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Critical Illness Insurance

Understanding Critical Illness Insurance


Critical illness insurance is an agreement in which the insurance provider undertakes to provide a tax-free lump sum amount of money to a policyholder if he or she is diagnosed with one or more of a variety of critical ailments that are under the coverage of the policy. The obligation of the insurance provider is often limited to a survival time period and the policy claim can often only be put into effect if a condition is diagnosed by an independent medical professional along with proof via certain diagnostic tests. This kind of a policy was first put on the market in 1996 when insurance companies found that surviving a critical illness could result in many being saddled bankruptcy inducing medical costs. Good critical illness insurance can assist families in avoiding financial devastation that is often the result of treatment costs.

How it Relates to Employment

If one enlists in a term life insurance policy as a result of a work benefits package, critical illness insurance is often included in that coverage. In cases such as these, one is eligible for a single claim. For instance, if one is diagnosed with colon cancer and elects to utilize the critical illness coverage to receive a payout, the term life provider is released from the obligation under the insurance agreement. If the cancer ultimately results in the policyholder’s death, then there will no longer be a requirement for the insurance company to pay out for the life insurance coverage.

The Benefits

If you face a critical illness, you will still be obligated to continue your health insurance premium payments, pay any deductibles and co-pays, pay your mortgage, auto payment and other bills. Often times it might take six months and up to two years to make a recovery from whatever illness is challenging you. Some insurance providers even offer partial coverage in case you are still able to work part-time.


Medical expenses are the biggest reason why Americans go to court seeking bankruptcy protection. With this in mind, it seems obvious that many people can benefit from critical illness coverage. Do your research to figure out whether it’s worth the expense to someday utilize the services of a payout. A critical illness policy is relatively affordable and can result in being a terrific option for a policyholder and his or her family.