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Did you know that receiving a diagnosis of a major illness ranks in the top five most stressful life events, ranking alongside issues like death, divorce, moving, and job loss? It’s not just the uncertainty about treatment and your prognosis that can cause extreme anxiety and stress. For many people, worries about how the illness will affect their families and their ability to meet their financial obligations are just as much a concern as the disease itself.
Worries over money when managing a severe illness are common and not entirely unfounded. People who need significant medical care for a condition like cancer have more debt and are more likely to file bankruptcy than those without major health issues. Even with health insurance coverage, the costs associated with getting treatment can create major burdens and make it challenging to fulfill your financial responsibilities.
A critical illness insurance policy can make it easier for individuals to fulfill their monetary commitments in the face of a life-threatening illness. While not a substitute for health insurance, these policies provide an influx of cash that can make the difference between staying afloat or facing hardship.
Critical illness insurance is a policy that creates a financial safety net for individuals with severe health issues. When you have one of these policies and a doctor diagnoses you with a covered illness, you can file a claim for a lump sum payment of the policy value, ranging from $5,000 to $75,000.
When the insurer approves your claim, you will receive a one-time cash payment to help cover your financial obligations; in most cases, these payments are tax-free. These policies are attractive because they don’t stipulate how to use the money. In other words, once you have the cash in hand, you may use it however you see fit.
You have multiple options for accessing a critical illness policy to help manage your financial liabilities in the event of a significant illness. Many people qualify for coverage through an employer-sponsored group policy, which is the most affordable and convenient option in most cases. You can also purchase a standalone policy or add a critical illness rider to a whole life or permanent life insurance policy.
Purchasing your own coverage or a rider might be more expensive than opting into a group policy, but you might be able to get a higher-value policy. However, if you choose the life insurance rider option and need to make a claim, the insurer will deduct the payout amount from your family's final death benefit when you die. Still, if you’re facing substantial medical bills and struggling to fulfill your obligations and finances are tight, the extra cash can make a big difference to your family’s financial future.
Another essential point to recognize when purchasing critical illness insurance is that it doesn’t cover all medical conditions. Policies vary by company, but most limit critical illness claims to the following conditions:
Because these policies do not fall under the rules of the Affordable Care Act, insurers can deny coverage based on pre-existing conditions or your health history. This means you may not be able to get a policy if you already have a cardiovascular disease, for example. Some companies will cover people with specific diseases or conditions, with the caveat of a waiting period for claims.
Buying a critical illness plan will not cover expenses for all chronic conditions. Diabetes and asthma, for example, don’t qualify for a lump sum payout. Insurers also exclude injuries or conditions related to substance abuse, acts of war, illegal activities, or self-harm, so be sure to examine the policy terms carefully to ensure your condition is covered.
According to research from GenRe, cancer, heart attack, and stroke are the most common reasons for critical illness claims. Considering that the American Stroke Association estimates the lifetime cost of a stroke to be about $140,000, it’s easy to see why a supplemental insurance policy can make a big difference in your ability to meet financial obligations.
While your health insurance will cover some of your financial liabilities when you get sick, the policy won’t cover everything. Your critical illness policy will fill the gap to help pay for immediate and ongoing medical and non-medical expenses.
With the money you receive from your critical illness insurance payout, you can address fiscal commitments like:
When you have a serious ailment like cancer, your non-medical economic duties don’t go away. You still have expenses to manage, and the insurance payout can help with things like:
Ultimately, if you get sick and cannot work, or you can only work full-time, a critical illness policy will help replace your income so you can keep paying your bills and reduce the likelihood of devastating medical debt.
Having a critical illness insurance policy means one less worry while managing your condition. Research published in the journal Critical Care Medicine revealed that financial stress is common during and after a critical illness and that it can have long-lasting effects, including symptoms of anxiety and depression. The last thing you need when facing a life-threatening disease is to worry about financial obligations, so it’s worth investing in a safety net to help support your recovery.
Even if you have health insurance, you should consider additional critical illness coverage if any of the following applies to you:
Research from KFF shows that even people with health insurance can accrue medical debt, and many people don’t have enough money to meet their deductibles and out-of-pocket costs for care. That’s not even considering the additional expenses associated with treatment, so a critical illness policy is worth considering if you have any concerns about your ability to pay your bills if you get extremely sick.
If you want to learn more and explore your options for critical illness insurance that will help you meet financial obligations, check out Insurdinary’s online quote tool. Answer just a few quick questions, and get free, no-obligation quotes for competitive policies from leading insurers. When you’re ready to buy, one of our licensed insurance professionals will walk you through the enrollment process.
Insurdinary makes getting the coverage you need for yourself and your family easy. Contact us today and enjoy more peace of mind and financial security.