How critical illness insurance may cover your health conditions

If you are dealing with a critical condition, this type of insurance plan may help. Here’s how.

In the United States, someone has a heart attack every 40 seconds, which adds up to more than 800,000 people a year. And in 2024, it’s estimated that there will be more than 2 million new cancer cases in America, according to the National Cancer Institute.

In both of these cases — heart attacks and cancer diagnoses — critical illness insurance can help with out-of-pocket costs that add up quickly, says Todd Ackerman. He’s president and Iowa unit leader of World Insurance Associates in Burlington, Iowa.

So, just what is critical illness insurance, and how can it help you? Read on to learn more.

Find out how critical illness insurance can help you. Call a licensed insurance agent at (800) 827-9990 to talk about plans, or browse your options online today.

What is critical illness insurance?

Critical illness insurance is a type of supplemental insurance. That’s a type of insurance that you pay for in addition to your traditional health insurance policy. It pays a cash benefit if you’re diagnosed with a medical condition covered by your policy.

“It’s meant to be used in addition to health insurance, but it doesn’t replace it,” explains Ackerman. The benefits are usually capped at a certain amount, and it only covers certain critical illness conditions (see below).

You can purchase critical illness insurance through your health insurance broker. Some life insurance companies may also allow you to add a critical illness benefit to your life insurance policy, notes Ackerman.

When you add this benefit, called a rider, there is a cash benefit if you’re diagnosed with a critical illness covered under the plan. The benefit amount received from the critical illness rider will be subtracted from your term life insurance policy benefit.

It’s worth noting that you’ll need to buy the insurance before you get a diagnosis for a covered illness (for more on what this might mean for you, see below).

What does critical illness insurance cover?

The conditions vary according to your policy, says Ackerman. But some common conditions it may cover include:

• Coma
• Hearing or vision loss
• Heart attack
• Kidney failure
• Life-threatening cancer
• Major transplant
• Paralysis
• Stroke

How does critical illness insurance work?

Your critical illness insurance policy pays out a lump sum benefit if you’re diagnosed with a covered illness. “It’s designed to help with the costs of treating and recovering from illness, as well as associated expenses,” notes Ackerman. “For example, it can help with expenses if you’re not able to work while you’re undergoing chemotherapy, or it can pay for travel expenses such as traveling for treatment.”

Usually, once you’re diagnosed with a covered medical condition, the policy will pay cash benefits, and you can use the money however you like, whether it’s to pay for out-of-pocket medical bills or living expenses.

Is critical illness insurance worth it?

Yes, critical illness insurance may be worth it. “Even with excellent health insurance, it may be worth it, because it will help you pay for living expenses, which is important if you can’t work,” explains Ackerman.

The cost of a plan depends on whether you buy it yourself or get it from your employer. “Oftentimes, workplace policies are more affordable,” says Ackerman. The cost of the plan will also depend on factors such as (the below list isn’t all inclusive):

• Your age
• Whether you smoke
• What conditions the policy covers

“If you’re in your 20s, you may be able to purchase a comprehensive critical illness policy for under $10 a month,” says Ackerman. “But if you’re older, it can get more expensive.”

Some reasons it might make sense to purchase critical illness insurance include:

• You’re the primary breadwinner in your family. If you can’t work for a period of time, you won’t be able to provide for your family.
• You have a High Deductible Health Plan (HDHP). A High Deductible Health Plan, or HDHP, is a type of insurance plan that has a higher deductible but usually a lower monthly bill (premium) than other health insurance plans. In 2024, these HDHP plans have at least a $1,600 individual deductible, and a $3,200 deductible for family coverage. With an HDHP, you could also end up spending up to $8,050 on out-of-pocket expenses if you have an individual plan, or up to $16,100 on out-of-pocket expenses with one of the family plans. In these cases, critical illness insurance can help cover some of those costs.
• You have limited savings. If you or a loved one develops an unexpected, covered illness, you may suddenly have bills to shoulder. Critical illness insurance can step in to help pay for those bills.

How does critical illness insurance differ from regular health insurance?

Unlike your regular health insurance plan, critical illness insurance isn’t regulated by the Affordable Care Act. That means the insurer may:

• Deny you coverage if you have a preexisting medical condition
• Impose specific caps on benefits, no matter how high your out-of-pocket costs are
• Refuse to cover you based on your medical history

“One reason why critical illness insurance tends to be so affordable is that companies expect most people won’t have to cash in their policy,” explains Ackerman. “If you were just diagnosed with cancer and decide that you want a critical illness policy, you’ll probably be out of luck. That’s why it’s best to purchase one when you’re healthy.”

How do I purchase critical illness insurance?

Many private health insurance companies offer critical illness insurance plans as one of their supplemental insurance policies. If you’re interested in exploring a critical illness insurance plan, you can call a licensed insurance agent at (800) 827-9990, or browse your options online today.

 

This article contains information that is compiled by HealthMarkets Insurance Agency. HealthMarkets Insurance Agency does not represent all the information provided are statements of fact.