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Scott Reynolds
Scott Reynolds
May 27, 2010

critical_illness

Critical Illness insurance is a fairly new product in the history of insurance. The plans came about as a spinoff to the more common Cancer plans. The cancer plans typically pay a set amount of money for each treatment and type of treatment. There may also be a benefit for a hospital admission or stay due to cancer. The critical illness plans cover many more diseases then just cancer and in addition pay a much higher lump sum benefit. Typically the benefit trigger on a critical illness policy is just being diagnosed by a physician as having one of the covered diseases. On most policies that would include Cancer, Heart Attack, Stroke, Kidney Failure, Major Organ Transplant, and Paralysis. Some cover more diseases like Alzheimer’s, Blindness, Deafness, Burns and Loss of Speach. In addition critical illness policies often cover other things, but at a lower benefit like 25%. Cancer in Situ which is a cancer that has not spread, bypass surgery and even angioplasty.  Some policies will pay multiple times. So if you have a heart attack with a $50K policy you will get the $50K. Then if you continue to pay premiums and have a stroke you get another $50K. There is even one policy that pays 3 times. An example of premium is a 30 year old non smoker with a $50K policy costs about $23 per month.

So why does everyone need Critical Illness and what does this have to do with Money Power? Even though you may have health insurance, there will be some type of out of pocket expense that you will incur if diagnosed with one of these diseases. You may have to pay a deductible or copays or coinsurance. Not to mention you probably won’t be working for some time. Even if you have disability insurance there is often a waiting period where no benefits are payable and then they usually only cover 60%-70% of your salary. Critical Illness coverage can protect your money. By having critical illness insurance you can leave your savings in tact. You won’t be tempted to withdraw that 401K money because you have to pay your mortgage. Critical Illness is an insurance product that like all other insurance products, protects against risk. You never know if you will need it, but if you do you will be glad you made the purchase.

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Posted Under: Risk Management


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