Is Critical Illness Insurance Worth It? [Complete 2022 Guide]

— Last Updated May 27, 2022

Is Critical Illness Insurance Worth It? [Complete 2022 Guide]

In this article

— Last Updated May 27, 2022

Read Time
8 mins
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Reviewed by
Eric Berkman
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Is Critical Illness Insurance Worth It? [Complete 2022 Guide]

Stephanie Wilson

Director of Operations

Read Time

8 mins
Group-27.png

Reviewed by

Eric Berkman

In this article

Illness and disease are unpredictable and strike when you least expect it. This is especially true as you get older, when certain ailments such as strokes and heart attacks become more common. Insurance typically helps cover some of these, but medical bills can still be extreme. A critical illness can often derail your entire life. Luckily, critical illness insurance is available!

Critical illness insurance is essentially a supplemental form of insurance, meant to assist those who have been afflicted by a covered critical illness. These costs can add up quickly, so critical illness insurance is meant to provide help! Yet questions about critical illness insurance still abound, including what it covers and how much it costs.

Keep reading to find out all you need to know about critical illness insurance. It is also important to mention that finding an insurance agent from a trusted company is an excellent way to learn more. Until then, we will cover all of the essentials so that you can make your own decision and truthfully answer the question: is critical illness insurance worth it?

What Is Critical Illness Insurance?

Before we can answer questions about the worth or cost of critical illness insurance, we must define exactly what it is. The most important thing to understand is that critical illness insurance is not exactly the same as other types of insurance, such as Medicare. Keep reading to define critical illness insurance and learn more about how it applies to you.

  • Definition

As we have covered, critical illness insurance is a supplemental form of insurance rather than full coverage. This supplemental help provides a lump-sum of cash to those who have been struck by one of the covered illnesses. The lump-sum provided can be used for the cost of treating and recovering from serious illness, including procedures and even the cost of upkeep around the home.

doctor and patient, critical illness insurance

Critical illness insurance can be a huge boon to those who suffer from illnesses that take over your life. Not every illness or condition is covered, but the list is expansive and covers many illnesses that can happen to anyone. Let’s cover these in a greater depth.

  • Examples

When discussing critical illness insurance, it is essential to emphasize the likelihood of being a victim to an illness. It can be easy to ignore the possibility or simply assume it will not happen to you, but the odds are that you or a loved one will be impacted by a critical illness at some point in your life.

The American Heart Association estimates that over 700,000 Americans have a heart attack each year. In addition, the likelihood of developing cancer at some point in your life is a one-in-three chance for men and nearly one-in-two for women. These conditions are not always fatal, and indeed might even be fairly mild for some. But the fact that they commonly occur is something nobody can deny.

With this in mind, you might be wondering which critical illnesses are covered by critical illness insurance. First, keep in mind that the illnesses covered are determined based on your own specific plan; they are not universal. That being said, here are the most common;y covered illnesses:

  • Heart attack
  • Cancer
  • Stroke
  • An organ transplant
  • Kidney failure
  • A bypass surgery
  • Being in a comatose state

As you can see, that means quite a bit is covered! Now, let’s move towards the specific pros and cons of critical illness insurance.

  • Advantages

First, we should go over the general advantages that you can enjoy as the recipient of critical illness insurance. If these sound good to you, consider speaking to an insurance agent in order to learn more and implement these benefits!

  1. Wide-ranging coverage. As we have discussed, critical illness insurance covers a wide range of potential conditions. While the exact coverage will be determined by your particular insurance company, you can still rest easy knowing that the illnesses you are most likely to suffer from (heart attack, cancer, or a stroke) are covered.
  2. Direct payment. With critical illness insurance, the lump-sum is paid directly to you rather than to an insurance provider. This means that you can use the money as you see fit according to your specific circumstances. Whether that is medical care or household needs, it is up to you!
  3. No waiting period. Unlike other insurance, you do not need to suffer through a waiting period to receive your benefits. Instead, you can receive your payment as soon as your diagnosis and plan are processed by your insurance company.
  • Disadvantages

To give you a fair overview of critical illness insurance, we must also cover the disadvantages. Here are a few of the common disadvantages you might feel as the recipient of your specific insurance plan.

  1. Being separate from medical insurance. It is easy to confuse critical illness insurance with medical insurance, but they are different things. In order to get coverage and a lump sum for proper protection, you will likely need both types of insurance. They are not required to be purchased together, but it helps.
  2. A potentially high cost. As with all forms of insurance, you will pay a monthly premium to your insurance provider in order to retain your coverage. These premiums can be high, especially when added to other insurance premiums. In addition, you could be paying them for years before a critical illness occurs.
  3. The potential to go unused. Critical illness insurance is meant to be purchased prior to your diagnosis as a precaution. This means that you will not actually need it when you buy it. If you get lucky, you will never have a critical illness in your life. However, this luck would mean your premium payments were technically unnecessary.

These have been some of the most common advantages and disadvantages of critical illness insurance. Now, let’s take a look at some deeper questions, including: who is critical illness insurance plan for?

Who Is Critical Illness Insurance For?

It cannot be denied that the likelihood of developing a critical illness increases as you age. You can technically purchase it at any time, but you are most likely to need it once you get older. For these reasons, those above fifty are most likely to utilize critical illness insurance.

