What is Critical Illness Insurance?

Each year thousands of people are diagnosed with a serious illness, and it can be an incredibly large financial burden on them and their families. When it comes to your health insurance coverage, your standard health plan alone may not be enough to cover those high costs. What you may not know is that you can often opt in for critical illness coverage in many health plans. Maybe you have heard of critical illness insurance before, but you might not be familiar with what exactly it is. Critical illness insurance may help to offset expenses that might not be covered under your employer’s existing medical insurance and disability plans, similar to an HSA but also different.

Critical illness insurance pays a lump sum cash benefit to you when you’re diagnosed with a serious illness like cancer, heart attack, or stroke. If you’re diagnosed with a serious or critical illness, even the best insurance won’t be able to cover the often-enormous costs associated with it. But, if you opt for critical illness insurance you’ve got a bit of a safety net financially if that diagnosis occurs. Critical illness insurance may include: dependent coverage for your spouse/partner and children, no obligation to submit expense receipts, and portable coverage should you leave your employer.

As of 2009, some 600,000 Americans have critical illness coverage they have purchased on an individual basis or through their employer. Though many of them won’t ever need to use the coverage, if a serious diagnosis occurs they will have more coverage than the average person. You may be wondering if you should join those 600,000 Americans enrolled in critical illness coverage, but you may want more information.

For example, what exactly is considered a “critical illness” – the big three are cancer, heart attack, and stroke. But other conditions may be covered as well, such as heart transplant, coronary bypass, angioplasty, renal failure, major organ transplant, and paralysis. These types of medical conditions can wind up bankrupting you or your family without critical illness insurance coverage.

Few people are prepared for the costs associate with critical illnesses and surviving them. Most health insurance policies come with deductibles and co-pays that can be as much as $7,000-$14,000 a year. Of course, while you’re undergoing the costly treatments required for critical illnesses, you still have to pay your insurance premiums even if you’re unable to work. When you consider all of this, critical illness insurance may be a smart option just in case.

Obviously, you should buy only as much protection as you can comfortable afford, but if you have a family history of any of these illnesses it may be nice to know that you’ve got some additional coverage if the worst occurs. It is our recommendation that you take the time to talk with your insurance provider about the costs associated with critical illness coverage and consider all of your options. Most people are surprised how affordable the coverage can be. Critical illness coverage is not the only option, but it may be well suited to you and your needs – just be sure to do plenty of research beforehand.