Reassessing your Investments: Is Critical Illness Insurance Worth the Cost?

You may be tempted to sit comfortably knowing you’ve played your role in ensuring your well-being by having health insurance until you notice that the policy doesn’t cover critical-illness conditions.

What is critical illness insurance?

It is an insurance benefit that pays out a lump sum if you’re diagnosed with any pre-defined critical illness, e.g., organ failure or examined to undergo a predefined surgical procedure (like the coronary artery bypass graft). Though health insurance covers most of the treatment and medication costs, without critical-illness protection, you must dip into your savings or hold a fundraising for other related expenses like rent, school fees, travelling costs and more. Read more here to learn about different medical insurance plans.

No wonder sky-high medical bills are the primary cause of personal bankruptcy filings!  Not credit card debt, and unpaid mortgages due to job losses. According to NerdWallet.com, families with over 1.7 million citizens applied for protection from bankruptcy in 2013 due to sky-high medical bills—mostly related to critical illnesses. Perhaps several other people facing expensive medical bills may evade bankruptcy, but that would mean emptying their saving reservoirs and/or retirement benefits.

Reassessing your Investments: Is Critical Illness Insurance Worth the Cost? - heart shaped image

What does Critical-illness Insurance Cover?

Insurance experts saw this problem back in ’96 and coined the critical-illness insurance policy to cover the massive costs of severe illness conditions. Regrettably, it is still not a popular policy among most people. It is purchasable via your employer or on your own. It is also possible to add it as an extra to your current life insurance policy.

Also note that different policies will offer protection against various illnesses and conditions, and terms will vary widely. But the most common diagnoses covered include

•    Cancer

•    heart attacks

•    strokes

•    major organ failure

•    end-stage heart failure

•    coronary artery bypass disease,

•    Alzheimer’s disease

•    benign brain tumours

•    severe burns

•    paralysis

•    comas

•    deafness

•    blindness

A family plan may also cover other conditions like type 1 diabetes, cerebral palsy, complex congenital heart disease cystic fibrosis, and muscular dystrophy.

You can use funds from a critical-illness insurance payout to cover whichever cost, whether to clear medical bills, manage your mortgage while not able to work or purchase a new auto to ease mobility.

Coverages are available at different levels; you can choose those that offer a lump sum from $10,000 to $1 million. Plus, they are reasonably priced compared to long-term-care covers and disability insurance.

What the policy doesn’t cover

Some critical illnesses are excluded from the cover, e.g., some types of cancers and conditions. You may also not be covered for conditions you knew about before you took out the policy. Plus, critical illness does not pay out if the insured passes away.

In a nutshell, whatever is covered and not included, will depend on the details of each policy, so it is crucial to ensure you are entirely familiar with them, and that they cover everything you want.

Wrapping Up

Now you know how critical it is to have a plan for severe illness conditions. Be sure to discuss all the offerings of an insurance policy before you sign up for protection.


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