severe conditions such as cancer. It should be noted, however, that Dread Disease Insurance does not apply to mental illness.
Among other things, the insurance product can be used by self-employed persons who wish to additionally secure their company in the event of a serious illness.
In the United Kingdom and the United States, this insurance product has been on the market since the 1980s and is therefore more widespread there. In Germany, marketing authorization for the Dread Disease insurance was granted in 1993. Today, there are six different insurers offering the special insurance product:
- Canada Life
- Zurich Life
- Cardea Life
- the Bavarian
Many insurers have similar building blocks in the portfolio, which are then only available together with other risk insurance linked.
Difference to other private pension insurance
Dread Disease Insurance differs from other private pension plans such as disability, disability or basic disability insurance. Thus, the agreed insurance amount in the case of benefits is paid immediately and completely and not converted into a pension.
In addition, the policyholder receives the insurance amount very quickly, even if there is no chance of recovery. It therefore does not matter, for example, whether the policyholder is still fit for work or not. The clinical picture that triggers the benefit claim is clearly defined in the policy.
In principle, the classic occupational disability insurance in the field of private pension insurance is the best because most powerful product. With the BU all health causes can be secured, which lead to incapacity for work. These also include mental illnesses.
The disability insurance is an equally useful supplement to the statutory disability pension. It is also useful when a consumer can not use BU and also covers any illness that causes disability.
The insurance benefit takes the form of a pension. Thus, when it comes to safeguarding the workforce in relation to many different health and mental factors that affect them, BU and disability insurance are beneficial to Dread Disease Insurance.
Disadvantage of dread disease
A possible disadvantage of Dread Disease Insurance is the one-time payment of the insurance amount. If this is to be sufficient for the rest of life as a hedge, it must be set very high. As a result, the rate for the insurance can be much higher than a BU or disability insurance.
Those who can afford it are certainly best protected with a combination of dread disease insurance and disability insurance.
The costs of this special personal insurance depend, among other things, on the age of the insured person, their occupation and the desired insured sum in the event of benefits. In addition, the level of the tariff also depends on whether the policyholder is a smoker or not.
With a sum insured of 300,000 euros for a non-smoking 30-year-old, consumers should count on about 150 euros or more per month.
Services of Dread Disease Insurance
With Dread Disease Insurance, serious illnesses are covered. Depending on the insurance rate, many different diseases are included in the policy.
However, those who are interested in Dread Disease insurance should pay particular attention to the fact that the four most common serious illnesses such as cancer, multiple sclerosis, heart attack and stroke are included in the insurance policy. Usually, these conditions are defined as standard in a dread disease insurance.
However, mental illness and skeletal disorders are always excluded. For example, the benefit does not arise if a policyholder is unable to work due to spinal cord injury due to depression or accidental paraplegia.
The Dread Disease Insurance pays out the agreed sum to the policyholder once in the contractually agreed insured event. The payment is exempt from income tax. However, if the sum is overwritten to third parties, taxes may be incurred.
This applies to the dread disease insurance
Before the insurance is completed, the insured diseases should be very well defined. In addition, the policyholders need to know exactly about the benefit claim.
For example, most insurers pay for cancer at an advanced stage rather than as long as there is still a good chance of recovery.
It is important that the insured ask in case of ambiguity, because often the definitions for laymen are not always clear. The more insured persons are informed, the fewer disputes will occur when requesting the insurance benefit.
Anyone wishing to take out a dread disease insurance must undergo a health examination before graduation. This is important so that the insurer can define both the tariff and the insured diseases.
Policyholders should not conceal any illnesses at this point. Otherwise, the insurer could refuse payment in the event of a claim.
If the tariff is adjusted as a result of a wedding or a real estate acquisition, often the renewed health examination.
It should be noted in the insurance contract, whether and which waiting periods are set for the payment. For example, some insurers do not pay until six months after a disease, such as cancer, has been detected.
Also important are the defined waiting periods. This period allows insurance from diagnosis to disbursement. Depending on the insurer, it usually lasts between 14 and 28 days. If, as in the case of a stroke, the actual severity can only be determined after a few weeks, it is also possible that the waiting period will be extended.
The term for a dread disease insurance can be set by the insured person. This is usually more than 15 years. It should be noted here that the choice of the term also affects the amount of monthly payments. If desired, the insurance can be taken out by some providers with lifelong insurance cover up to the age of 100 years.
Some insurers also offer a dynamic contribution and benefit increase. This may be useful, for example, if the insurance is already taken out at a younger age and insurance coverage is to increase with increasing age and the increased risk of illness.
Unit-linked Dread Disease Insurance
The Dread Disease Insurance is fund linked to some insurance companies. The policyholder bears no risk for losses, but benefits only from a possible fund assets.