What Does Critical Illness Insurance Cover and Is It Worth It? While health insurance covers your hospital bills, it doesn’t always protect your income or long-term recovery. That’s where critical illness insurance comes in — offering a lump-sum payout when you need it most. What Is Critical Illness Insurance? Critical illness insurance provides a fixed cash benefit if you're diagnosed with a serious condition covered under your policy. Unlike regular health insurance, it pays you — not the hospital. Commonly covered illnesses include: Cancer (early or major stage) Heart attack Stroke Kidney failure Major organ transplant Paralysis or loss of limbs How Does the Payout Work? You choose a lump sum amount when you apply (e.g., $25,000–$100,000) If diagnosed with a covered condition, you get the full payout — tax-free in most cases You can use the money for anything: Mortgage/rent Daily living expenses Non-covered medical ...