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Seems that everywhere you go these days, you can practically insure anything from a coffee grinder, your four-legged friend, a wedding, a trip to the Bahamas, and yourself. While some insurance plans may be a questionable investment to some, other plans may keep others financially afloat in a time of an unexpected critical crisis.

Critical Illness Insurance vs. Health Insurance


When you’re healthy and are insured you probably don’t think about what’s covered (or not covered) in the event of an illness. Most health insurance policies will cover a majority of doctor visits, medications, and even part of a hospital stay or surgery, but what happens if you’re diagnosed with a serious illness that requires lengthy hospital stays or expensive treatments?  While your regular health insurance will continue to cover a portion of your medical needs, your medical debt is likely to grow.


Some experts recommend critical illness insurance for that fact alone, to reduce your risk of bankruptcy due to mounting medical bills. Similarly, unlike other minor medical conditions, serious illnesses often keep an individual from working, increasing the chance of financial hardship.

What is a “Critical Illness”?


Like all health insurance policies, critical illness insurance may differ on what and how much they cover. Some health conditions that are often considered a “critical illness” include, but are not limited to: cancer, heart attacks, strokes, major organ failure/transplant, Alzheimer’s disease, deafness, blindness, paralysis, comas, and severe burns. If considering a family plan, additional conditions may include type 1 diabetes, muscular dystrophy, and cerebral palsy.

How Does Critical Insurance Work?


Keep in mind that like all types of insurance, critical insurance policies may vary. In general, critical illness insurance pays a lump-sum, tax-free, cash payment if you are diagnosed with a “critical illness”. While some individuals receive one check in the full amount, others will get paid numerous times.


If you are diagnosed with a critical illness one year, such as a heart attack, and another illness (such as cancer) a few years later, you will receive compensation for each illness. One of the benefits to a critical illness insurance payout, the money can be used as you see fit. The payout can be used to pay for medical expenses or even your mortgage if you’re out of work during your illness.

The Cost of Critical Illness Insurance


Depending on your health, age, and coverage, the cost of critical illness insurance can cost less than $100 per month. Lump sum payouts can range from $10,000 to $1 million. Here are some examples of what some individuals may pay each year, according to the American Association for Critical Illness:


For a $30,000 benefit, a 45 year old male (non-smoker) may pay anywhere from $570 to $605 a year while a non-smoking woman of the same age may pay $420 to $460 a year.


A 45 year old male who smokes may pay between $980 to $1,020 a year while a smoking woman of the same age may pay between $710 to $750.


Staff (65 Posts)