Accident & Health Insurance
Critical Illness Insurance: What Is It and How Does It Work?
When you get sick, medical insurance can help cover costs during your recovery. Sometimes though, the expenses associated with recovery from a major illness go beyond standard medical bills. That's where critical illness insurance may help.
Whether you need to take a taxi to a doctor’s appointment, order a nourishing meal delivered to your door or even hire a babysitter while you recover, a payment from critical illness insurance can be used to help cover such expenses or however you see fit. Read on for a closer look at what critical illness insurance is and why you may want to consider getting a policy.
What is critical illness insurance?
Critical illness insurance typically provides a lump sum payment when you have a verified diagnosis of a covered illness.
Pay-outs can typically be used to cover:
- Out-of-network treatment
- Therapy and rehabilitation
- Transportation expenses
- Childcare
- Lost income
- Other financial obligations (e.g., mortgage payments)
Exactly how much your critical illness plan pays out will depend on your insurance provider and the type of plan you’ve selected.
What does critical illness insurance typically cover?
Critical illness plans are designed to provide coverage for illnesses and injuries that have a significant impact on your quality of life. However, the specific list of qualifying conditions may vary based on your insurance provider. Critical illness insurance typically provides a lump-sum payment when you’re diagnosed with or require any of the following:
- Heart attack
- Stroke
- Kidney failure
- Cancer
- Major organ transplant
- Alzheimer’s disease
- Coma
- Severe burns
- Paralysis
- Coronary artery bypass graft
- Sudden cardiac arrest
- Benign brain tumors
- Progressive diseases
- Infectious disease
- Childhood diseases
- Loss of the ability to speak, hear, and/or see
For conditions with a possibility of recurrence, such as cancer or stroke, some critical illness plans will provide an additional payout. Be sure to check your policy for details.
Why enroll in critical illness insurance?
Critical illnesses are more common than you might think. According to the Centers for Disease Control and Prevention (CDC), someone in the U.S. has a heart attack every 40 seconds.1 When surgery is required for a heart attack, the average cost of emergency treatment can be $100,000 or more — even with health insurance.2 And that’s for just one type of critical illness.
There has also been an increase in strokes, heart disease, and chronic liver disease, and that — along with COVID-19 — has led to a slight drop in life expectancy in the U.S. over recent years.3 So, enrolling in critical illness insurance to protect yourself and your loved ones may be a wise investment.
How to get critical illness insurance
Enrolling in a critical illness insurance plan is easy. If your job provides employee critical illness insurance, you can sign up during open enrollment, during a qualifying life event, or when you first start your job. Premiums are usually handled via payroll deduction, like employee health insurance, so you don’t have to worry about managing additional payments.
If you’re curious about getting a critical illness plan through your employer, ask your benefits representative if it’s available as a workplace benefit. You can also purchase an individual plan through an insurance provider.