What Is Critical Illness Coverage?

by Team eLocal
Healthcare and medical concept, Stethoscope on prescription clipboard record information paper with internet laptop computer at Doctor working  on busy desk hospital office, top view selective focus

The last thing you want to worry about when facing a serious illness is how you'll pay for your medical expenses.

Critical illness insurance can give you peace of mind in some medical emergencies.

What Is Critical Illness Coverage?

Critical illness insurance is a supplemental insurance policy that helps cover the cost of treatment for critical illnesses. Your regular health insurance should cover at least some of the hospitalization and treatment costs that you might have after a critical illness diagnosis. However, you could still end up with a large chunk of the bill that you're responsible for paying. You might also struggle to pay your regular bills if you're out of work.

If you receive a diagnosis for a covered critical illness and meet the stipulations of the policy, you'll receive a lump-sum cash payment. You can use the money to pay for your medical bills or cover your expenses, such as your mortgage payment.

What Illnesses Does Critical Illness Insurance Cover?

The diseases that critical illness insurance covers can vary depending on the company and policy details. Some common medical situations that are covered include:

  • Heart attack
  • Stroke
  • Cancer, sometimes limited to life-threatening types
  • Organ transplants
  • End-stage renal failure
  • Coronary artery bypass graft

Some policies cover additional conditions, which might include multiple sclerosis, Parkinson's disease, paralysis and coma. Review the specific diseases covered by your policy to understand what types of situations will result in a payment to you. Check for limitations or stipulations on those conditions as well. You typically don't receive coverage for pre-existing conditions. The policy has to already be in place before the critical illness happens for the policy to pay you.

How Much Does It Cost?

A critical illness plan is a relatively low-cost insurance policy, especially compared to health insurance. Most policies are under $100 per month, and some are only around $25 monthly. Several factors go into how much you'll pay for a critical illness insurance policy. Some of those factors include:

  • Coverage amount: Most policies are relatively low-coverage plans, but you have some choice in your limits. A higher benefit amount will increase your premiums.
  • Age: If you're an older adult, you'll likely pay more for a critical illness policy, since you have an increased chance of having a critical medical incident. Some policies also reduce the payments you receive based on age, so review the terms carefully.
  • Smoking status: Tobacco users typically pay significantly more for a policy.
  • Overall health: If you're in good overall health with no pre-existing conditions, you might get a lower premium on the policy.
  • Conditions covered: Some policies have a more extensive list of diseases they cover, which usually results in higher premium costs.

Getting personalized quotes for various coverage amounts gives you a better idea of what you can expect to pay.

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Do I Need Critical Illness Coverage?

No one can predict whether they'll experience a critical illness in their lifetime. Even people who seem to be in perfect health can have a stroke, heart attack or other critical medical situations. If covered medical issues run in your family or you have risk factors for some of the covered conditions, having a plan could be beneficial for you.

With such a limited scope of diseases that a typical policy covers, you might never need it, though. Many policies also have limitations even for the covered diseases, such as how long you have to be sick or experience symptoms, which means you're not guaranteed a payment. Since this is an optional, supplemental policy, it's a matter of what feels right to you.

Is Critical Illness Coverage Worth the Extra Cost?

The value of critical illness coverage isn't as clear-cut as some other types of insurance. Consider factors such as your health insurance coverage. If you have a high-deductible health insurance plan, you'll likely pay more out of pocket for a major medical event, so having critical illness coverage could come in handy.

Your financial situation can also help you decide. If you don't have much savings, a critical illness could make it difficult to keep up with your bills. Getting a lump sum from the insurance policy could help you keep up with your finances during a difficult time. Comparing quotes for critical illness coverage to estimate how much you'll pay can help you decide whether it's worth it.

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