Critical illnesses can lead to financial devastation, even if you have comprehensive health insurance. About 60% of U.S. bankruptcies are related to medical bills, and this includes many households with insurance. With rising premiums, ever-growing deductibles, and high co-pays, a critical illness can wipe out savings and come with substantial out-of-pocket expenses. Critical illness insurance is a specialized form of coverage that gives you a lump sum of cash when you need it most.
How Does Critical Illness Coverage Work?
This form of coverage provides a lump sum cash payment if you are diagnosed with a qualifying critical illness or procedure after your policy’s waiting period. This lump sum can be used to help pay your out-of-pocket medical expenses, unexpected costs you face while recovering, or everyday expenses like paying the mortgage and buying groceries.
These policies focus on acute illnesses, not chronic illnesses like diabetes. Depending on the policy, there may be an age reduction schedule, which means the cash benefit declines as the policyholder ages. You can select from many levels of coverage starting at $10,000 and up to $100,000.
What Is a Critical Illness?
A critical illness policy typically covers specific illnesses or conditions such as:
• Heart attack
• Organ transplant
• Kidney failure
• Coronary artery bypass
A more comprehensive critical illness policy may also coverage additional illnesses like ALS (Lou Gehrig’s disease).
A critical illness can strike at any time or age. You probably have friends or family members who have been affected by a life-changing illness, but you may not have considered the significant financial burden an illness like cancer or a heart attack can have on a family. With critical illness insurance, you have the peace of mind knowing that if a serious illness occurs, you will receive a lump sum of money to help pay medical and household bills while you recover.