Guide to Critical Illness Insurance Policies: Are They Right for You?

If you’re fortunate, you’ve never used critical illness insurance, otherwise known as catastrophic illness insurance, you’ve probably never heard the word. But in the unfortunate event of a critical health emergency like stroke, cancer, or heart attack, this insurance plan could be your only buffer from financial ruin.

It’s common for people to assume that their standard health insurance coverage offers full protection. However, the cost of treating severe health conditions is usually exorbitant compared to what’s covered in any other plan.

Critical medical conditions can present themselves at the least expected moment, and the impacts are often life-changing. Most of the time, the resultant financial strain may worsen the experience for immediate family members dependent on the affected individual.

But if you have a critical illness policy, you’ll avoid this scenario and have the right peace of mind to aid recovery. You can still sign up for the insurance cover to complement your existing medical coverage to address any possibility of critical illness.

So, what do critical illness insurance policies cover? Will it be worth the investment if you consider it for yourself and your family? Read on for enlightenment on this.

What Is Critical Illness Insurance?

As the average American citizens’ life expectancy continues decreasing, savvy insurance brokers like the Healthcare Solutions Team are finding excellent ways of ensuring everyone that can afford the privilege of aging. Developed in 1996, critical illness insurance came into place as more people became aware of the financial burden that follows after surviving a critical medical condition.

Critical illness insurance is also referred to as critical care insurance. It’s a long-term insurance policy whereby the policyholder is compensated with a lump sum payment once diagnosed with a severe health condition outlined in the policy. This amount can cover personal or healthcare costs that result from the illness, but this is only done at their discretion.

This coverage is not offered as part of the standard health insurance but separately. Still, it’s also offered by health insurance providers or through an employer. Some benefits of acquiring the policy through your employer may include:

  • You’ll get a lump sum benefit payment that you can use according to your plans
  • Dependent coverage for your partner or spouse and kids
  • You’re not obliged to provide expense receipts
  • If you leave your current workspace, you’ll enjoy portable coverage options

Critical illness coverages vary. Some are limited to only a handful of critical health conditions, while others cover policyholders for a wide variety of critical illnesses. The specific illnesses that are covered are usually listed in your policy. In some instances, the precise amount offered to you varies with the type of condition.

What’s Covered?

Some of the covered medical conditions include:

  • Stroke
  • Heart attack
  • Cancer
  • Organ transplants
  • Severe burns
  • Coronary bypass
  • Arthritis
  • Multiple sclerosis
  • Dementia
  • Angioplasty
  • Alzheimer’s
  • Coma
  • Paralysis
  • Parkinsonism
  • Connective tissue disease
  • Kidney failure
  • Accidental brain damage

Some policies also cover permanent disabilities resulting from illness or injury. Others will make smaller payments if the policyholder is undergoing a less severe condition or if one of their kids has one of the illnesses specified in the policy. The payout is done once, and this will mark the end of the policy.

What’s Not Covered?

Some critical conditions may not be covered in a critical illness insurance policy, like those not mentioned in the policy or some cancers. Also, you won’t be covered for pre-existing illnesses before signing up for the coverage. Notably, the insurance coverage won’t pay if, unfortunately, you pass on.

All the covered illnesses and those not covered will be specified in the policy details to ensure you’re fully aware.

How Critical Illness Insurance Policies Work

Like any other insurance policy, this plan would require you to pay a monthly premium. In exchange, you’ll get the eventual assurance that you’ll be covered if you become ill. The lump-sum payments may range from $5,000 to $500,000, depending on the policy and the covered illness.

Besides the coverage amount that you wish to purchase, other factors that determine the policy cost include:

  • Your age
  • Whether you’ll pay for the individual plan or supplement the current life insurance or health policy.
  • Personal risk factors and general health
  • The number of illnesses included in the coverage
  • Whether it’s only you who’s covered, you and your partner, or your whole family
  • Whether you use tobacco products

Notably, some critical care insurance policies require you to undergo health screening for risk-factor assessment before granting the coverage rate. Others, on the other hand, promise coverage without any tests and questions. This is possible if you acquired your health insurance plan through your employer or the same insurance provider.

