At first glance, critical illness coverage seems like it doesn’t offer much in the way of support for your health care needs. The fact is, a critical illness plan can help prevent you from going into medical debt and reduce the potential for filing for bankruptcy, even when you have an existing health care policy. Critical illness insurance pays out a lump sum amount when you’re diagnosed with a major disease like cancer, renal failure, stroke, or suffer a heart attack.

So, is critical illness insurance worth it? Only you can make the decision if it is or isn’t, but this type of coverage is becoming more popular as a voluntary benefit. That is, an employer offers this type of insurance to employees who want a hedge against higher deductibles and lower coverage. Another influencing factor is the fact that, according to an article published in the American Journal of Public Health, medical bills make up 58.5% of all bankruptcies and 44% of all income loss related to illness.

58.5% of bankruptcies are due to medical bills

Getting a critical illness plan can help you manage your finances with less stress while you’re unable to work, and pay for medical expenses when the bills are due. Read on to learn more about how this type of insurance works, and how it can benefit you if you experience a major medical event or illness.

What is critical illness insurance?

Critical illness insurance is a type of health insurance that provides financial coverage for a catastrophic illness. Catastrophic illnesses frequently push a health care policy to its limit, leaving the policy holder with large medical debts. The critical health insurance policy pays out a set dollar amount to help you pay for the outstanding medical bills. There are no copayments or deductibles associated with this type of insurance.

What does critical illness insurance cover?

Examples of illnesses critical illness insurance covers

Critical illness insurance can also cover:

• Paralysis
• Coma
• Loss of speech
• Loss of vision
• Loss of hearing

When looking at the question of “is critical illness insurance worth it?”, it’s evident that the money provided is of great benefit to your peace of mind and financial stability during a major illness.

Critical illness insurance does not cover pre-existing conditions and health conditions caused by:

• Diabetes
• Asthma
• Self-inflicted injuries
• Injuries sustained during the commission of an illegal act
• Injuries received in war
• Injuries that are the result of substance abuse

How does critical illness insurance work?

Upon receiving a diagnosis of a critical or catastrophic illness, the critical illness plan pays you an amount that’s outlined in the policy. The money can be paid out in a lump sum or in monthly payments, depending on which option you took when you applied.

The money that you receive from the policy is yours to use as you need. It’s similar to supplemental paycheck insurance in that the funds can be used to pay for anything, but it provides a lump sum instead of replacing income.

How much does critical illness insurance cost?

Critical illness insurance can be as little as $10 a month for younger adults who are in good health. Older adults who want more coverage, have a history of health issues, and/or use tobacco can expect to pay a lot more for a premium. The cost of coverage uses a formula that includes age of the insured per dollar amount of coverage. A 30-year-old individual who wants coverage can expect to pay $1.64 per $5,000 of coverage. They’ll pay $16.40 a month for a policy worth $50,000.

Advantages of critical illness insurance

Critical-illness policies were first offered in the United States during the 1990s, and more than 600,000 Americans now have critical illness protection in excess of $11.5 billion dollars. The advantages of critical illness insurance comes in the form of financial support during a catastrophic health event. They’re inexpensive, yet provide financial protection that can replace most or all of an annual salary. In the event you have to use the coverage, you can use the money for anything you like, including paying for mortgage payments, auto loans, even credit card bills. There are no restrictions on the use of the money once you’ve received the funds.

You can get critical illness coverage as a supplement to an individual (or family health insurance) or short-term health insurance. You can also take advantage of an exception that allows you to get this type of coverage with an HSA plan.

Critical illness insurance has low monthly costs and can be an add-on to your health insurance

Disadvantages of critical illness insurance

There are disadvantages to getting a critical illness insurance plan that include low limits of coverage, no coverage of pre-existing conditions, and premium costs that increase with age. Most plans offer a coverage limit of $50,000, which sounds like a lot of money up-front. However, the cost of treatment for many illnesses frequently reaches amounts higher than the average critical illness plan.

What to consider when looking for critical illness insurance

A critical illness policy is affordable and the advantages can outweigh the disadvantages in many ways. However, it’s always wise to ask yourself some questions about critical illness coverage. Some of the questions to ask include:

• Can you get coverage in the event an illness returns after you’ve recovered?
• How much of the total benefits will be paid out?
• Is the payment a lump sum or monthly?
• What are the critical illnesses covered by the policy?
• Do you have to deal with a waiting period before payment begins?

 Find the right critical illness insurance with eHealth

Today, people insure their phones, laptops, clothes, computer devices, and pets, but often fail to ensure their health and financial well-being. Regardless of your current health insurance, disability coverage, or medical savings accounts, you could face severe financial difficulties if a critical illness strikes.

Ultimately, the decision whether to get critical illness insurance depends on your risk tolerance, family situation, and financial profile. But given the potential costs and benefits, the coverage is certainly worth investigating. If you have more questions or concerns about critical illness insurance, eHealth is here to help. Speak with a licensed insurance agent from eHealth today.