Voluntary Benefits: Critical Illness Insurance
This know your benefits article describes critical illness insurance, outlines what it typically covers and explains how it works.
Heart attack, stroke, cancer and other illnesses can affect not only your health but also your bank account; medical expenses reportedly lead to more than half of all bankruptcies in the United States. When faced with a severe illness and the accompanying medical costs, critical illness insurance can help.
What Is Critical Illness Insurance?
Critical illness insurance is offered as a voluntary benefit by some employers to supplement your regular medical coverage. This insurance is designed to cover out-of-pocket expenses not covered by your health insurance, such as your deductible and copays as well as many out-of-network charges. Illness can often lead to extended time away from work, and critical illness benefits can offset some of those lost wages and help you pay routine living expenses such as child care, transportation and rent or mortgage payments. If you don’t want to drain your savings because of medical bills and time away from work, critical illness insurance can protect you from financial loss.
What Does Critical Illness Insurance Cover?
Critical illness insurance provides coverage for acute illnesses that can be financially catastrophic. Plans specify a distinct list of conditions that will be covered. Although some plans only include a few of the most common critical illnesses, other plans provide benefits for as many as 20 or more. Some of the illnesses that may be covered include the following:
Cancer
Heart attack and stroke
Kidney failure
Major organ transplant
Blindness and deafness
Multiple sclerosis
Coma
Many insurance plans will have a specific definition for each illness, so read your benefits carefully in order to understand what will be covered if you are diagnosed with a serious illness.
How Does Critical Illness Insurance Work?
Because this insurance is a voluntary benefit offered by your employer, you will likely receive a group discount, and your premium may be paid through an automatic payroll deduction. After submitting a claim, the insurance company will determine whether your illness is a qualifying event and will usually enforce a survival period, which is a pre-determined number of days you must live past the diagnosis in order to receive your benefit payment.
The insurance company will typically issue a lump sum payment directly to you regardless of any medical or disability insurance you might have. Plans are designed to have a specified benefit payout, usually for an amount between $10,000 and $50,000. With some insurance plans, you will receive the full amount for any of the covered conditions; other plans may feature several categories of illnesses, with some allotted the full benefit amount and other illnesses only leading to a 25% or 50% payment of the benefit amount. Also, age may affect your coverage, resulting in reduced benefits as you get older.
No one wants to deal with a serious or life-threatening illness, but critical illness insurance can help reduce your financial worries and give you peace of mind.