Insurance is a tool that is necessary to protect yourself and your loved ones. Long-term care insurance and life insurance are often offered by employers as part of your benefits package. However, as discussed in the article “What Is Critical Illness Insurance” from the balance, this additional insurance could make a big difference in your family’s financial well-being. Before making any decisions, it’s important to understand the role of critical insurance.
Critical illness insurance, which is also known as critical care insurance, is a type of insurance policy that pays insurance policyowners with a lump sum payment, after they are diagnosed with a specific type of illness that is listed on their insurance policy. This insurance may also be structured to make serial payments, based on the policyowner’s ongoing medical treatments or condition.
Some critical coverages are very limited and only cover a handful of illnesses, while others can provide coverage for as many as thirty different conditions.
Like any kind of insurance policy, it’s important to read the fine print. There will likely be conditions attached to getting a cash payout. Do the research before signing up.
Some critical illness policies cover the portion of the cost of any diagnostic or screening tests for a condition. If you have regular colonoscopies, for instance, and you own a cancer policy, it is possible that the unreimbursed portion of your procedure could be covered by the critical illness policy. A good policy could work for you during your entire healthy life, as well as during a critical illness.
Some of the critical illness policies provide an option to combine critical illnesses coverage with additional life insurance, accident or disability insurance. If you want to maximize coverage and avoid having to manage a few different insurance policies, this may work for you. Again, read the fine print. You don’t want to put all your insurance eggs in one basket, only to find that the conditions are counter-productive to your coverage goals.
Critical illness insurance usually comes with a list of illnesses that are included in the policy. Each one will have very specific criteria that will define whether you qualify for a benefit payment. There are cases where people may think they have coverage because of a diagnosis, only to learn that they have not met the specific criteria.
Deciding whether you need critical illness insurance, in addition to your employee benefits, is a personal decision. If you are paying several hundred dollars a month for many years and never become ill, then you may not consider the money well spent. However, if you receive a diagnosis of a critical illness and you receive a large payout, you’ll be glad to have the coverage.
Another option is to put the same amount of money into a health savings account. However, there’s no way to be sure that the account will grow enough to cover the expense of a major, life-changing illness.
Reference: the balance (March 11, 2019) “What Is Critical Illness Insurance”