Definition of Critical Illness Insurance
A critical illness insurance is an insurance package whereby the insurer is required to make a lump sum payment if the policyholder is diagnosed with a serious illness listed in the insurance policy.
For example, this insurance can be very beneficial in providing financial protection to the policyholder or their dependents to repay their mortgage or debts due to the inability of the policyholder to work or due to death of the policyholder. This policy can also be used to make modification to one’s home in case wheelchair access is required.
The lump sum payment which vary from $10,000 to $1 million, depending on your policy coverage. This amount of money is generally paid as a one-off payment. In some cases, some insurers will make progressive payments, such as when a serious illness is diagnosed, and then whilst you receive ongoing treatment for example. Some insurance companies are willing to offer up to $50,000 critical illness coverage without a medical exam, however please be sure to check.
Critical Conditions Covered by the Insurance Policy
Critical conditions covered under the policy will differ from one insurer to another, however, some of the most common conditions that are popular in every insurer’s policy include:
- Contraction of HIV/AIDS during a blood transfusion or operation
- Organ Transplant
- Kidney / Organ Failure
- Blindness / Deafness
- Stroke / Heart Attack
- Certain types and stages of Cancer
- Multiple Sclerosis
- Parkinson’s disease
- Terminal illness
- Paralysis (paraplegia, quadriplegia, hemiplegia)
- Bacterial Meningitis
- Traumatic head injury
The above list is not exhaustive. It is also important to note that some serious illnesses such as some types of cancers may not be covered by a critical illness policy. Also, a lifelong condition may not be covered. For example, a health condition that you had before signing up for a critical illness policy is highly unlikely to be covered.
As unusual as it seems, the insurance company may expect the policyholder to survive a minimum number of days (survival period) from when the critical illness was first diagnosed. This minimum period of time varies from company to company. In the United States, the typical period of time set by the insurers is fourteen (14) days of survival period, whereas in other parts of the world, for example in Australia, the survival period is set between eight (8) to fourteen (14) days.
Critical Illness Insurance Coverage
Critical illness coverage is meant to provide financial protection to a policyholder who is diagnosed with a critical illness. This insurance policy can be bought in conjunction with a life insurance policy. A critical illness insurance coverage will generally cater for the following:
- It can be used to cover all costs associated with treatment and care
- It can be used to replace lost income of a diagnosed patient due to the inability to earn money
- The coverage can also be used to pay for the policyholder’s new lifestyle. This can be due to the fact that the policyholder’s home or car may need to be modified to make it wheelchair friendly
- It can be used to cover for medical expenses not covered by your standard health plan
- It can be used for your car or other loan repayments
- It can be used to fund your travel trips in case you live in an area where specialized treatment is not locally available
It goes without saying that you will find the money very helpful in those difficult times and that you will use the money effectively.
Qualifying For Critical Illness Insurance
There are about 600,000 Americans who have signed up for a critical illness insurance policy. When you apply for this coverage, the underwriter will ask you to fill out a form; you can do this at the agent’s office or online. If you are familiar with a life insurance underwriting, then you will find the process of underwriting a critical illness policy to be very similar. Factors taken into account include gender, health habits, past medical history, consumption of drugs and alcohol, family history and body weight.
In most cases, family history comes into play when determining this coverage, because some of the critical illnesses aforementioned are hereditary. Based on facts and statistics, the underwriter will decide whether to take on the risk of covering your health. They will also decide whether you will fall under the standard rate or customize a special rate based on your or your family’s medical history.
Who Needs Critical Illness Insurance
Critical illness cover is the right option for people who:
- don’t have enough savings cover themselves or their dependents if they became diagnosed with a serious condition
- don’t have an employee benefits package to cover themselves or their dependents during their off-work period while they are undergoing treatment
- don’t have enough money to deal with day to day expenses and/or pay off their mortgage in case they were unable to ever return to paid work
Other Important Things To Know About Critical Illness Insurance
If you already have a pre-existing medical condition, please remember that this will not be covered by a critical illness insurance.
