What is critical illness insurance?

Critical illness insurance is a specialized type of insurance that provides a lump sum payment upon the diagnosis of a specified critical illness, such as cancer, heart attack, or stroke. This financial benefit can be used to cover a variety of expenses that arise due to the illness, including medical bills, lost income, or any other costs the policyholder might incur during their recovery period. The key aspect of critical illness insurance is that it pays out a predetermined amount regardless of the actual medical expenses incurred, which allows for financial flexibility and support during a challenging time.

While other options mention aspects of health insurance or coverage types, they do not capture the essence of what critical illness insurance specifically offers. For instance, the notion of covering all medical expenses is more aligned with comprehensive health insurance, while the idea of accident-only coverage pertains to a different type of policy entirely. Additionally, the requirement of monthly premium payments is common across many types of insurance policies but does not uniquely define critical illness insurance. Thus, the focus on the lump sum payment upon diagnosis is what makes the selected answer the most accurate representation of critical illness insurance.