Covering critical illnesses from heart attacks to cancer

There are many different types of health insurance. Critical illness insurance is one that you may not know much about. What is it, and what does it cover? We explain so you can decide if you need this type of coverage.

What is critical illness insurance?

Critical illness insurance is designed to cover a major health event or emergency, such as a heart attack or cancer diagnosis. It can protect you financially, over and above your regular health insurance.

Anyone who has experienced a serious health crisis knows how expensive it can be. Health insurance will cover a part of your expenses, but some life-threatening conditions can cost much more than a typical policy will pay.

What does critical illness insurance cover?

Developed in 1996, critical illness insurance is designed to help absorb the exorbitant costs associated with treating a serious illness or emergency. It may cover the following conditions:

  • Heart attack
  • Coronary bypass
  • Coronary artery disease
  • Stroke
  • Cancer
  • Organ transplant/damage
  • Other: blindness, deafness, paralysis, ALS, lupus, malaria, sickle-cell anemia, cystic fibrosis, serious burns, coma, tetanus 

Treating these illnesses can include extensive hospitalization, surgery, diagnostic testing, and rehabilitation. Short of emergency funds that you put aside or a health savings account, you could quickly find yourself in dire financial straits from even one event.

Critical illness insurance will cover these costs.

Health insurance vs. critical illness insurance

A personal health insurance policy covers many of your medical expenses. With most policies, you have to cover a copayment for medical services such as doctor visits, prescriptions, diagnostic/lab testing, and urgent care visits.

You may also have deductibles and/or coinsurance that you must pay before your plan starts covering your costs. A higher deductible comes with a lower monthly premium. Such a plan might make sense for a relatively healthy person, but a serious illness could put you in a real pinch.

Health insurance pays for each event and/or an amount over a single year. Critical illness insurance pays one lump sum to cover your costs.

You can use the money to pay your deductibles, coinsurance, and copays, as well as expenses that are not covered by your insurance. It can also be used for nonmedical expenses, such as travel/transportation for treatments, living expenses, in-home care, and child care.

Are there exceptions or exclusions?

There are some exceptions/exclusions when it comes to critical illness insurance. It generally covers three specific categories of illness. Conditions that don’t fall under these umbrellas are not eligible. In addition, some conditions may only be eligible for a partial benefit.

Cancer exceptions

To receive the full benefit, your condition must be life-threatening. Cancers that are not considered serious (such as some forms of skin cancer) might only pay a partial benefit. In addition, early-stage cancer diagnoses may not be eligible, since they might not be considered serious yet.

Heart condition exceptions

Heart attacks and strokes generally receive the full benefit amount. Other conditions, such as coronary artery disease, may only receive a partial benefit.

Critical illness coverage does not cover chronic conditions such as diabetes, high blood pressure, or asthma. Preexisting conditions are generally not covered, either.

How much does coverage cost?

Critical illness coverage can range from $5,000 up to $100,000. The cost is generally affordable, though premiums vary depending on several factors, including your age, sex, medical history, and general health.

A healthy 42-year-old can expect to pay anywhere from $25-$50 a month. If you choose a higher payment amount, you will pay more each month.

Many employers are now offering optional critical illness coverage, while others include it as part of their benefits packages. You can also buy a policy on your own.

Expand your coverage to help pay serious medical expenses

If the worst should happen and you experience a serious health condition such as cancer or a stroke, you could be saddled with enormous medical expenses. Your health insurance will only cover so much. Critical illness insurance can cover the gap to help protect your family’s financial stability.

You may also need other types of personal insurance, including life insurance and long-term disability. Speak to one of our insurance agents to determine your specific needs. If you have any questions or you would like a quote, contact us today.

This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.