A critical insurance policy will only take effect and cover you if you are diagnosed with one of the critical illness listed in your policy cover. If you are unlucky enough to have an illness not listed in your policy, this will not be covered. This policy can be quite expensive over a period of mind, however is there a money-amount that you can put down to peace of mind? You should be reassured that, in case you are hit with a serious condition, you and your dependents will receive a lump sum cash payment.
Some people opt for life insurance coverage rather than critical illness insurance. But it is important to note that life insurance will only pay out if you die or actually diagnosed with a terminal illness. You can read my other posts on life insurance here.
If you are young, have a healthy lifestyle with a good family medical history, then the risk of you getting one of the critical illness is very low. However, the older you are or if your family’s medical history is not so great, the risk of you getting ill are probably higher. Therefore it might be a worthwhile decision to look into a critical illness insurance.
Tips On How To Compare Critical Illness Insurance Companies
Premiums for critical illness insurance will vary from one insurer to another depending on the level of coverage that you opt for. So, it is worthwhile to seek quotes from multiple insurers to ensure that you are getting value for money. Here are some tips that will help you compare the best critical illness insurance companies:
In your quest to obtain a critical illness insurance, it is advisable that you compare say 3-5 insurance companies. You can simply do a Google search by typing in “critical illness insurance quotes”. Since this type of insurance becomes very important at a time that is likely to be very stressful, you have be confident that you are working with a reputable insurance provider. You can check out ratings for particular providers as well as read any negative feedback on them.
After you have short-listed a few insurance companies with the best rating, simply get in touch with them and get a quote from each one. You can choose to do this online or on the phone or by even visiting their office in person. By doing so, you can interact with their staff and have first-hand experience of the level of customer service they provide. Make sure you know exactly what is covered and also read the fine print to find out which medical conditions are not included in the policy. Remember that each company will offer you a policy with unique benefits. Also look for any additional features that are being provided and check for any hidden fees or charges.
It is very important to compare premiums. The very first thing you need to do is to find out how much coverage you actually need. Things that you should consider include your annual wages, monthly spending habits, number of dependents, mortgage and car repayments, and more. Some companies will accept that you pay the premiums on a monthly basis whilst other may require you to make an annual payment. Make your decision based on what suits you best.
Best Critical Illness Insurance Companies
United Health One
UnitedHealthOne is one of the best healthcare insurance providers who will provide you with a comprehensive critical insurance policy cover. In addition, they will also payout 100% maximum benefit when the following critical illnesses strike:
- Heart Attack
- Life-Threatening Cancer (diagnosed more than 90 days after effective date)
- Loss of Hearing
- Loss of Speech
- Loss of Vision
- Major Transplant
- Paralysis: Quadriplegia
- Paralysis: Paraplegia
- Paralysis: Hemiplegia
- Renal Failure
Please note that the above is quoted from the UnitedHealthOne website and you can read more here.
According to AIG, once you’re diagnosed with a critical illness, the costs of treating it will be far beyond your reach. These are not your standard type medical expenses, as sometimes a particular critical illness may require an organ transplant and this comes at a prohibitive cost. AIG also has a package called Critical Care Plus Policy. This is for individuals who would like to leave their retirement and lifetime family saving intact if they ever get diagnosed with a critical illness. This also covers a spouse and children if necessary. Learn more here.
You can also get a quote from one of the most reputable health insurance companies in the USA.
eHealth has 13,000+ plans from 180+ carriers and they assure you that you will not find a better price anywhere. Simply fill out the form to get the best health insurance plan and you can include your spouse and children as required. Click here for more information on eHealth critical illness insurance.
Critical Health Insurance is generally not cheap, therefore only buy protection that you can easily afford. Imagine the peace of mind you will have knowing that, in case of a critical illness, you and your beneficiaries don’t have to face financial stress while you recover and undergo treatment.