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Last Updated on July 18, 2024 by Insurdinary Editorial Team | Fact Checked by Rhonda Gary -->
Like most people, you probably don't expect to go through your life dealing with the aftermath of a serious medical condition or severe accident. Unfortunately, life situations can change without warning. You or an immediate family member can be healthy one day and get a life-altering diagnosis the next—are you well-prepared?
Think about something like a serious illness—cancer or the loss of a limb—that can drastically disrupt your daily life and possibly cause financial strain. Even with health insurance, you could quickly find yourself facing medical expenses, costly treatments, and typical living expenses without sufficient resources.
You’ll need time to get your health in order, but due to your condition, you might also be working less or not at all. If you're experiencing a major monetary burden, what can you do? Well, one option is critical illness insurance.
Can you protect yourself and your family financially if a household member experiences a significant and unexpected health problem? Consult the guide below to learn more.
Critical illness insurance is an add-on policy to minimize the risk of financial strain after a serious diagnosis. The policy doesn't cover all illnesses or conditions, but it can alleviate your financial difficulty that many life-threatening or critical diseases could cause.
When you have critical illness insurance, and you receive a covered diagnosis, your insurer will pay you a lump sum. Depending on your selected insurance company, you could buy a policy for yourself, one that also covers your spouse and children, or group coverage. Companies will often offer critical illness policies only for women (to cover conditions like ovarian cancer).
Don’t mistake critical illness insurance for health insurance—both insurance types offer great financial protection, but they're not the same thing.
Though good health insurance can reduce some financial strain from medical expenses, critical illness benefits also cover cost-of-living expenses during your recovery or adjustment period.
The face value of your policy depends on different factors, including your chosen insurance provider. Plus, since critical illness insurance is a supplemental policy, it will come with a list of covered conditions and exclusions.
For example, you will submit a claim for a covered ailment after getting a diagnosis. After waiting the appropriate time—some policies require 30 to 90-day waiting periods—you could receive benefits. Most policyholders get a lump sum payment of their benefit amount or payments on a per-treatment or monthly basis.
The insurance company will pay the money to you, not your doctor or medical facility. You can use the funds to pay for the following and more:
Ultimately, specific coverages for critical illness insurance are up to the insurance company. Most policies cover the following:
As with any insurance policy, critical illness insurance has limitations. For example, it won't cover all life-threatening conditions, including those resulting from prolonged drug or alcohol abuse, pregnancy-related complications, or HIV or AIDS-related treatment. Psychiatric, psychological, and mental health-related disorders and complications also aren't likely to have coverage with this type of policy.
Some insurance companies will let their critical illness policyholders pick their benefit amount (the range is typically from $5,000 to $75,000). Depending on the amount and insurer, you could get a lump sum of the total coverage amount or increments over an agreed-upon period.
Critical illness insurance will reduce your potential financial strain during a time of great need. However, you must pay for your policy monthly to keep it active in case you develop a critical illness.
It's also impossible to know exactly how much you'll pay for your monthly critical illness premium; all policies are different. Insurance companies use various factors to determine the cost of a policy. As such, people can pay more or less than others for similar policies and identical benefits.
These are the most common factors influencing critical illness insurance premium amounts:
Having a critical illness insurance policy can undoubtedly safeguard you and your family from severe financial strain. If someone becomes critically ill or injured, it could be hard to work and earn a living. The loss of income and rising bills could quickly put you and your household into debt, even if you have excellent health insurance.
If you’re still on the fence about buying a critical illness policy to protect your family’s financial future, here are some benefits you can enjoy if you go ahead and apply for one:
With all the benefits critical illness policies can offer, you might wonder if this insurance is right for you. It's worth noting again that it won't cover all illnesses, even life-threatening ones.
Most insurance companies require a diagnosis for a covered condition that may cause you to be seriously ill or disabled. Even then, limitations could restrict whether the insurance provider will pay out benefits for a covered condition. Additionally, if you never get a critical illness diagnosis, you won't get a refund for the money you spent on the policy.
So, before buying a policy, consider whether you need one. It might be unnecessary if you already have critical illness insurance coverage elsewhere or you work for someone who'll pay you if you develop a health condition or disability. You might also consider not getting critical illness protection if you already have substantial savings to draw from to prevent financial strain.
It’s also important to note here that insurance companies will request specific information from you before you can buy critical illness insurance.
For instance, you must give information about you and your family's medical history. You must also disclose your pre-existing conditions, which may not have coverage.
If you're ready to buy a critical illness policy, you can work with an independent insurance agent or financial adviser. You'll have to pay for the service and the professional advice.
You could also shop on different insurance companies’ websites directly, though this process is extremely time-consuming. Since many providers offer some form of illness protection, it’s better to rely on a quick quote comparison tool like the one that Insurdinary coordinates.
The economic pressure you could experience if you, your spouse, or your child develops a serious medical condition could be overwhelming. With rising medical costs, exhausted health insurance, loss of income, and inflation, you might wonder how you can reduce your fiscal struggle while still having time to recover and adjust. Critical illness insurance may be your answer.
Buying a critical illness policy in conjunction with health insurance and other protections like life insurance could lessen your financial strain. If your policy covers your illness or condition, you'll get a lump sum to use for your medical bills, mortgage, rent, and everyday expenses.
Of course, finding the right insurance provider helps, too. Why not turn to our capable Insurdinary representatives for help in making the best choice by easily comparing multiple quotes from the country's best insurance agencies? Get started with Insurdinary today by completing our easy-to-use online quote form.