Critical Illness Insurance

Critical Illness Insurance Explained


Critical illness insurance was introduced in the latter few years of the ‘90s. It was engineered to assist people with critical illnesses in covering costs that are associated with dealing with their chronic conditions. Often this coverage applies to medical costs that are not already a part of a workplace benefits package. It can also be exploited to handle bills and other typical life expenses.

Who Benefits

Each policy will vary but there is a standard litany of conditions this kind of insurance was designed to address. Generally, the three main illnesses most covered are cancer, heart disease and stroke. The American Cancer Society reveals that cancer affects an ever increasing group of Americans each year and notable numbers of people are experiencing their first stroke or heart attack every year as well. Most of these patients will survive and, of course, will need some kind of treatment.
Some policies will also offer coverage for other conditions like heart or major organ transplantation, dealing with paralysis, bypass surgery, angioplasty and even kidney failure. It is not uncommon for treatments such as these to cost many thousands of dollars each year. This would obviously be a big financial catastrophe for many of those who would not be able to work for extended periods of time.

Kinds of Coverage

There are essentially two kinds of coverage plans usually offered. One is called “Simplified Issue Individual Protection.” These plans can pay out up to $50,000 and are less costly and require fewer health questions for qualification. The other is known as “Fully Underwritten Individual Plans.” These cover up to $500,000 in costs but in order to qualifying for this kind of coverage means answering a battery of health-related questions.
Both kinds of coverage are offered by individual insurance providers. There are also plans offered through some employer programs that are also paid for by employees. Additionally, there are critical illness benefits provided as “riders” (or supplemental coverage) on some life insurance policy offerings.

The Benefits

The big plus in carrying critical illness insurance is the promise that critically ill policyholders can access the treatment they require regardless of any gaps in their workplace benefit coverage. It can also help with cash assistance for such things as mortgages, medicines, car payments, food, necessary travel costs and even experimental treatments. It can even provide monetary relief to the family should one of the breadwinners be needed to help his or her spouse while ill, leaving them unable to work.

How it Functions

For a policyholder to receive benefits, his or her initial diagnosis will have to take place after a mandated 30-day waiting period. Additionally, one will also first be required to live through a survival period specified by the policy particular regarding the specific illness. Upon these conditions being satisfied, the policyholder can receive a tax-free, lump sum amount of money to cover expenses that are incurred as a result of treatment and recovery.
It is even possible to receive more than just one payment. For instance, a person may use the benefits from a cancer diagnosis then, after also suffering a heart attack a short time afterwards might have access to another pay out. Keep in mind that it is most wise to purchase only the kind and level of coverage your budget allows.