Which of the following describes the main purpose of a critical illness insurance policy?

Question: Which of the following describes the main purpose of a critical illness insurance policy?

Answer options: ✅ To provide a lump-sum payment upon diagnosis of a covered critical illness.

• To replace lost income due to an inability to work because of an accident or illness.
• To cover the costs of prescription drugs and medical treatments.
• To provide financial support to dependants upon the policyholder's death.

Correct answer: To provide a lump-sum payment upon diagnosis of a covered critical illness.

Explanation: Critical illness insurance policies are designed to pay a tax-free, lump-sum benefit if the insured is diagnosed with one of the specific critical conditions listed in the policy, such as cancer, heart attack, or stroke. This payment can be used by the insured as they see fit, often to cover medical expenses not covered by provincial plans, adapt their home, or provide income replacement during recovery.