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Fall 2018  Volume 11, Number 3        

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Insurance That Goes Beyond Health Benefit Coverage

Health Insurance will not always protect you from financial devastation if you suffer from a critical illness.

Harvard University conducted a study revealing that almost 78 percent of individuals who filed for bankruptcy because of an illness had health insurance. Many of the families were under-insured. The average out-of-pocket cost for these families was $17,749. For patients who initially had private coverage but lost it when they were unable to work and get employer-sponsored health care coverage, the family's out-of-pocket expenses averaged $22,568.

Out-of-pocket health care costs are not the only challenge many critically ill individuals face. They also may find themselves in a situation where they can't work and can't pay for their mortgage, food and other essentials.

That’s why Critical Illness Insurance is growing in popularity. Already established in South Africa, the United Kingdom, Ireland, Australia and New Zealand, it moved to the United States in the late 1990s. Critical Illness Insurance helps consumers cover expenses associated with serious illness by providing a lump-sum, tax-free payment if the policyholder suffers from certain specific conditions.

Conditions Covered

Some of the conditions Critical Illness Insurance covers includes:

  • Life-threatening forms of cancer
  • Alzheimer’s disease
  • Parkinson’s disease
  • Heart disease
  • Loss of limbs
  • Organ transplants

The list is subject to change. As diagnosis and treatments improve, illnesses now deemed critical may not be as serious in the future. And some diseases currently not on the list, such as diabetes and rheumatoid arthritis, might be added at policyholders' requests as insurers seek to be more competitive.

Keep in mind that the definition of what is considered a critical illness can vary between insurers, although many insurers are starting to standardize their claim definitions so that policyholders can more easily compare policies and benefits offered by different carriers.


If you’re interested in Critical Illness Insurance, there are three individual policy categories:

  • Simplified Issue is the easiest to get (few health questions) and is the most affordable. It provides up to $50,000 coverage.
  • For Fully Underwritten, the interested party must provide medical information to the insurer. It provides up to $500,000.
  • Critical Illness or Dread Disease Riders often are available as a rider to your life insurance policy.


When a claim is paid, the policyholder usually receives a lump sum ranging from $10,000 to $1 million.

The policyholder must meet certain requirements, such as surviving a minimum period after the initial diagnosis — usually 14 days. Other requirements may include a diagnosis performed by a specialist.

Claims payouts can pay for a number of bills:

  • Medical treatments not covered by health insurance
  • Health insurance premiums
  • Rent or mortgage
  • Credit card bills
  • School tuition
  • Real estate taxes
  • Food
  • Utilities
  • Car payments
  • Travel expenses to out-of-town medical facilities
  • Experimental treatments not covered by insurance
  • Cash to replace a spouse's income while caring for the injured or ill person


The cost of critical illness insurance depends on how much coverage is needed and whether the policy holder has any pre-existing medical conditions. Premiums range from $180 to more than $1,500 annually and may cost more for tobacco users.

If you're unsure how much coverage you need, a simple way to calculate is to multiply your mortgage payment by 24 months, so you will at least know that your housing is taken care of for two years while you undergo treatment and recovery.

Coverage and costs vary between insurers, so it's essential to work with a knowledgeable broker who has access to multiple insurers and can help compare policies and costs. Give us a call to get started.


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In this issue:

This Just In...

Getting Ahead of the Curve: Planning Now for Social Security Deficiencies

The State of Medicare: 2018 and 2026

Insurance That Goes Beyond Health Benefit Coverage

Too Much Blue Light? Filtering Lenses May be the Answer


The information presented and conclusions within are based upon our best judgment and analysis. It is not guaranteed information and does not necessarily reflect all available data. Web addresses are current at time of publication but subject to change. SmartsPro Marketing and The Insurance 411 do not engage in the solicitation, sale or management of securities or investments, nor does it make any recommendations on securities or investments. This material may not be quoted or reproduced in any form without publisher’s permission. All rights reserved. ©2018 The Insurance 411. www.theinsurance411.com Tel. 877-762-7877.