What is Critical Care Insurance?

Aug. 7, 2018

You may already know that life insurance is primarily designed to pay death benefits when you die, and disability income insurance is set up to pay benefits if you become disabled and aren’t able to work. But what is critical care (also called “ critical illness ”) insurance? Who needs it, and how is it different from your regular health insurance policy?

Simply put, critical care insurance is an insurance product designed to protect your finances in the event you are diagnosed with a covered illness or condition. It’s a type of insurance that can prove to be invaluable if you need it, but it’s not as well known yet as other common types of coverage. In this post, we’ll dive into some features and details you need to know so you can make more informed decisions about purchasing coverage.

Understanding Critical Care Insurance Benefits

You are probably familiar with traditional health insurance, which pays the cost of covered medical care in full or in part after you’ve met any applicable policy deductible and co-pay requirements. Even the best health insurance policy has limits on care provided, though. If you were to become diagnosed with cancer, suffer a stroke or heart attack, or contract another debilitating condition, you could quickly reach the maximum amount of coverage under your policy leaving you with medical bills on top of your everyday financial obligations. Compounding the problem, you may be unable to earn an income at all.

Critical care insurance is designed to pay a lump sum, tax-free benefit payment after the insured person becomes critically ill, as defined in the policy.

What Critical Illness Policies Typically Cover

Insurance coverage can vary from one insurance company to another, but critical illness policies typically pay out policy benefits when the insured person suffers a heart attack or stroke or is diagnosed with cancer. Some policies also cover some or all the following types of conditions:

  • Coronary bypass surgery

  • Renal (kidney) failure

  • Angioplasty

  • Heart transplant

  • Other major organ transplant

  • Paralysis

  • Loss of hearing, speech, or vision

You may be able to add these and/or other conditions onto a policy as “riders”.

How Critical Care Benefits Can Be Used

Because critical care insurance pays policy benefits directly to the insured person in one lump-sum, tax-advantaged payment, there are no restrictions on what the money can be used for. You’ll determine the amount you want to receive up-front. Policy sizes can vary but may range from $10,000 to $1 million. Your insurance agent can help you determine how much coverage you should purchase.

Many people use critical illness policy benefits to help pay medical expenses including health insurance deductibles, co-pays, and premium payments, as well as to make mortgage payments and to meet other regular monthly financial obligations. You could also use the funds to travel to receive treatment somewhere else or to pay for treatment your health insurance policy does not cover.

Why You May Want to Consider Buying Critical Care Coverage

Receiving a cancer diagnosis or suffering a heart attack or stroke can take both physical and emotional tolls on you and your loved ones. There can also be serious financial implications. In fact, more than 60 percent of bankruptcies in the United States are primarily or partially in result of medical bills. When you buy critical care insurance, you're buying a lump-sum benefit that can provide a financial cushion if you need it, helping you avoid being part of the health-related bankruptcy statistic.

Knowing that you have a critical illness insurance policy in place can provide valuable peace of mind. If you buy a policy and later suffer from a covered critical illness or condition, you will have a safety net in the form of a cash emergency fund you can fall back on. This can ease stress – both yours and that of your loved ones.

Alternatives to Critical Illness Insurance

If you are lucky enough to have significant cash savings to fall back on, you may not need to buy a critical care policy. However, you should also consider the possible implications of draining your cash reserves while you recover. This could leave you without sufficient savings later in life when you need it.

You may also want to consider purchasing disability income insurance. Sometimes people opt for disability coverage instead of critical care coverage. However, don't make the mistake of thinking they're the same type of policy. Where critical illness coverage pays one lump-sum benefit based on your diagnosis, disability income insurance pays a set monthly benefit amount if your physical or mental health condition leaves you unable to work. Monthly benefits stop when you’re able to go back to work or when you’ve reached the end of the payment period, as defined in the policy.

It may make sense to buy both disability income insurance and critical illness insurance. Your independent insurance professional can help you determine the best insurance fit for your situation.

Symmetry Financial Group Can Help You Determine Whether Critical Care Insurance Makes Sense for You

You may be surprised at how affordable critical illness insurance can be, and how easy it can be to obtain. In fact, you may not even need a medical exam! If you are interested in learning more, contact your Symmetry Financial Group Independent Insurance Agent. Exploring whether you qualify for coverage, and how much that coverage would cost you, doesn’t obligate you to purchase a policy.

Your agent can help you evaluate various policies and coverage options, so you can make a decision about how to best protect yourself and your loved ones from the potential financial risks that can come with a critical illness diagnosis.

To learn more and to get a free quote, contact us online today.


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