Critical illness insurance provides a lump-sum payment if you’re diagnosed with a serious condition. Unlike health insurance, which pays medical providers, critical illness insurance pays you directly. You can use the🅰 funds for any expense, not just medical bills. It can help cover out-of-po🌱cket costs such as deductibles and copays, supplementing your existing health coverage.

What Is Critical Illness Insurance?

“Critical illness insurance covers you in case of a future diagnosis of a specified serious illness,” said Sandi Crawford, presi🉐dent of The Otium Agency, a full-service insurance company guiding small to midsize companies through insurance benefits.

If you experience a severe health issue, such as a heart attack, a diagnosis of ALS or Parkinson’s disease, or an organ transplant, critical illness insurance gives you a payment. Sometimes called supplemental health insurance, critical illness insurance can be used however you want. You can pay 澳洲幸运5开奖号码历史查询:medical bills, cover everyday expenses like rent or groceries, or e💛ven make discretionary purchases such✃ as a nice meal or an outing.

Critical illness insurance and health insurance can work together. Your health insurance can cover the direct costs of your medical treatment, like hospital stays and doctor visits, once you’ve met your deductible. But even with good health insurance, you may still have expenses like copays, 澳洲幸运5开奖号码历史查询:coinsurance, and other out-of-pocket costs. Critical illness insurance pays you a lump sum you can use to cover those extra costs or to replace lost income if you can’t work. It’s also helpful if you need to see an 澳洲幸运5开奖号码历史查询:out-of-network provider.

You may be able to purchase a critical illness policy as an individual or through your employer. Some 澳洲幸运5开奖号码历史查询:term life insurance policies include critical illness🍰 cove🎃rage, with the critical illness benefit subtracted from your death benefit if used. 

In addition to your own policy, you can purchase critical illness insurance that covers your spouse and children as long as they meet 🐷the insurer’s eligibility requirements for age and coverage amounts. The benefit amount for loved ones may be s♏maller.

How Much Does Critical Illness Pay?

Critical illness insurance coverage differs from policy to policy, so how much your critical illness insurance pays depends on your insurer. Typical benefits are around $25,000 to $100,000, with an average benefit of $29,000. It’s also possible for critical illness benefits to be as low as $5,000, which could save you money on premiums but might not be enough coverage.

Note that some insurers may have additional benefit structures. For example, Aflac’s critical illness policy pays $25,000 upon diagnosis, $6,250 for undergoing a coronary bypass graft surgery, and $12,500 for each recurrence of a previously covered illness. Under this plan, your initial diagnosis benefit may increase by $500 per year, for up to 10 years.

However, make sure you underst✱and whether your policy has a maximum lifetime beꦜnefit, which could limit how much it will pay.

When you get a payment for critical illness insurance, you might have to pay taxes on it, depending on how you paid for the insurance. If you used money from your paycheck 澳洲幸运5开奖号码历史查询:before taxes were taken out, you’ll likely owe taxes on the benefit. But if you paid with money after taxes were taken out, the benefit is usually tax-free.

Critical Illness Insurance Waiting Periods

In most states, you may need to wait between 15 and 30 days after your policy becomes effective before filing a claim under your critical illness insurance policy. Some policies have a 90-day waiting period for specific illnesses.

Some critical illness insurance policies let you file claims for new illnesses that pop up later. But if you’ve already filed a claim and received money for one illness, you’ll likely have to wait six months before you can file a claim for a different illness.

What Does Critical Illness Insurance Cover?

Critical illness insurance helps pay for serious medical events, including sudden health crises, diseases and illnesses, and certain types of surge♛ry. Your policy will have a list of exactly what’s covered.

Some common critical conditions include:

Critical Illnesses

• Cancer
• Heart attack and sudden cardiac arrest
• Alzheimer’s disease
• Coma
• Renal failure
• Stroke
• Carcinoma (in situ)
• Multiple sclerosis
• ALS
• Parkinson’s disease
• Bacterial meningitis

Critical Conditions

• Loss of hearing, speech, or vision
• Loss of independent living
• Paralysis
• Severe burns
• Post-traumatic stress disorder

Critical Health Care Procedures

• Organ transplant
• Heart valve replacement
• Coronary artery bypass graft
• Pacemaker placement

Who Needs Critical Illness Insurance?

You might need critical illness ღinsurance for several re𒅌asons. We’ll go over three of the most important ones below.

You ⛄or a Family Member Have a Family History of C🐼ritical Illness

If you know you or your spouse have a high likelihood of being diagnosed with a severe health issue due to its prevalence in your family history, you can t🥃ake out a critical illness insurance policy before you get sick. That way, you’ll be able to plan for the unfortunate event that you or your spouse develop the condition and ensure you have funds to cover all aspects of your care.

You’re Worried About Out-of-Pocket Costs

Even with excellent 澳洲幸运5开奖号码历史查询:health insurance, you’ll often need to pay a deductible, which is the amount you must pay out of pocket for a covered medical service. Deductibles can cost thousands of dollars, especially with 澳洲幸运5开奖号码历史查询:high-deductible health plans.

On top of that, your health insurance may only cover a small part of out-of-network services, meaning you’ll have to pay the remaining amount out of pocket. With criꦍtical illness insurance, the lump-sum benefit could help pay for💟 these unexpected costs.

You Want ꦫto Supplement Your Disability Insu🅘rance Policy

If you have 澳洲幸运5开奖号码历史查询:disability insurance, your critical illness insurance may complement your dis☂ability coverage. 

“Disability benefits are triggered by the inability to perform the duties of one’s job,” said Scott Maibor, managing director of Se𒊎nior Benefits Boston. “A covered illness or accident may not disable a policyholder, so there would be no trigger for a disability payment.” 

Many of the conditions covered by critical illness insurance can cause permanent disability, which could result in benefits being paid under your 澳洲幸运5开奖号码历史查询:disability insurance plan. However, if your medical condition isn’t severe enough to qualify, y🌺our critical illness insurance coverage may fill the financial gap for you.

Cost of Critical Illness Insurance

Critical illness insurance tends to be affordable. For example, a non-smoker in their 40s or 50s could get a $10,000 policy for $4.33 a month, according to Aflac. The price goes up if you want a higher benefit amount, and do😼wn if you want less. 

Critical illness insurance costs depend on several factors, including whether you get coverage from your employer under a group💎 policy or buy an individual policy.

Your age will also affect your rates. As with 澳洲幸运5开奖号码历史查询:life insurance, the older you are, 澳洲幸运5开奖号码历史查询:the more you’ll pay for coverage. Rates could be as high as $50 per month for a minimal amount of coverage when you’re in your 50s.

Your rate will also be affected by whether you smoke. For example, for a $30,000 group critical illness insurance policy from Securian Financial, someone between the ages of 40 and 49 will pay nearly double the monthly premium ($15.58 versus $28.76) if they’re a nicotine user, according to 2024 data.

Note that, unlike life insurance, where 澳洲幸运5开奖号码历史查询:premiums are typically level—they stay the same throughout the entire coverage period unless you change your policy—your critical illness ins🍌ura💜nce premiums may increase as you age. 

The Bottom Line

Critical illness insurance is affordable, so it may be a solid choice when deciding whether you’ll need the benefit offered by its coverage in the event of a severe medical crisis. It works well wit🌌h other policies, such as health insurance and life insurance, to give you a strong safety net and leave you better prepared for unexpected healt🎃h crises without wrecking your finances.