What does critical illness cover?

Since medical bills are the number one reason for bankruptcy in the U.S., protecting yourself against that fate should be a strong consideration. If you have a family history of any of the covered illnesses (mentioned below), it’s probably an even better idea.

Critical illness insurance was developed in 1996 as people realized that surviving a heart attack or stroke could leave a patient with insurmountable medical bills.
Even with excellent medical insurance, just one critical illness can be a tremendous financial burden.  Critical illness insurance provides coverage if you experience one or more of the following medical emergencies:

• Heart attack
• Stroke
• Organ transplants
• Cancer
• Coronary bypass

Because these illnesses require extensive medical care and treatment, their costs can outstrip a family’s medical insurance policy quickly. If you don’t have an emergency fund or health savings account, you’ll have an even harder time paying those bills out of pocket. 

Since many people are now choosing high-deductible plans, they’ll owe even more than if they had a traditional plan. Critical illness insurance can pay for costs not covered by insurance. The money can also be used for non-medical costs related to the illness, including transportation, child care, etc. Typically, the insured will receive a lump sum to cover those costs.

There are exceptions to critical illness insurance coverage. Some types of cancer may not be covered, while chronic illnesses are also frequently exempted. You may not be able to receive a payout if a disease comes back or if you suffer a second stroke or heart attack. Some coverage might end once the insured reaches a certain age.  Like any form of insurance, make sure to read the policy carefully. The last thing you want to worry about is your emergency plan.