The first step in getting critical illness insurance is applying for a policy. Every carrier has age limitations, but if you're between the ages of 18 and 64, you're good to go. If you're over age 64, check with me first so I can help you find a carrier that covers this age group.
The next step is to decide how long you want coverage. Policies are available in 10-, 15-, 20-, and 30-year terms. If you want the coverage to offset financial risk from a mortgage, for example, pick the term length that best matches up with the time left on your home loan.
Next, you'll pick the amount of coverage you want. In general, the amount of coverage you can apply for depends on your income. Most carriers offer amounts from $10,000 up to $500,000. Depending on how much coverage you want, you may have to take a brief medical examination, EKG, or other medical test. Every carrier's underwriting requirements are a little bit different. In general, if you're applying for less than $100,000 of coverage, you'll probably be able to skip the medical exam. Keep in mind that your application may be rejected if you've ever been diagnosed with or treated for one of the conditions covered by the policy.
Once all the underwriting and exams are complete, if you're approved, your policy will be issued. Your monthly payment will depend on your age, coverage amount, and risk factors. If you're a smoker, for instance, your premium will be higher. Once your policy is issued, it may also be guaranteed renewable up to a certain age (usually 65 or 70).
Coverage Under the Policy
Your policy will specify the benefit face amount, which is the maximum cash benefit payable. That full benefit is payable if you are diagnosed with certain conditions or illnesses. For example, many policies pay 100 percent of the benefit face amount if you have a stroke, heart attack, kidney failure, or are diagnosed with cancer after the policy has been in effect for a certain amount of time.
The policy may also specify that only partial benefits are payable under certain circumstances. For example, some policies may pay 25 percent of the benefit face amount if you need to undergo a coronary artery bypass, or if you're diagnosed with cancer before the policy has been in effect for a certain amount of time.
Your policy's benefits may also change as you age. For example, your policy may pay full benefits up until age 65 and partial benefits thereafter. Some policies will only cover a limited range of illnesses after a particular age. Some stand-alone critical illness policies pay limited death benefits (such as a benefit equal to 10 percent of the benefit face amount). If you want to make sure your policy has any of these features, let me know and I'll help you shop for the best fit for your needs and budget.
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