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Critical Illness Insurance

Information on Critical Illness Insurance


Over the years, many Americans have suffered needlessly from inadequate coverage when a critical illness strikes. This phenomenon has left many in terrible financial shape with a disturbing number of bankruptcies as a consequence. Most had regular health insurance coverage mind you, but typical health insurance coverage often falls short in the event of a critical illness. Good critical health insurance can make the difference as it is designed to assist families and those directly suffering from a critical condition to get on financially until the one stricken has recovered. This coverage help gives a family the opportunity it needs to meet the obligations of bill payments, mortgage payments, etc., in case a critical illness prevents the policyholder and breadwinner from working as normal. In many cases, this coverage can be applied to medical costs not already covered by workplace benefits.

Who Benefits

Although policies vary somewhat, there are several conditions this kind of insurance was created to address. The top three of these illnesses are cancer, heart attack and stroke. The stats certainly back this up as cancer strikes an increasing number of Americans each year and, similarly, large numbers of people will have their first stroke or heart attack each and every year. It is important to note that most of these people will survive and require some type of treatment in the aftermath.
There are other forms of this type of policy that will cover other necessary treatments and conditions such as heart or major organ transplant, paralysis, bypass surgery, kidney failure and angioplasty. Often treatments for these conditions can cost multiple thousands of dollars each year. This will likely be way out of reach for someone who is unable to work for an extended period of time. This is how good critical illness insurance coverage can help.

There are two major types of coverage:

• An Individual Fully Underwritten Plan
This type of critical illness plan pays out large amounts, up to $500,000, when activated. This coverage can be bought from either an insurance company directly or from a broker. To buy this type of coverage, individuals will be mandated to provide all their relevant medical records.
• An Individual Simplified Issue Plan
This kind of critical health coverage plan is made available to those on a budget but pays out more modestly. The maximum amount one may receive from this level of plan coverage is usually $50,000. Normally the insurer will only ask a few health related queries when one is seeking this coverage. (There is no need to provide one’s medical records.)
Both of these coverage types are made available through individual insurance providers. Additionally, there are plans offered by some employers, paid for by their employees, as well as benefits that are included as supplemental coverage on life insurance policies.

Big Benefits

Critical illness insurance coverage can provide peace of mind for those who are facing a critical illness as it ensures that they can get the treatment they require by filling in the gaps in their workplace benefits and normal health insurance coverage. It is also greatly helpful when it provides needed funds to those in need for help with mortgages, car payments, food, prescriptions, experimental treatments and necessary travel costs that stem from treatment. It can even assist in replacing a spouse’s income if he or she is unable to work due to the need of caring for the critically ill policyholder.

How it Operates

To receive these many benefits, a policyholder’s first diagnosis must happen after a required 30-day waiting period. Additionally, the policyholder will have to live out a specified survival period detailed in the policy for the particular illness. If these conditions are met, the covered individual will be able to receive a lump sum payment, tax-free, that covers expenses during treatment and recovery.
Depending on one’s circumstances, it is even possible to be the recipient of more than one of these lump sum payments. For instance, the policyholder can receive benefits after a cancer diagnosis, then suffer a heart attack a short while later and also be helped again. Keep in mind that it’s important to only buy the type and level of coverage you can afford for your budget.