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Do You Need Critical Illness Insurance?

Life Insurance
A couple smiles after having a discussion about whether or not they need critical illness insurance

Major health problems can create a wide range of expenses that your basic health care plan may not cover. During such an event, your finances may be impacted if you take time away from work, travel for care, or use out-of-network health care providers — not to mention pay co-pays and deductibles. If you're concerned about this, you might wonder — do you need critical illness insurance? Depending on your circumstances, it may help you fill this financial gap. Here's why you might consider critical illness insurance, as well as which illnesses are typically covered by critical illness insurance.

What Is Critical Illness Insurance?

Critical illness coverage, which does not replace the need for health insurance, pays you a benefit if you are diagnosed with certain conditions listed in your policy. When buying coverage, you select an amount that you'd like to receive if you get sick.

What Illnesses Are Covered by Critical Illness Insurance?

The details depend on your policy, but policies often cover medical conditions such:

  • Life-threatening cancer

  • Stroke

  • Heart attack

  • Major organ transplants

  • End-stage renal failure

  • Qualifying surgical procedures

Be sure to review each policy carefully to understand which conditions critical illness insurance covers. Also, you may need to meet certain requirements and provide diagnostic information from your doctor to receive payment.

What Might You Use a Critical Illness Benefit to Pay For?

If you're concerned about the costs associated with a major illness, you may want to investigate critical illness insurance. You can use the money you receive for anything — and cash is typically helpful in the midst of a health care event. Here are just some of the common expenses that a critical illness benefit may help with:

  • Co-pays for doctor visits

  • Coinsurance and deductibles

  • Costs for travel to specialists

  • Time away from work as you get care and recover

  • A family member's time away from work to care for you

  • Childcare while you're at the doctor or recovering from illness

  • Cleaning, meal preparation and other routine tasks

Even with a generous health insurance plan in place, you'll likely face additional expenses and a potential loss of income. That's where critical illness insurance may help. If it turns out that you do not spend all of the money you receive from a critical illness policy, you can keep the excess funds.

Potential Limitations of Critical Illness Insurance

Critical illness coverage is not a substitute for health insurance. It can supplement your health coverage but not replace it. Before buying a policy, consider some of the limitations.

One-time payment: Critical illness insurance typically pays a one-time lump sum. If you have multiple qualifying health care events, you may not get benefits after the first occurrence.

You might not use it: Critical illness insurance covers a specific subset of health problems. If you don't have those health issues (or if you have different health issues), the insurance will not pay you a benefit. Some policies offer a return-of-premium feature at death to mitigate this risk.

Preexisting conditions: Your critical illness policy may have limitations or waiting periods for preexisting conditions.

Other types of coverage may work better: If you're concerned about losing your income due to a serious illness, it's worth exploring all the alternatives. For example, disability insurance might pay benefits each month for many years. As a result, you might get more benefit from disability income insurance. To maximize your coverage, you could buy both forms of insurance.

MORE: What's the Difference Between Critical Illness & Health Insurance?

Key Takeaways

Health insurance is essential, but it doesn't necessarily cover all the costs that arise when you get a serious illness. Critical illness insurance can help ease the financial burden by providing a benefit if you get diagnosed with specific conditions. But, do you need critical illness insurance? To answer that question, consider evaluating your ability to cover the expenses that could come with getting sick. For more information on critical illness insurance, consider talking to a financial representative.

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Information provided is general and educational in nature, and all products or services discussed may not be provided by Western & Southern Financial Group or its member companies (“the Company”). The information is not intended to be, and should not be construed as, legal or tax advice. The Company does not provide legal or tax advice. Laws of a specific state or laws relevant to a particular situation may affect the applicability, accuracy, or completeness of this information. Federal and state laws and regulations are complex and are subject to change. The Company makes no warranties with regard to the information or results obtained by its use. The Company disclaims any liability arising out of your use of, or reliance on, the information. Consult an attorney or tax advisor regarding your specific legal or tax situation.