Critical Illness Insurance
What Does Critical Illness Insurance Mean?
Critical illness insurance is a type of medical insurance that provides the insured with a lump-sum payment upon diagnosis of a specified condition or illness listed in the policy. Alternative payout structures may also be available, and many policies require the insured to survive for a certain number of days following the diagnosis.
This type of insurance is also known as dread disease insurance or catastrophic illness insurance.
Insuranceopedia Explains Critical Illness Insurance
As medical expenses contribute to many bankruptcies, critical illness insurance can serve as a valuable supplement to a regular health insurance policy. Because payouts go directly to the policyholder, the money can be used for costs that a standard health insurance policy won’t cover, like travel to specialists or lost wages during recovery. It helps alleviate significant financial strain on the patient and their family, facilitating payment for necessary treatments. Most policies cover the three primary critical illnesses that affect Americans: cancer, stroke, and heart attack. Coverage may also extend to various other conditions, including kidney failure, paralysis, blindness, multiple sclerosis, and more. Claim payouts can range from $10,000 to $1 million. Waiting periods and the list of qualifying diagnoses vary between insurers, so comparing critical illness insurance plans before buying is worth the time. Some buyers also weigh this coverage against disability insurance, since both replace income during a major health event but under different triggers.
