If you are diagnosed with a serious illness such as cancer or a heart condition, the bills from treatment could be overwhelming, even if you have health insurance. In such a situation, a critical illness policy would come in very handy.
What is it?
Critical illness insurance is a type of supplemental insurance that offers you a payment if you are diagnosed with a serious illness covered by the policy. Such coverage is often offered as part of a voluntary benefits package through your employer, which allows you to get coverage at lower group premium rates.
Who is it for?
A critical illness policy is a good idea for anyone, but it is an especially good idea for certain people. For instance, if you have a job that won’t pay you if you can’t work, having critical illness coverage is a good idea. It’s also helpful for people whose health insurance requires large out-of-pocket costs. Such a policy additionally can offer peace of mind to parents or anyone caring for another person.
How does it work?
If you are diagnosed with an illness covered by your critical illness policy, you must make a claim to your insurer and the policy will then pay you a lump sum payment equal to the policy’s limit. You will receive the payment regardless of whether you have other insurance, and you can use the money for whatever purpose you deem necessary, even if it is not directly related to your illness – such as living expenses.
Types of coverage
Critical illness policies are fairly standard, and most cover a narrow range of life-threatening illnesses, including cancer, heart attack and stroke. Some policies may cover more illnesses, and others offer coverage for serious injuries, as well.
The main benefit of having critical illness insurance is the promise of additional money should you become temporarily or permanently disabled by a serious illness. This money can help you pay your medical bills or pay everyday living expenses, such as your house payment. Having such coverage might be the very thing that prevents financial ruin due to medical expenses.