This sort of coverage should not be confused with income replacement insurance in the event of a disability. Today, more and more people are surviving medical conditions that were once considered fatal. Critical illness simply provides a tax-free lump sum benefit to the insured upon the diagnosis and survival (typically for at least 30 days) of a covered critical illness.
The payment can be spent as one sees fit. Such expenditures might include medical treatment in another country, periodic transportation costs to a treatment facility, renovations to the house to accommodate the patient’s needs, taking an extended recuperative holiday or simply paying off the mortgage. One does not have to have incurred such an expense to claim on the policy.
The sort of critical illnesses or conditions that would be covered might include: