View INSTANT Quotes

Critical Illness Insurance For Beginners

Home - Critical illness insurance - Critical Illness Insurance For Beginners

the basics of critical illness insurance

According to a recent publications, Americans are living longer as the rates of death from heart attack, cancer and strokes are declining.

Despite the fact that mortality rates have fallen for many serious medical conditions, critical illnesses and the out-of-pocket expenses related to them can easily lead someone into bankruptcy.

If you do not have the appropriate policy in place and you are diagnosed with a serious medical condition, the chances of you being able to afford the costly treatments are low. 

Fortunately, critical illness insurance can assist in providing a lump sum of cash to help with this.

What Does Critical Illness Insurance Cover?

The following is a list of the medical conditions that most critical illness insurance policies cover:

How Does The Policy Work?

The critical illness insurance policy will provide you a lump-sum payment, as long as you’re diagnosed with a covered medical condition as noted in your policy contract.  You do not have to be necessarily disabled or bed-bound to collect the benefit.  And, unlike disability insurance, employment is not a requirement to receive benefits.

The lump-sum payment that you will receive from your critical illness insurance policy can then be used to pay for all other expenses, such as your mortgage, medical bills, home health care, retrofitting your home or vehicle, a wheelchair, or maybe even a trip to the spa.  Be sure to understand fully what medical conditions are covered under the policy that you select.

 

 

How Is Critical Illness Insurance Purchased?

One way that this policy can be purchased is as an individual stand-alone policy. 

Additionally, you can add it as a rider to most health or life insurance policies. 

One of the most popular ways of buying a critical illness insurance policy is as part of your employer’s benefits package. 

Either the policy will be paid for by your employer, or you may have it payroll deducted.

The coverage limits for critical illness insurance ranges from $10,000 to $1 million.  The National Association for Critical Illness Insurance (NACII) recommends that you consider two common debts when deciding the amount of coverage you may need:

  • The total of all outstanding credit card debt and other forms of credit debt
  • The total of two to three years’ worth of your monthly rent or mortgage payments

Exclusions and Limitations

Before purchasing a critical illness policy, be sure that you completely understand its exclusions and limitations. 

Consider the policy’s waiting period, which the time specified that you will need to wait from the point of diagnosis to receiving an insurance payment.  For some policies, especially those without the critical illness rider, if you die of the diagnosed medical condition during the waiting period, no critical illness benefits will be paid to your beneficiary or your estate.

Most policies include the typical exclusions, which means that your coverage would not apply if you are diagnosed with a critical illness during the waiting period of the policy, commit suicide, suffer a self-inflicted injury, or are diagnosed with an illness as a result of illegal activity. 

Further exclusions usually include pre-malignant or potentially malignant medical conditions, most skin cancers, and balloon angioplasty.

What About Underwriting?

Both individual and employer-provided critical illness policies are medically underwritten, so the price of the policy is based on your individual factors, such as age, sex, and medical history. 

However, if you purchase a group plan, it’s considered a “guaranteed issue” critical illness policy. 

The price of a group plan is based on the applicant’s age and the number of employees the company has, and there is no required medical exam or medical questions to be asked.  Unfortunately, coverage is excluded on conditions that occur prior to the policy becoming active.

When purchasing an individual policy, you will most likely need to answer medical questions from the underwriting department and submit lab specimens, such as urine, blood, and saliva. 

A medical exam, an EKG, and a treadmill electrocardiogram will most likely be required if you have a pre-existing heart condition or a family history of such. 

Likewise, a smoker could be required to undergo a chest x-ray.

In regards to family medical history, a female under the age of 50 could potentially be considered ineligible if she has two or more relatives who have also been diagnosed with breast cancer – this might include a sister, mother, or an aunt. 

Furthermore, depending on the insurer, you could be potentially found ineligible or pay much higher prices for a group plan if you have two or more relatives (first degree) who have suffered from heart disease, kidney disease, or cancer before 65 years of age.

Paying The Premiums for critical illness insurance

Critical illness policies are canceled for the most part if the premiums are not paid, if you request to cancel if you die, or once the maximum benefit is paid.  You will not receive a reimbursement (money back) if you cancel your policy or never get sick unless the “premium return” feature has been added to your policy.  You will want to make sure that the premium fits into your budget, because if the policy is not in force when critical illness occurs, you will not receive any benefits.

If you purchase the return-of-premium death rider and die during the waiting period, all premiums paid in will be paid out to either your beneficiary or your estate.  In order to receive the “premium return”, you also cannot die from any condition listed as excluded or not defined in your policy.  Case in point, say an aneurysm is not covered by your policy and you die from one, the return-of-premium rider is not applicable and your beneficiary will receive nothing.  Same is true if you die from an illness that’s excluded like skin cancer – the premiums will not be returned.

What To Look For in Critical Illness Insurance…

The National Association for Critical Illness Insurance (NACII) suggests considering the following factors when deciding on a critical illness insurance policy:

  • Lump-sum Benefits – paid upon diagnosis of a covered serious illness
  • Coverage of Diagnostic Procedures – Pap smears, colon screenings, mammograms, etc
  • Transportation Benefits – coverage for travel to a medical facility for treatment
We are Here to Listen and Serve
For more information about Critical Illness insurance and to get a free and confidential quote, please call InsuranceQuotes 2Day at 1-800-712-8519 during normal business hours or contact us through our website at your convenience.

Frequently Asked Questions

How does critical illness insurance work?

The critical illness insurance policy will provide you a lump-sum payment, as long as you’re diagnosed with a covered medical condition as noted in your policy contract.  You do not have to be necessarily disabled or bed-bound to collect the benefit.  And, unlike disability insurance, employment is not a requirement to receive benefits.

What can the benefit of a critical illness policy be used for?

The lump-sum payment that you will receive from your critical illness insurance policy can then be used to pay for all other expenses, such as your mortgage, medical bills, home health care, retrofitting your home or vehicle, a wheelchair, or maybe even a trip to the spa.  Be sure to understand fully what medical conditions are covered under the policy that you select.

What does critical illness insurance cover?

Some examples of illnesses that can be covered by a critical illness insurance policy are:
– Stroke
– Heart Attack (Myocardial Infarction)
– Paraplegia
– Kidney Failure (End Stage Renal Disease)
– Alzheimer’s
– Major Organ Transplant
– Multiple Sclerosis (MS)
– Coronary Artery Bypass Graft (CABG)
– Loss of Vision, Hearing, or Speech

Your individual policy will specify what it covers.

Leave a Reply

Your email address will not be published. Required fields are marked *