Critical Illness Insurance
Critical illness insurance, or critical illness coverage, is a type of insurance that provides the insured person with money if they are diagnosed with a specific illness. This insurance was first established in the 1980s but became more popular in the late 1990s. Critical illness coverage prevents individuals and families from going bankrupt from costs of treatment.
Depending on the policy, the insurance may cover a variety of illnesses, including Alzheimer's disease, kidney failure, multiple sclerosis, an organ transplant, paralysis, Parkinson's disease, heart attack, stroke, and cancer. If the insured person is diagnosed with one of the diseases within their policy, the insurer will usually make a lump sum cash payment. In some cases, the insurer will pay for treatment costs directly instead of giving the insured person cash.
Many critical illness coverage companies require the insured person to make it through a "survival period" after their initial diagnosis before receiving any payment. This period of time varies between policies but is often around 14 days. Some policies may also have other requirements for policyholders. For example, a policy may require that the insured person have a specific test to confirm their diagnosis. The payments range in size, but usually start at around $10,000 and can go up to a million dollars. Individuals can use these payments to pay for treatment, a mortgage, or other living expenses.
Individuals can buy different types of critical illness insurance depending on their personal circumstances. Simplified issue individual protection usually covers up to $50,000. Fully underwritten individual plans cover larger amounts of money, but individuals must provide their medical information. The annual cost of the insurance will vary depending on the insured person's age and medical history. For example, smokers will likely pay a higher premium than non-smokers. Larger coverage amounts will also cost much more than lower coverage amounts. Most people buy coverage for $50,000 or less.