Critical Illness Life Insurance: How It Works & How To Get It

If you or a loved one has been diagnosed with a critical illness, you know just how important it is to have the financial resources in place to cover medical expenses and any other associated costs that come with treatment. 

One type of life insurance that can help in this situation is critical illness coverage. This type of policy pays out a lump sum of money if you become critically ill.

We’ll explain in further detail what critical illness coverage is, the benefits, and drawbacks of this type of insurance. 

What is critical illness life insurance?

Critical illness life insurance is a type of policy that, if you were to come down with a critical illness, you would be paid out a lump sum of money. The money can be used to cover medical expenses, lost income, and other costs associated with the illness. 

For example, if you are diagnosed with Alzheimer’s disease, the money from a critical illness policy could be used to pay for in-home care or other expenses.

What qualifies as a critical illness?

Before jumping into which illnesses are covered, let’s review the definition of critical illness. Critical illness is defined as a serious, life-threatening, or debilitating condition that requires hospitalization. 

With that in mind, some of the most common critical illnesses that are usually covered include Alzheimer’s Disease, cancer, heart attack, kidney failure, and stroke.

Some policies may also cover critical illnesses not listed here. Some policies will also cover critical illnesses that are specific to children. Make sure to check the policy terms to see what is and is not covered.

How is critical illness life insurance different from regular life insurance?

Regular life insurance pays out a death benefit if you die. Critical illness life insurance pays out a benefit if you live but become critically ill and is considered to be secondary insurance. 

There are a lot of things to consider while buying a second health insurance policy, so it’s important to understand these differences.

For example, if you have a regular life insurance policy and you die of cancer, your beneficiaries will receive the death benefit. If you have a critical illness life insurance policy and you die of cancer, your beneficiaries will not receive the critical illness benefit.

This also means that critical illness life insurance is usually sold as an add-on to a regular life insurance policy. So keep in mind, this will mean that you have two separate policies: one for critical illness and one for life insurance.

How do I get critical illness life insurance?

To get critical illness life insurance, you’ll need to purchase a policy from an insurance company. There are many reputable companies that offer this type of coverage. Be sure to shop around and compare policies before buying to make sure you pick the right term insurance plan for your family’s needs.

Some of the most reputable insurance companies include:

• AIG
• Banner Life
• Brighthouse Financial
• Genworth Life Insurance Company
• ING USA Annuity and Life Insurance Company
• John Hancock Life Insurance Company (U.S.A.)
• Lincoln National Life Insurance Company
• MassMutual International LLC
• MetLife Insurance Company USA
• Mutual of Omaha

These are just a few of the companies that offer critical illness life insurance but can get you started in the right direction for finding the perfect fit for you.

What questions should I ask when looking for critical illness coverage?

When you’re looking for critical illness life insurance, be sure to ask about:

• How long the coverage lasts
• The definitions of what constitutes a critical Illness
• The benefit amount and how it is paid out
• Whether the policy covers pre-existing conditions
• What happens if you survive the critical Illness
• What is not covered by the policy

Asking these questions will help you to understand the coverage you’re getting and ensure that it meets your needs.

What are the benefits of critical illness life insurance?

There are many benefits of critical illness life insurance, but there are also some drawbacks. Let’s break both sides down to get a better understanding.

Starting with the benefits, here are the top reasons to get critical illness coverage:

• The policy pays out a lump sum of money if you become critically ill. This money can be used to cover medical expenses, lost income, and other costs associated with the illness.
• The policy can help to ease the financial burden on your loved ones if you become critically ill.
• The policy can give you peace of mind knowing that you and your loved ones are financially protected if you become critically ill.

Critical illness life insurance can be a great way to financially protect yourself and your loved ones if you become critically ill, but let’s discuss the drawbacks as well.

Drawbacks of Critical Illness Life Insurance

There are a few drawbacks to critical illness life insurance. Some of these drawbacks include:

• The policy may not cover all critical illnesses. Make sure to check the policy terms to see what is and is not covered.
• The policy may have exclusions, such as pre-existing conditions. You can find out specifically what is not covered by talking with your insurer.
• The policy may have a waiting period before it pays out. This waiting period is typically 30 days, which might not be right for you if you’ve already been diagnosed.

As you can see, the drawbacks of critical illness life insurance can be significant. Make sure to carefully consider these drawbacks before purchasing a policy.

Consider Carefully

Critical Illness life insurance policies are a great way to financially protect yourself and your loved ones if you become critically ill. The policy pays out a lump sum of money if you become critically ill, which can be used to cover medical expenses, lost income, and other costs associated with the illness.

Be sure to carefully consider the benefits and drawbacks of critical illness life insurance before purchasing a policy. The benefits include easing the financial burden on your loved ones if you become critically ill. 

However, the drawbacks may be that the policy may not cover all critical illnesses and may also have exclusions, such as pre-existing conditions.

If you have any questions about critical illness life insurance, be sure to talk with your insurer. They will be able to help you understand the policy terms and what is covered.

Luke Williams writes and researches for the insurance comparison site, ExpertInsuranceReviews.com. His passions include insurance and educating others on different policies.