Critical illness insurance only covers a specified set of serious medical conditions.
There are some important differences between critical illness insurance and life insurance. Critical illness insurance covers only a set of serious medical conditions, such as cancer, stroke, and heart attacks. Life insurance covers death or sometimes a specific term of living that’s impacted by a catastrophic event, like being diagnosed with a disease.
Critical illness insurance is used to cover costs associated with unexpected medical events that may be hard to plan for. The money paid out from the policy can go towards whatever the insured needs it for—such as rent or mortgage payments while undergoing treatment.
If you don’t want life insurance and want to cover only critical illnesses, it’s possible to take out insurance that just covers serious illnesses.
If you don’t want life insurance and want to cover only critical illnesses, it’s possible to take out insurance that just covers serious illnesses. However, these policies tend to be more expensive than the equivalent term life insurance policy because they pay out more often.
Key differences between critical illness insurance and term life insurance:
- Critical illness insurance only covers a set of specified medical conditions such as cancer, or heart attacks. Term life insurance will cover any cause of death except suicide in the first two years of the policy.
- Critical illness policies typically have shorter terms than whole of life policies. This means that if you live for longer than the policy term, then your surviving family will not be paid out on critical illness. In comparison, a whole of life policy can be taken until your passing, regardless of age.
- Unlike term assurance policies which are invested via an investment fund so returns can vary depending on how well the fund performs over time, critical illness policies tend to have fixed payments which won’t vary over time.
What is critical illness insurance?
- Life insurance is a death benefit. If the insured person passes away, the designated beneficiary receives a sum of money based on the policy. If your goal is to protect your family’s way of life if you aren’t around to provide income, life insurance can help.
- Critical illness insurance pays out a lump sum of cash if you are diagnosed with a serious health condition covered by your policy. This could include cancer, heart attack, stroke or major organ failure. It can help cover things like lost income and everyday expenses (like rent or mortgage payments) that continue even after you become critically ill.
- Disability Insurance provides an income replacement benefit if you are unable to work due to sickness or injury (mostly short term). This type of coverage is usually offered by employers as part of their benefits package, but it can also be purchased from an insurer on your own as well.
- Long-term care insurance pays for long-term healthcare services for people who have chronic illnesses — such as Alzheimer’s disease — or injuries that make it difficult for them to perform daily activities such as getting dressed or eating on their own. Long-term care insurance isn’t only available through private insurers: Some states offer programs through their Medicaid division.
What serious medical conditions are covered?
A critical illness policy is intended to provide some financial relief in the event of a serious medical condition that requires long-term care. It typically covers health concerns such as:
- Heart attack
- Stroke
- Cancer (except skin cancer)
- Organ failure
- Major organ transplant
- Alzheimer’s disease or another form of dementia
- Parkinson’s disease, or another form of neurological disease, such as Lou Gehrig’s Disease (ALS) or multiple sclerosis.
How much does critical illness insurance cost?
How much does critical illness insurance cost?
The amount you’ll pay for critical illness insurance coverage depends on many factors, including your age, health, the benefit amount you choose and the length of your policy (also known as the “term”). Some policies require a certain level of wellness to qualify. If you’re interested in purchasing a policy with coverage for pre-existing conditions, you’ll likely have to complete a medical exam.
How do I pick my benefit amount?
First, you have to determine how much money you need to cover your expenses for the duration of your recovery. You may also want to consider any additional costs, like having a nurse or therapist come to your house. If you’re married and depend on each other’s income, you might also want enough money to replace your spouse’s lost wages while they take care of you.
You should base this estimate on the specific illness that critical illness insurance is covering. For example, if you get brain cancer, you might need enough money to pay for chemotherapy treatments over several years and make up for lost wages. Your benefit amount should be high enough that these expenses are covered until:
- you recover from the condition and can return to work
- you die and have no more outstanding medical bills
What factors impact my critical illness insurance cost?
Some of the factors that will impact your critical illness insurance cost include:
- Your age, health, gender and lifestyle.
- Your smoking status, family medical history and existing medical conditions.
- The coverage amount chosen, the term length of your policy and whether you have any exclusions. You can customize a policy to fit your specific needs and budget. For example, if you choose a lower coverage amount or shorter term length, you may be able to lower your premium amount. However, keep in mind that your insurer may also refuse coverage for pre-existing conditions.
Can I buy term life and critical illness insurance together?
You’re probably asking yourself if you can buy both term life and critical illness insurance together. The answer: yes, you can. In fact, it’s a great idea! In this article we’ll look at how to buy life and critical illness insurance together. We’ll also explore why you might want to do that. And lastly, we’ll discuss how much your coverage should be for each type of policy.
Let’s start by looking at why you’d want to buy both types of insurance together (as opposed to buying them separately). One reason is that it’s less work this way—you only have to fill out one application form (instead of two), and make one monthly payment instead of two.
Also, if you try to apply for a new policy after being diagnosed with a critical illness (like cancer), your application will likely be denied. If you decide later on that you need critical illness coverage, it will cost more than it would have if purchased initially with your life insurance plan.
If you already have term life insurance, but now realize that you need CI coverage as well—don’t worry! You don’t necessarily have to cancel your existing policy just so that the two can be combined into one. It depends on the company offering the plan as well as some other factors. Either way, we can help determine what’s best for your situation when you give us a call.
Critical illness insurance can help you pay for care if you encounter a serious medical condition.
Critical illness insurance is different from life insurance. While life insurance pays a death benefit to your beneficiaries in the event of your death, critical illness insurance pays a lump sum directly to you when you have been diagnosed with one of several serious medical conditions. This money can be used for medical expenses, but you can also use it to pay for daily living expenses like groceries or rent. It’s more flexible than money from other kinds of disability coverage, which may only be used for medical treatments and equipment.
The major advantage critical illness insurance has over life insurance is that it gives you flexibility. Life insurance benefits are paid out after your death, so having it doesn’t affect how much money you have while you’re alive. Critical illness coverage is paid out upon diagnosis or treatment, meaning that those who take out this kind of policy receive the benefit while they’re alive — a huge advantage if they need help covering their financial obligations while they’re critically ill and unable to work.
The cost depends on factors like age at purchase (the younger and healthier you are when purchasing the policy, the lower your premiums will be), whether or not there’s an early detection component (most policies exclude cancers found before symptoms arise), term length (typically 10 years) and amount covered (up to $1 million). If we were buying from Assurity Life Insurance Company — who recently partnered with Haven Life — we’d expect our healthy 43-year-old couple to pay about $110 per month for a 20-year term policy with $300k in coverage and around $140 monthly for 30 years’ worth of coverage on the same plan type/amount of protection.”