Is critical illness insurance worth it?
When someone is diagnosed with or experiences a critical illness, such as a heart attack, stroke, or cancer, it can disrupt life for the whole family. Dealing with a potentially debilitating medical issue means that daily routines tend to go out the window — and among other things, that can lead to all sorts of unplanned extra expenses for things like transportation, help around the house, additional child care, pet care, and more.
And the chance is by no means remote: The Centers for Disease Control reports that in a given year, about 805,000 people in the US have a heart attack – that's one every 33 seconds.1 Thousands more have strokes or are diagnosed with cancer and other critical illnesses. A critical illness insurance plan can help protect your financial well-being by directly paying you a benefit payment that can be used for any purpose. But should you consider it?
What is critical illness insurance?
Critical illness insurance is a type of supplemental health insurance that pays a lump sum benefits directly to you — not your medical provider — when you (or a covered dependent) are struck with a covered ailment. You can use your benefit for things like paying your health insurance deductible or other out-of-pocket medical expenses, as well as non-medical and regular living expenses. But importantly, it's not a substitute for health insurance that covers your medical bills.
How does critical illness insurance work?
If you or a covered family member experience a condition or illness covered under your policy, you can contact the insurance company directly, provide a doctor or hospital bill, and soon after, the benefit payment will be sent to you or deposited into your bank account. How much will you get? That depends on the policy and the specific health issue.
Reasons to consider critical illness insurance
Critical illnesses such as heart attack, stroke, and cancer are serious, stressful health conditions and events that can impact physical, emotional, and financial well-being. It's an affordable way to supplement and pay for the additional expenses that can come with serious illness. Plus, some of our policies pay out benefits for preventing, diagnosing, and treating less serious conditions.
That's why a growing number of employers are considering offering optional benefits like critical illness coverage to help support employee financial well-being. And when it's available through work, it's usually easy to get and pay for. However, not all policies are the same, and some plans provide benefits for more health conditions than others. So, it's important to check what's covered before signing up.
Plans may also offer mental wellness and even family planning benefits—such as support for infertility treatments.
It’s also important to know what may not be covered
These plans aren't designed to pay medical bills and shouldn't be considered as an alternative to traditional health insurance. Also, critical illness plans typically don't pay benefits for injuries like broken bones (which are usually covered by accident insurance), and policies may exclude a pre-existing condition. Also, many common chronic conditions, like asthma, aren't usually covered. Again, a plan's schedule of benefits should clearly define what is covered – and if a health condition isn't listed, you can assume it isn't covered.
Other supplemental health benefits—and alternatives to critical illness insurance
Every health and medical condition is unique and can impact household finances. That's why there are different types of supplemental health insurance that cover different types of issues, including hospital indemnity insurance, cancer insurance, and accident insurance. These benefits may be offered by your employer and can be purchased as an alternative to — or in addition to — critical illness insurance to help ensure that you don't have to choose between taking care of your health and taking care of everyday expenses.
Take the next step
Ask your supervisor or HR department whether critical illness insurance is available as part of your employee benefits. And if you'd like more information about how to decide which employee benefits are right for you, here's a guide that can help.