While your health insurance will cover most of your medical expenses, and costs associated with some medical issues, it won’t cover you for lost income and non-medical expenses you incur if you are unable to work due to your illness. For example, if you have a debilitating stroke or heart attack, your insurance will cover treatment, but you may have to foot a large portion out of pocket and you may need extra funds during your recovery to make ends meet.
So, how do you pay for the expenses that medical insurance and disability insurance do not cover? Critical illness insurance can fill the gap when you need it most. This is especially true if you have a high-deductible health plan. If you suddenly are faced with a medical bill associated with a cancer diagnosis or a stroke, it could be a massive financial strain, particularly if you are unable to work for a time and don’t have the income to pay those out-of-pocket medical bills.
In this case, you could use proceeds from the insurance to pay your deductible and more. The peace of mind having critical illness insurance when you also have an HDHP is worth its weight in gold. Fortunately, these policies are often reasonably priced.
How it works
Critical illness insurance will pay you a lump sum cash in case of a serious illness. The number of covered illnesses depends on the policy, but the average is 19. Some common ones include:
- Stroke,
- Heart attack,
- Cancer,
- Serious COVID-19 hospitalization (depending on the severity and incapacitation),
- Alzheimer’s disease,
- Kidney failure, and
- Paralysis or paraplegia.
The size of the payment depends on the policy limits. It can range from $5,000 up to $100,000. A few policies offer a lifetime maximum of up to $500,000. The higher the lifetime maximum, the more you will pay in premium Typically, individual critical illness coverage is guaranteed renewable for life, as long as the policy is purchased before the age of 70. That said, after an insured turns 70, the policy’s benefit amount is reduced by half. That means if you buy critical illness insurance with a $50,000 benefit amount prior to age 70, and if you make a claim when you are 76, the policy will pay $25,000.
Once you have the funds, you can use them for anything you need, like health insurance deductibles, special equipment, wheelchair, costs of seeing a specialist for whom your health insurance won’t pay, transportation and childcare. You can even use the funds to pay your mortgage, utilities and other day-to-day necessities. There are no restrictions on how you spend the money. Once it’s yours, it’s yours.
How much it costs
The cost of a critical illness plan will vary on your age, health, whether you smoke or not, and what kind of work you do. Critical illness insurance can be relatively inexpensive.
Offering an employer voluntary critical illness plan can help to secure the financial security of their employees in an unexpected time of need. The policy price will depend on the carrier and the size of the employer.
What to do next
You may be wondering if this type of insurance is right for your employees. If you’re interested, please call us and we can go over the specifics and shop around for the policy that is right.
*If you have an insurance need, we have a solution. We provide solutions for home & auto, health and Medicare insurance, life & dental coverage, employee benefits and commercial insurance. Give us a call at 803-286-1161.
