Critical Illness Insurance – Why It Is Important?
“Critical Illness Insurance is a supplemental insurance plan in which the health insurance company (insurer) is liable to pay you (insured) a pre-decided, lump sum amount in the event you are diagnosed with any one of the critical illnesses mentioned in the policy. The big “3” are cancer, heart attack and stroke. Some others which may be covered are kidney failure, organ transplant etc.”
Do You Need Critical Illness Insurance If You Have A Health Insurance?
Let me first bring some sub-conscious thoughts to the forefront. How many of us, have a mortgage on our homes and how many of us reading this article are and will be the sole bread earners of our family? I bet, 8 out of 10 people who read this article would say YES to both the questions. Being able to earn for ourselves and our family is our biggest asset. Having said that, we do carry health insurance to somewhat secure our medical expenses liability if they may come in an untimely manner.
Your health insurance policy, may not provide coverage for critical illnesses like cancer or an organ transplant. If, someone is diagnosed with cancer and earns for his family then not having critical illness insurance will lead to a feeling of regret and remorse. As per the recent study from American Association for Critical Illness almost 47% of claims filed in the year 2011 under critical illness insurance were from individuals under age 55.
Getting a critical illness insurance leads to piece of mind. This is the immediate ROI which you will observe because I cant pray that you have to have a critical illness to experience the benefits,right?
All these payments in a standard health insurance policy are out of pocket expenses and can be huge amount to shell out.
Factors Affecting Critical Illness Insurance Rates (Costs)
Factors affecting critical illness insurance are mentioned below:
- Your age.
- Current and past medical history.
- Medical health conditions
- Social habits like smoking and drinking
Some of the less known underlying benefits of critical illness insurance is mentioned below
If you have a group health plan or an individual plan, you might be having high deductible amount. Deductibles can vary anything between $200 to $10,000 for catastrophic health plans.
What about payments for co-insurance and co-payments?
The lump sum amount received under critical illness insurance (CI) is completely tax exempted. Moreover, the amount which you receive is unaffected by the disability benefits.
You are covered until your 65th birthday.
Indexed claim benefit. To neutralize effects of inflation each year.
Covers medical expenses which your standard health policy will not cover like non-covered prescription drugs, out of town expenses, co-pay, lost income, mortgage on payments, health insurance premium etc.
Helps you recoup and replace wages lost due to severe illness.
A lot of people are also looking at income protection insurance as an alternative to critical illness insurance which we will covering in the forthcoming article. This article only lays out importance of critical illness insurance and I will be covering this topic in the weeks to come in detail. Do leave your feedback in the comments below.