Why does the benefit amount reduce by 50% at the later of age 65 or 5 years after issue?
The primary reason is that the Critical Illness Insurance benefit is designed to replace lost income when the insured is not able to work because of his or her illness. Most individuals are retired by age 65, so this is no longer a consideration. Also, this provision allows the premiums charged over the life of the policy to be significantly lower. Finally, Medicare kicks in at age 65, thereby reducing the need for the Critical Illness Insurance benefit.