In addition, a pre-existing condition can sometimes discourage insurance providers from approving your for critical illness insurance. This makes it likely that those who already have pre-existing conditions will require forms of healthcare aside from critical illness. To recap, critical illness insurance is for everyone, but you are more likely to need it as you age. In addition, it is not always meant for those with pre-existing conditions.

How Does Critical Illness Insurance Work?

Now that you know more about this type of insurance, it is time to learn how it works. We’ve already covered that anyone can qualify for critical illness insurance, and you just need to approach an insurance company during open enrollment and discuss creating a plan. This will often be easiest if you already have a plan with that provider, such as Medicare or another health insurance.

Some health insurance companies may require you to get a medical exam or health screening in order to determine your eligibility. As discussed, pre-existing conditions or a clear medical risk may prevent you from getting critical illness insurance. This is because companies are unlikely to insure someone with a clear risk or health problem aside from the future diagnosis of a critical illness.

critical illness, stethoscope

After your possible health screening, you will begin paying premiums on your plan. You will continue to pay these premiums until you are diagnosed with a critical illness, although there is a chance that will not occur. If you feel after a bit that you are unlikely to need your insurance, you can cancel the plan. However, if you are diagnosed with a critical illness, you can notify your insurance provider immediately with proof of the diagnosis of you or a loved one requiring your assistance.

After your claim has been processed, you will be provided with a lump-sum of cash to handle the monetary needs of your treatment. The money is yours to use as you see fit!

Are Other Benefits Available Under a Critical Illness Plan?

Next, you might be asking if there are other benefits of insurance aside from the lump sum in case of illness. The short answer is that no, critical illness insurance does not typically offer benefits beyond the lump-sum of cash. This is because it is still fundamentally separate from other types of medical insurance, which would be more likely to offer additional benefits.

Ideally, you will be using critical illness insurance in addition to another plan such as Medicare or life insurance. However, make sure you talk to your insurance agent about your specific plan.

How Much Does Critical Illness Insurance Cost?

The most essential question that people will ask themselves is how much critical illness insurance actually costs. In truth, factors such as age, gender, lifestyle, benefit amount you are seeking, and more can impact your overall payments. The primary thing you will be paying are your monthly premiums, which typically increase as you get older and are more likely to use the service.

It is estimated that someone in their 40s who does not smoke or drink excessively will pay about $60 a month for a $50,000 benefit policy. However, this price can double or even triple for someone in their 70s. So, you need to weigh the cost of premiums over the year with the potential cost of being treated for a critical illness. If you have an insurance plan with a very high-deductible or your insurance doesn’t cover a treatment you need, the assistance of a lump sum could outweigh the cost of premiums.

The true cost of critical illness insurance will be determined by your own unique plan. Make sure to speak to a trusted insurance agent about any concerns or questions with costs, and they can help you to find a premium that is affordable for you.

Is Critical Illness Insurance Worth It?

There’s really only one last question to ask, and that is whether or not critical illness insurance is truly worth it. Let’s review some of the quick things we’ve learned about this unique form of healthcare!

  1. It is a supplemental insurance, meant to be used in combination with other forms of healthcare.
  2. It pays you a lump sum after your diagnosis with a critical illness. The exact amount of the sum can be anywhere from $5,000 to $100,000 depending on your specific policy.
  3. It covers a set number of critical illnesses, and those with chronic or pre-existing conditions are not eligible.

If you are a person who does not have a pre-existing condition but would require financial assistance in the event of an illness, this insurance is surely worth it. The future is uncertain, and if you ever find yourself in financial straits due to medical bills, you’ll be glad to have critical illness insurance! It really depends on your personal situation, which again is something an insurance agent can help decipher. That leads us into our final portion of the article…

Where Can I Find Out More and Get Advice On Critical Illness Insurance?

Today, you can find multiple disability insurance consultants on the internet. However, choosing the right advisor is another difficult task. Policy solver has knowledgeable, licensed agents, and is here to help you navigate through your disability insurance journey. We are a team of professional insurance policy brokers and we can save you time and money, while finding the right policy for your specific needs.

Our experienced advisors will ask you a few questions to understand your unique situation and will come up with a comprehensive analysis of different insurance plans so they will be able to recommend the best policy at the best price for you.

Need advice on critical illness insurance? Contact us or schedule a free consultation, and we will get back to you soon!

 

Sources

Wolstenholm, Jack. “Critical Illness Insurance: What Is It & Do I Need It?” Breeze, 1 June 2019, https://www.meetbreeze.com/critical-illness-insurance/what-is-critical-illness-insurance/.

“American Heart Association: To Be a Relentless Force for a World of Longer, Healthier Lives.” Www.heart.org, https://www.heart.org/.

 

Fb. “What Are the Chances of Getting Cancer?” TruGenX, 3 Sept. 2021, https://trugenx.com/probability-of-getting-cancer/.

Bernard, Tara Siegel. “Insurance for Critical Illness May Add Security, but at a Cost.” The New York Times, The New York Times, 18 Mar. 2016, https://www.nytimes.com/2016/03/19/your-money/insurance-for-critical-illness-adds-security-but-at-a-cost.html.

 

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