What is critical illness insurance designed to provide?

Critical illness insurance is specifically designed to provide a lump-sum payment when a policyholder is diagnosed with one of the critical illnesses specified in the policy. This type of insurance is intended to give the insured financial support to cover various costs that arise from serious health issues, such as cancer, heart attack, or stroke. This payment can be used for anything from medical expenses and treatment to everyday living expenses, thereby allowing the individual to focus on recovery without the added stress of financial burdens.

Daily compensation during hospitalization, lifetime coverage for all illnesses, and reimbursement for all medical expenses do not align with the primary function of critical illness insurance. Instead, those options pertain to other types of insurance plans that focus on daily benefits or comprehensive medical expense coverage. Thus, the correct answer accurately reflects the purpose of critical illness insurance in providing a one-time financial benefit based on the diagnosis of a specified critical illness.