What is Critical Illness Insurance?
Critical illness insurance is a type of insurance that makes a payment if the policyholder is diagnosed with an illness specified in their policy, or undergoes a specified medical procedure (e.g., heart surgery).
Although some policies may pay out directly to health facilities, most critical illness insurance policies provide a lump sum of money to the policyholder. This money typically does not have any stipulations attached to it, and can be used for anything from covering medical bills to paying for childcare to paying bills in the event of lost income. There is usually a “survival period” that must be reached before the policy will pay out; the survival period is usually 1-2 weeks.
Critical illness insurance can come in the form of a guaranteed issue policy, where the only requirement is a health questionnaire, or a fully underwritten policy where the applicant’s health is taken into account.
What Critical Illness Insurance Protects Against
The conditions covered by a critical illness insurance policy will depend on the specific policy and insurer. However, common conditions that allow a critical illness insurance policy to be used often include:
Cancer
Heart attack
Stroke
Kidney failure
Heart surgery
Major organ transplant
Loss of hearing
Loss of speech
Loss of vision
Paralysis
Coma
Renal failure
Carcinoma in situ
Coronary artery bypass graft
What Critical Illness Insurance Doesn’t Protect Against?
Each critical illness insurance provider and policy will have its own guidelines on what conditions are covered. For this reason, applicants should check which medical conditions are named in their desired policy, and which are not, before committing toHow Much Does Critical Illness Insurance Cost?
Critical illness insurance rates depend on the policy and, potentially, the health of the applicant. Coverage amounts are usually much less than life insurance or long-term disability insurance policies; while the payout can go as high as $1 million, most policies are usually closer to $10,000. If you have a fully underwritten policy or have pre-existing conditions, you will pay a different price than if you purchase a guaranteed issue critical illness insurance policy.
Is Critical Illness Insurance Worth It?
If you have a family history of health conditions, it may be worth purchasing a critical illness insurance policy. Paired with a health insurance and long-term disability insurance policy, it can help cover the costs of medical expenses, as well as related costs from being unable to work during recovery, providing you with a full financial safety net.Advantages of a critical illness plan
Tax-advantaged, cash benefits
Flexibility to allocate money as needed
Simple application of questions with yes or no answers
Various maximum lifetime benefit amounts from $10,000 to $50,000
Cash benefit to use as you see fit
Mortgage or rent payments Groceries Out-of-pocket medical costs Prescriptions Treatment by a specialist Transportation to and from treatment