What Is Critical Illness Insurance and Is It Worth Buying?

Many employers offer critical illness insurance as part of their benefits package. What is this insurance, and is it worth purchasing? Before paying for a plan, you should read the fine print and consider alternatives. 

While a regular health insurance plan usually offers comprehensive coverage for all types of illnesses, many plans have high deductibles and copays that require policyholders to pay a lot of money out of pocket. Critical illness insurance allows you to buy insurance to cover that gap if you have a serious health diagnosis, such as cancer or a heart attack. Critical illness insurance can also cover non-medical expenses, such as a mortgage or child care bills. 

Reasons to Buy a Policy

Premiums for critical illness insurance policies are relatively low, which makes the coverage appealing. The policies usually pay out in a lump sum, with the amount depending on the policy purchased. There are different types of critical illness insurance policies: some cover only one illness, like cancer, while others offer coverage of a number of different illnesses. The more coverage offered, the higher the premiums. 

Read the Policy Carefully

Before purchasing one of these policies, however, you need to consider the downsides. Reading the fine print on the policy is very important because it will only cover certain illnesses, and actual coverage may depend on the severity of those illnesses. For example, even though the policy says it covers cancer, it may only cover aggressive cancer and not a more slow-moving cancer. In addition, critical illness insurance doesn’t offer the same protections that regular health insurance offers under the Affordable Care Act, so you can be denied coverage if you have a pre-existing condition. Critical illness insurance premiums also tend to rise as you get older, and you could be denied coverage once you reach a certain age. 

What are the Alternatives?

Instead of critical illness insurance, you can consider alternatives. First. you should look at your health insurance to see exactly what it will cover. In addition, a health savings plan in which you contribute pre-tax dollars can be a good way to cover unexpected medical expenses. Disability insurance can also offer protection for lost salary due to illness. 

Get more information about critical illness insurance online or with an insurance agent. If you have questions about long-term health care needs and ways to prepare for medical costs, find an estate planning or elder law attorney near you.