Critical Illness Insurance: Is It Really Worth It?


Critical Illness Insurance: Is It Really Worth It?

June 12, 2024

Touch wood or knock on wood—we say that often to ward off bad luck. But sometimes, it’s not always enough. Life is full of twists and turns, some smooth and others more challenging. Being diagnosed with a critical illness is one of those difficult challenges, and it happens more often than we might think. Whether it’s heart disease, cancer, or a stroke, these conditions can strike anyone at any time, disrupting both your physical and mental well-being. And the financial impact goes beyond medical bills, with lost income, caregiving costs, day-to-day expenses, and more.

When it comes to protecting your health, knowing your options is key. One such option is Critical Illness Insurance, a type of coverage that offers a one-time, lump sum payment if you’re diagnosed with a covered serious illness—a backup plan for when life gets tough.

Nobody wants to think about it—it’s one of the uncomfortable truths of financial planning— but there are a lot of myths about Critical Illness Insurance that might be keeping you from taking the plunge. You might be wondering:

1. Isn’t it the same as Health Insurance or Life Insurance?


Not exactly. While Health Insurance pays for your medical bills, and paramedical services (like chiropractic or massage) and Life Insurance helps support your family in the event of your passing, Critical Illness Insurance is designed to assist you during your recovery from a serious illness. It’ll pay out if you’re diagnosed with a “covered” condition, or specific medical condition that’s outlined in your policy, like cancer, a stroke, or a heart attack, among others. This way, you can focus on recovery rather than stressing about regular monthly or medical expenses.


2. So, it’s the same as Disability Insurance, right?


They might seem similar, but both coverages actually have distinct roles. Disability Insurance payments are ongoing and replace a portion of your regular monthly income if you’re unable to continue working because of an eligible injury or illness. This can help you with your regular monthly bills (mortgage payments or rent, food bills, utility expenses, car payments, etc.).

In contrast, Critical Illness Insurance provides a one-time, lump-sum benefit when you’re diagnosed with a covered illness and will pay whether you’re able or not able to continue working. Plus, unlike Disability Insurance, you get the full coverage amount that you pay for, rather than just a portion. In a way, both types of insurance plans can be crucial elements of your personal protection plan.


3. So, I can only spend my benefits on medical costs?


Not at all. Critical Illness Insurance provides you with a lump sum that you can use in whatever way best suits your needs at that moment. Once it’s been paid, how you spend it is entirely up to you. Whether you need to hire a nurse, make your home accessible, pay off part of your mortgage, cover childcare expenses, or take an extended vacation, the choice is yours.


4. Great, I’ll get it when I’m older.


Waiting until you’re older to get Critical Illness Insurance might seem like a good plan, but it could end up costing you more in the long run. When you’re younger, you’re less likely to develop a critical condition, leading to lower premiums. If you wait too long, you may become ineligible for coverage for certain medical conditions that occur later in life, leading to a possible decline of your application.

Besides, critical illnesses don’t discriminate by age. It’s better to buy protection when you’re younger so you have some peace of mind in case the unexpected happens.

Another benefit of buying, when you’re younger, is to take advantage of the optional features, such as the Return of Premium Rider that could be worth considering. With this, if you don’t file a claim during the policy term, you can get back the premiums you paid. Getting Critical Illness Insurance sooner not only means lower premiums but also the chance to get your money back if you don’t use it; a win-win situation for your financial security and peace of mind.


5. Aren’t my employer’s insurance benefits enough?


It’s nice to have workplace benefits, but they might not offer enough coverage for your needs. Employer policies could have limits and might not fully protect you if you get seriously ill. For instance, if your employer’s policy only provides $20,000 in coverage to everyone, what happens if you were to face an illness requiring extensive treatment and your medical expenses exceed this limit? You could find yourself facing significant financial strain. And if you change the company or employer you work for, you may not get this coverage with your new employer.

Having your own Critical Illness Insurance policy gives you an extra layer of protection that’s customized to what you need. It’ll ensure you’re protected even if there are changes in your employment status.


6. If I already have a health condition, am I ineligible?


There’s hope. Having a pre-existing health condition can influence your eligibility and the cost of Critical Illness Insurance, but it doesn’t always mean you can’t get coverage. Many insurance companies have options for people with pre-existing conditions, though the terms and prices can differ. It’s important to chalk out your priorities and talk to a licensed insurance broker to find a policy that works for you.


7. But the health condition I have is recurring or chronic.


Critical Illness Insurance is primarily meant to provide financial support for sudden, life-threatening illnesses rather than ongoing medical expenses for chronic or recurring conditions. But there are still alternatives that might cover such conditions. Be sure to speak to a licensed insurance broker who can assist you in examining and comparing the different insurance companies and their coverages to find options to meet your specific needs.


8. So, what’s the catch?


Keep in mind: Critical Illness Insurance doesn’t cover every condition under the sun. Policies usually list specific critical illnesses and knowing what’s covered is crucial. You’ll need to carefully evaluate the coverages to see if they match your circumstances.

That’s where having a licensed insurance brokerage, like PROLINK, by your side can make a difference. Our consultants can help you navigate through various policies, compare the rider options, and find the one that truly protects you. With our help, you can make an informed decision that provides the right level of coverage in your difficult time.

And when life presents you with that curveball, you and your family will never face the financial burdens of recovering. With PROLINK, you can rest assured that your coverage is in capable hands, allowing you to focus on what truly matters: your recovery and well-being (Touch wood!).

PROLINK’s blog posts are general in nature. They do not take into account your personal objectives or financial situation and are not a substitute for professional advice. The specific terms of your policy will always apply. We bear no responsibility for the accuracy, legality, or timeliness of any external content.

    Personal InsuranceCommercial EnterpriseAssociations & Affinity GroupsLife & Benefits

      Personal InsuranceCommercial EnterpriseAssociations & Affinity GroupsLife & Benefits

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