Differences Between Consumption-Type and Savings-Type Critical Illness Insurance
There are differences between consumption-type and savings-type critical illness insurance in several aspects, and neither of them is as described by your friend. The specific analysis is as follows:
Coverage Content
Consumption-type critical illness insurance mainly provides coverage for major illnesses. Compensation can only be obtained when a major illness specified in the contract is diagnosed, and it does not include coverage for death or total disability. In addition to covering a variety of major illnesses, savings-type critical illness insurance usually also includes coverage for death or total disability. However, generally only one of the two types of coverage (for major illnesses or for death/total disability) will be compensated.
Premiums and Cash Value
Consumption-type critical illness insurance has relatively low premiums. Since it only provides illness coverage and has no savings function, it usually has no cash value or only a low cash value. Savings-type critical illness insurance has relatively high premiums. Besides illness coverage, it also has a savings function. During the contract term, the cash value will gradually increase as premiums are paid.
Coverage Period
Consumption-type critical illness insurance usually provides short-term coverage (e.g., one-year coverage). There are also some long-term products, but their coverage periods are relatively short. Savings-type critical illness insurance usually provides long-term or even lifetime coverage.
Claim Settlement Methods
Consumption-type critical illness insurance usually provides a one-time payment, with compensation granted upon diagnosis of the covered major illness. Savings-type critical illness insurance has three main claim settlement methods: 1) Compensation is granted when a major illness specified in the contract is diagnosed; 2) Compensation is also granted if the insured dies without contracting a major illness; 3) Cash value can be obtained by voluntarily surrendering the policy.
It can be seen from the above that consumption-type critical illness insurance is not a medical insurance that reimburses actual expenses. Medical insurance reimburses based on actual medical costs, while consumption-type critical illness insurance provides a one-time fixed payment upon diagnosis of a major illness. Although savings-type critical illness insurance has a savings function, it cannot be simply said that it is the only one that truly covers various hidden costs caused by loss of labor income—because the compensation from consumption-type critical illness insurance can also be used to make up for such loss of labor income.
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