Nobody expects to have a major medical condition, and many would prefer not to even think about the possibility. But the truth is, having essential additional insurance coverage during a major sickness can provide peace of mind and financial assistance when it’s required most. It could be the one thing standing between you and medical bankruptcy.
Many people believe they are adequately insured if they have a normal health insurance policy, but the excessive expenses of treating life-threatening illnesses often exceed any plan’s coverage. Continue reading to learn more about critical illness insurance and whether it’s something you and your family should consider.
What Is Critical Illness Insurance?
Critical illness insurance is also referred to as critical care insurance. These plans offer financial assistance in the event of a major illness diagnosis. They provide a lump-sum payout or monthly payments to help with expenses incurred as a result of a serious illness.
Your primary health insurance policy will cover some medical costs, but you will always have out-of-pocket expenses. For example, you may have deductibles, copays, coinsurance costs. Plus, your health plan will not pay for non-medical expenses. You can use a critical illness plan to pay for any bills or expenses you have, even if they’re just everyday living expenses.
How Does Critical Illness Insurance Work?
Critical illness insurance in Texas is simple to understand. You pay a monthly or annual premium for the coverage, and the plan pays upon a critical illness diagnosis.
Some policies offer guaranteed coverage without requiring a health screening. This is almost always the case if you already have another policy with that insurance carrier. Acceptance is guaranteed if you’re purchasing critical illness through an employer that offers it. You will not need to fill out a health questionnaire or have a medical exam.
Your premium will depend on the amount of coverage you select as well as some personal factors. The insurance carrier will base your premium on:
● Your geographical location
● Your gender
● Your age
● Your tobacco use
● Your health risk factors
● The plan’s coverage level
● The number of illnesses covered
● If it is an individual, couple, or family policy
You should expect to have a waiting period after you enroll in a critical illness insurance plan. Most are 30 days, so any diagnosis made within the first 30 days will not be covered.
Processing claims after a diagnosis is quick. However, the length of time between the diagnosis, claim submission, and payment will vary based on the insurance company. After the claim is submitted, most carriers will send you an acknowledgment letter that will ask how you’d like to receive your claim payments. Most offer payment via check or electronic funds transfer.
Let’s review how one of these policies would work in real life.
John purchased an individual critical illness insurance policy with a $30,000 lifetime benefit. Two months after the plan’s effective date, John suffers a heart attack and gets admitted to the hospital.
John submits his claim to the insurance company and selects electronic funds transfer as his payout method. The insurance company issues the payment of $30,000 into John’s checking account. John now has an emergency fund that he can use to pay for treatment and other expenses while he recovers from his heart attack.
What Does Critical Illness Insurance Cover?
Each critical illness insurance policy will have its own list of conditions covered by the plan. Most policies cover heart attacks, strokes, organ transplants, and coronary bypass, but some offer benefits for a longer list of conditions. You may find a policy that includes coverage for:
● Renal failure
● Loss of speech, vision, and hearing
● Life-threatening cancers
● Carcinoma in situ (stage 0 cancers)
Like any type of insurance policy, there will be some exceptions to your critical illness coverage. These exceptions will be outlined in your policy’s summary of benefits, so be sure to read the summary carefully.
Most policies do not offer coverage for chronic illness, nor will they pay for a disease that occurs a second time within the life of the policy. This might include a second heart attack or stroke. In addition, some types of cancer may not be covered. Lastly, some coverage ends when the insured reaches a specific age.
It’s also important to note that not all critical illness conditions warrant a full policy payout. Some plans only give a partial payout for specified occurrences. For instance, many plans only pay 25% of the benefit for coronary artery bypass.
A cancer diagnosis may only qualify for coverage if the cancer has spread enough to become life-threatening. A stroke may only be considered if neurological damage persists longer than a specified amount of time. Other limitations include a certain length of time the policyholder must be ill or must survive following the diagnosis.
In addition, pre-existing conditions may or may not be covered by the policy.
How Much Does Critical Illness Insurance Cost?
You can purchase critical illness insurance in Austin, TX, in a wide range of coverage amounts. Lump-sum payouts could be as little as $5,000 or as much as $100,000. Even the higher levels of coverage are relatively inexpensive.
For example, a healthy 40-year-old female will have a monthly premium of approximately $20 for a plan that offers $20,000 in coverage. As we’ve discussed, many factors go into establishing premium rates, but that should help give you an idea of how affordable these policies are.
Who Should Purchase Critical Illness Insurance?
Anyone who wants to build a more comprehensive medical insurance package should consider adding a critical illness insurance policy to their portfolio. However, there are a few instances when these are exceptionally beneficial.
Individuals and families with high-deductible health plans often worry about how they’ll afford the high-deductible if they suffer a catastrophic loss. A critical illness plan is a great way to ease that discomfort.
Families who rely on one person as their main source of income should also consider the additional coverage of a critical illness policy. Remember, the funds from these plans can be used for anything, including as a source of income replacement while the policyholder recovers before returning to work.
If you have a term life insurance policy, you can often add critical illness protection as a rider on that policy. Of course, your premium will increase, but it may be a more cost-effective way to provide coverage if you already have a term life policy in place.
How Do I Choose a Critical Illness Insurance Plan?
If you’re shopping for critical illness insurance, compare terms and conditions carefully. Make sure you know how many diseases and medical problems qualify for coverage.
Here are a few things you should consider when choosing a plan:
Cost for dependents (some offer free coverage for children)
A critical illness insurance plan is a great way to supplement your other insurance policies like short-term medical, term life, or individual health plans. Our licensed insurance agents will review your existing coverage and determine if there are gaps in your coverage that could benefit from one of these plans.
At CoverMile, we’ve got your best interests in mind. We offer various plan options through multiple insurance carriers, so we can find the right plan for you and make sure you get competitive rates.
Call us today and schedule your complimentary consultation.