Critical care insurance plans come with a list of ailments covered in the policy. They also provide crucial information on the following:

  • Definitions of conditions and diseases covered
  • Qualifications for a payout
  • Whether you’ll need to finish a waiting period to get your benefit
  • The percentage of the entire benefit that you’ll receive
  • The steps if the condition comes up for the second time

Once you receive your benefit from your insurance provider, you can use this money to cover your healthcare or personal expenses during treatment. These include the living costs during recovery, travel expenses to and from treatment, childcare expenses, in-home care, and any other treatment costs that aren’t covered.

Is Critical Illness Insurance Right for You?

Insurance coverage not only provides a hedge against risks in the future, but it’s also an excellent investment for your peace of mind. However, it’s always a gamble.

There’re numerous examples of policyholders who’ve paid for critical illness insurance policies for ages yet end up not needing the compensation. There’s also a chance that you’ll pay for a policy that offers a much smaller or larger benefit than you may require. You may also direct your dollars to critical illness coverage, and a need arises in just a few years, making it one of the smartest investments.

Even with comprehensive insurance coverage, it’s possible to face financial hardships. So ensure you consider the following factors before you purchase a critical illness insurance policy:

  • What’s your risk of suffering from a critical medical condition in the next five to ten years?
  • Does any other family member face the risk of critical illness?
  • What’s covered in your regular health insurance policy?
  • If you’re incapacitated and can’t work anymore, will you still maintain your living standards?
  • What’s your preparation strategy for unforeseen expenses?

Understandably, a smaller, less comprehensive insurance policy is more attractive due to the affordability. Still, it may not deliver sufficient payout to cover all your needs and expenses when you can’t work. Signing up for a more comprehensive plan may seem costly in the short-run, but it also covers more critical conditions and offers better coverage in case of illness.

Besides looking at your financial position, it would also help you understand your personal risk as you look for the appropriate critical illness insurance policy. This means you’ll schedule a visit to your doctors and discuss the following crucial factors:

  • Age, considering the risk of heart disease and most cancers gets higher as you become older
  • Risk factors such as drinking and smoking
  • Family history of particular health conditions

Depending on your preferred coverage options for your critical illness insurance policy, you must weigh the policy’s cost against the amount you’ll be forced to pay out of pocket to take care of a critical medical condition. It would be best to consider your preparedness to absorb the financial burden on your own with no coverage.

If you can address all the treatment costs and financial implications by yourself, then you’re fortunate. But if the associated expenses are unaffordable to you, the best move would be to sign up for a critical illness insurance policy.

Are There Any Alternatives to the Critical Illness Insurance Coverage?

Like any other form of supplemental insurance, signing up for the critical illness insurance policy is optional. Sometimes, it may not fit everyone’s context, and it’s okay to want to learn about other practical solutions.

Below are some of the appropriate alternatives to this insurance coverage:

  • Combined policies – In some insurance coverages, policyholders can sign up for a combination of critical illness and other coverages like disability insurance, life insurance, or accident insurance. This can be an excellent financial strategy if you wish to maximize our coverage without paying for different policies.
  • Cancer-only insurance – In the United States alone, nearly 18 million individuals are cancer survivors. This is a significant number compared to other critical illnesses, and the high prevalence shows the significance of the risk. The cancer-only insurance policy may be limited, but it can be an excellent investment if you’re at risk.
  • No supplemental insurance – Individuals in their 20s or 30s, reasonably healthy, and without the risk factors of severe health conditions may not require critical illness insurance policies yet. If you already have a comprehensive health insurance policy, the best thing to do would be to forgo any form of supplemental insurance.

Do you need expert guidance on the best options for your critical illness insurance policy? Are you looking for affordable insurance plans to take care of your future health needs? Healthcare Solutions is here with all the answers you need. Our healthcare insurance solutions will help you minimize the costs and get the maximum coverage.

Contact us today for the best guidance.

Healthcare Solutions Team is a wholly owned subsidiary of the National General Insurance Group and the Allstate Insurance Company.