Critical illness insurance, or dread disease coverage as it’s sometimes called, is an insurance product in which the insurer is contracted to pay a lump sum cash payment if the employee policyholder is diagnosed with one of the specific illnesses on a predetermined list as part of their insurance policy. It offers a degree of financial security to cover an employee in the event that he or she becomes seriously ill. Illnesses can include cancer, stroke, major organ transplants and heart attacks.