When you wake up in the morning, do you think about your chance of having a heart attack? What about a stroke? Cancer? You probably have other things on your mind- like work, or your family, not something that’s unlikely to happen to you, right? In the U.S., 1 in 3 women are at risk for developing cancer, and 1 in 2 men are at risk.4 Every 34 seconds in the U.S. someone has a heart attack.7 Those don’t sound that unlikely now…

Having a heart attack, stroke, or being diagnosed with cancer isn’t something anyone expects or plans on- it just happens. Because of its unexpected nature, it can be hard to be emotionally and financially prepared for a critical illness. Deductibles are higher than ever, and even once they are met, major medical insurance will not cover indirect costs of an illness. There is a plan that can cover you for these financial burdens, and many people are not aware that such an option exists. Critical illness insurance can provide you with the financial stability that will ease your mind and allow you to focus on what really matters if you get ill- recovering!

critical illness eye catcher

What is Critical Illness Insurance

A critical illness policy covers illnesses such as heart attack, stroke, and cancer.3 Should one of these illnesses occur, your insurance policy would pay out a lump sum in cash to you. Pretty simple, right? That’s the beauty of this coverage.

You might also be interested to know that critical illness insurance can be kept for as long as you would like it, typically until age 65. Some insurance, like short-term coverage, cannot be kept for a long period of time. You can keep your critical illness coverage for as long as you like. You can cancel at any time should you decide you no longer find it necessary. There are also no deductibles or copays required for critical illness insurance, unlike many other types of coverage. You pay a monthly premium, and your insurance provider pays you in the event of a diagnosis of a covered critical illness.

What Critical Illness Does Not Cover

The name itself implies that there are restrictions on what critical illness insurance covers. Maternity benefits are not covered, nor are pre-existing conditions. Additionally, prescription drugs are not covered under this insurance.

Critical Illness Under Obamacare

With so many changes in the ways of healthcare in our country, there are a few facts that you need to be aware of when considering critical illness insurance:

  • It cannot be purchased through the Health Insurance Marketplace. This means that you cannot go to healthcare.gov and enroll in this insurance like you can a major medical plan
  • Under Obamacare (Affordable Care Act/ACA), individuals are required to have minimum essential coverage or else face a tax penalty at the end of the year. A critical illness plan does not count as minimum essential coverage- i.e. this plan cannot be purchased to avoid the penalty
  • While there are certain insurance requirements under Obamacare, critical illness is not required. It is most definitely a smart choice- but by no means required
  • Obamacare subsidies can only be used towards major medical plans, not critical illness insurance

The Numbers

Let’s be honest, no one wants to pay for something that isn’t required of them. No one wants to pay for something that they don’t think they will ever use. The honest truth is, though, you just never know. How many people do you know who had a heart attack knew that it was going to happen ? How many people do you know who planned on being diagnosed with cancer? Exactly, probably none.

The American Cancer Society estimates that there will be 1,658,370 new cases of cancer by the end of 2015.1 According to the American Heart Association, about 735,000 people have a heart attack each year.6 Even more, about 800,000 people suffer from strokes each year.4 In 2012, in families with medical coverage, nearly 40% reported that they experience problems paying medical bills or even paid them late, as shown below.2 and in 2013, medical expenses were the number one cause of bankruptcy in the U.S.5

Percentage of families that had any financial burden of medical care in the past 12 months- United States, 2012

critical illness medical burden chart

These numbers are not meant to scare you, but to serve as an eye-opener. No one expects these things to happen to them, but the numbers don’t lie- these things do happen, and there is a way to reduce the burden that comes along with them, whether they’re medical expenses or living expenses. While you’re getting treatment or on the road to recovery, critical illness insurance will provide you with the means to take care of your financial obligations.

What Critical Illness Insurance Will Cover

Maybe you already hold major medical coverage, so you’re wondering why you would need this extra insurance policy. Major medical insurance offers a lot of benefits should you get seriously ill, but there are also a lot of expenses it won’t cover, and too often people do not realize that until it’s too late.

While you’re unable to work due to a critical illness, the payout from your policy will help replace what you’re losing by not working. When you’re going through treatment or recovering, you can use the money to cover some of the below expenses, along with anything else that may come up:

  • Your deductible. Major medical insurance will cover many of your medical expenses, but only after your deductible is met, which frequently means after thousands of dollars are spent
  • Your mortgage/rent
  • Travel expenses if your best treatment option is not available locally- plane tickets, hotel, your spouse or family to come with you
  • Child care expenses
  • Groceries, gas, and any other day-to-day expenses
  • Most importantly, your health insurance premium

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Citations

  1. Cancer Facts & Figures 2015. (n.d.). Retrieved September 1, 2015, from American Cancer Society website: https://www.cancer.org/research/cancerfactsstatistics/cancerfactsfigures2015/index
  2. Cohen, R. A., Ph.D., & Kirzinger, W. K., M.P.H. (2014, January). Financial burden of medical care: A family perspective. Retrieved September 1, 2015, from Centers for Disease Control and Prevention website: https://www.cdc.gov/nchs/data/databriefs/db142.htm
  3. Critical illness insurance for individuals. (n.d.). Retrieved September 1, 2015, from American Association for Critical Illness Insurance website: https://www.criticalillnessinsuranceinfo.org/learning-center/individuals.php
  4. Lifetime risk of developing or dying from cancer. (2014, October 1). Retrieved from American Cancer Society website: https://www.cancer.org/cancer/cancerbasics/lifetime-probability-of-developing-or-dying-from-cancer
  5. Mangan, D. (2013, June 25). Medical bills are the biggest cause of US bankruptcies: Study. Retrieved from CNBC website: https://www.cnbc.com/id/100840148
  6. Mozaffarian, D., Benjamin, E. J., Go, A. S., et al. (2015). Heart disease and stroke statistics—2015 update: a report from the American Heart Association. Circulation. 131, e29-322.
  7. What is cardiovascular disease. (2015, May 18). Retrieved from American Heart Association website: https://www.heart.org/HEARTORG/Caregiver/Resources/WhatisCardiovascularDisease/ What-is-Cardiovascular-Disease_UCM_301852_Article.jsp#