Critical illness insurance pays cash if you get sick and need help paying for treatment, or just maintaining your current lifestyle. It can really help ensure you don't drain your savings or the kids' college fund if something unexpected happens.
Here are some of the most common questions my clients ask about this type of insurance:
What is critical illness insurance?
Critical illness insurance pays you cash in a lump sum if you're diagnosed with a covered medical condition. Approved conditions will be spelled out in your policy documentation.
I already have life insurance. Why do I need critical illness insurance?
Life insurance is intended to provide a death benefit for your family if you pass away. True, many modern policies have living benefits that let you access the funds if you're diagnosed with a terminal illness. But what if your illness isn't terminal, as defined by your policy? In that case, you won't be able to access your living benefits. You're going to have increased medical bills at a time when you may not be able to work. That's a huge financial strain your life insurance won't be able to help you with. That's exactly what critical illness insurance is for.
Plus, if your life insurance policy offers living benefits triggered by a covered illness, using those benefits will reduce or eliminate the death benefit your survivors will receive if you pass away. Buying a stand-alone critical illness policy means that your life insurance benefits will still be payable to your beneficiaries even if you're diagnosed with a serious illness and receive benefits from your critical illness policy.
I already have a good health insurance policy. Why do I need critical illness insurance?
All health insurance plans have deductibles, limitations, and exclusions. Only certain treatments and drugs will be covered. But what happens if a clinical trial or new drug emerges that could treat - and possibly cure - your illness? You may face the terrible dilemma of paying for it out-of-pocket. Plus, depending on your illness, you may need to take time off work for treatment, surgery, recovery, or physical therapy. Depending on how much time you need, you may max out your vacation time and end up taking unpaid leave. How would that affect your household budget? Your retirement savings? Critical illness insurance is cash you can use to pay for treatment, drugs, home modifications, or your monthly bills. No approvals, no applications, no restrictions. It's peace of mind that allows you to focus on getting better.
Is disability insurance the same thing as critical illness insurance?
No, these are two different types of coverage. Disability insurance covers short- and long-term disabilities, which aren't the same thing as illnesses. Also, disability plans usually have a waiting period - anywhere from 30 to 90 days. What do you do if you're sick and can't work during that waiting period? If your illness was covered by both disability and critical illness insurance, you could make claims on both. Your critical illness benefits would help you through the waiting period until your disability benefits kicked in.
Do I need to take a medical exam to get coverage?
It depends on the carrier and coverage amount you want. For smaller amounts (under $100,000), you probably won't need to take a medical exam. If you want to apply for a larger policy, you'll probably need to take a brief medical exam that would include a blood profile and urinalysis.
Do I have to pay tax on the cash I get from the policy if I get sick?
Not usually, no. You'll want to check with your tax advisor to be sure, but as a general rule, if you paid for your policy with after-tax dollars, the benefits from your plan are not subject to income tax.
What if I don't get sick? Do I lose all my money?
It depends on the specific policy and carrier. In many cases, the policy changes at around age 70. At or before age 70, it will pay the full benefit for all covered conditions. At age 71, the plan can continue at the same premium for the rest of your life, but it will likely only cover certain conditions, such as loss of independent living.
Get Covered Now
Critical illness is one more piece of the insurance puzzle that keeps your family and your finances safe. If you're ready to learn more, call or email me for a free, no-obligation quote.