Critical Illness Insurance

Critical illness coverage is a contract of insurance wherein an insurance company agrees to make a single tax-free lump sum payment to its policyholder if he or she is diagnosed with any number of critical conditions that are covered by the policy. The insurer’s obligation might be subject to a survival period and diagnosis of the condition by an independent specialist in a particular area of medicine along with appropriate diagnostic tests. The coverage was first offered around 1996 when insurers determined that surviving a critical illness could leave a person burdened with overwhelming medical bills.

How might it relate to your job?

If you have term life insurance as part of your benefits package at work, critical illness insurance might be a part of that coverage. When it comes in that form, you’re only allowed a single claim. For example, if you’re diagnosed with brain cancer, and you elect to take the critical illness coverage payout, your term life insurer is discharged from any other duties or obligations under the insurance contract. If that brain cancer is ultimately fatal, there won’t be an obligation for the insurer to pay on life insurance.

What are the benefits?

If you have a critical illness, you’ll still need to pay your health insurance premiums, deductibles, co-pays, mortgage, car payment and utilities. You’ll need to keep your family going too on their weekly expenses. Life doesn’t give you much of a choice sometimes, and it might take you six months to two years to make a full recovery. Some insurers are even offering partial coverage in case your condition allows you to work part-time.

Medical bills are the primary reason why Americans seek protection through the bankruptcy courts. There’s no question that most people can benefit from critical illness insurance. Do your own risk analysis, and determine whether it’s worth the cost and the advantages of a payout. A critical illness policy is really quite affordable, and it might end up being a very wise choice for protecting you and everybody surrounding you.