Critical illness insurance was engineered to assist people with critical illnesses to cover costs associated with the treatment of critical and chronic conditions. Often this coverage applies to medical costs not already a part of a workplace benefits package. It can also be used to handle typical life expenses.
Policies vary, but there is a standard litany of conditions this type 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 such as 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 tens of thousands of dollars each year. This would obviously be a financial catastrophe for many of those who would not be able to work for extended periods of time.
Types of Coverage
There are essentially two kinds of plans usually offered. One is called Simplified Issue Individual Protection, which can pay out up to $50,000. These policies 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 qualifying for this type 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 paid for by employees. Additionally, there are critical illness benefits provided as riders, or supplemental coverage, on some life insurance policy offerings.
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 to cover expenses 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 afterward, might have access to another payout. Keep in mind that it is wise to purchase only the kind and level of coverage your budget allows.
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. Mostly, it provides peace of mind and that there will be financial relief for the family should one of the breadwinners become ill.