21 Dec 2018

How Does Critical Illness Insurance Work?

How Does Critical Illness Insurance Work?

According to the American Association for Critical Illness Insurance, even a relatively healthy 25-year-old non-smoking male has a 24% chance of getting a critical illness like cancer, heart attack or stroke before turning 65.  And every 34 seconds, an American suffers a heart attack.

Not many people have heard of critical illness insurance, but it’s becoming more important than ever.  Hopefully, you never get a critical illness but if you do, thanks to modern medicine, the odds are in your favor.  Medical advancements have made certain diseases more survivable than ever before.  For example, prostate cancer now has a 98% survival rate.

But survival now comes at a steep financial cost as many treatments for critical illnesses are usually more than what your health insurance plan will cover.

What is critical illness insurance?

Medical treatment is getting better but also more expensive than ever.  The cost of treating serious illnesses can easily outstrip the benefits provided by even the best health insurance plans.

Critical illness insurance (sometimes called critical care insurance) first hit the market in 1996 when people realized that survivors of critical illnesses were often left with massive medical debt.  It is said that this type of insurance was developed by a heart surgeon who witnessed his patients going through financial stress even after they’ve recovered.

How does critical illness insurance work?

Critical illness insurance will pay you a tax-free lump sum benefit if you contract a critical illness that’s listed on the policy.  Benefits range from a few thousand dollars to $100,000.  This money comes with no strings attached, so you’re free to spend it on whatever you wish.

Most people will choose to spend it on medical care, at-home nursing care, to replace lost income if they’re unable to work, for meals if you’re unable to cook for yourself during recovery, or even to pay off the mortgage.

What is a “critical” illness?

As mentioned before, you’ll only get the payment if you contract a critical illness listed on the policy.  The exact list of qualifying illnesses will vary between insurers, but there are three major critical illnesses that most policies will cover:

  • Cancer
  • Heart attack
  • Stroke

Other critical illnesses can include:

  • Kidney failure
  • Organ transplant
  • Heart valve replacement or coronary bypass
  • Loss of important faculties like blindness, deafness or paralysis
  • Bacterial meningitis
  • Multiple sclerosis

What are the exclusions?

Chronic illnesses or some types of cancers may not be covered.  If you’ve had an illness before and you relapse, depending on the policy, you may not be able to receive a payout (i.e. for a second heart attack).

Exceptions and exclusions vary, so it’s important that you read the policy carefully.

How much does critical illness insurance cost?

It’s hard to give an exact number because it depends on a bunch of factors like policy terms, benefit size, the list of qualifying illnesses, your age, and your medical history.  But most plans are not expensive – they can be as little as $25 a month.

Want to learn more?

All the different terms and conditions can be hard to navigate on your own.  Some policies may not cover the illness you’re most worried about.  But that’s what we’re here to help with.

If you’re interested in learning more about critical illness insurance, what’s covered and how it can fit into your existing insurance portfolio, get in touch with the licensed insurance agents at HealthQuoteInfo.com by calling 1-855-614-5057 for quick quotes and unbiased advice.

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