What is Critical Illness Insurance?

Critical illness insurance is simply a policy that pays money directly to you in the event of a critical illness diagnosis. It’s kind of like life insurance, but more important. Instead of waiting till you die for it to pay the benefit, it pays while you are still alive so it helps pay for things that medical insurance doesn’t pay for.

Out of all the health insurance available, critical illness insurance is a very important policy to have as part of your overall health insurance package.

What Does Critical Illness Insurance Do?

Critical illness insurance pays you a “benefit” for being diagnosed with an illness. That benefit is a lump sum of money, usually anywhere from $2,500 to $100,000; depending on the amount of your policy. This money is paid directly to you and goes into your bank account. You can do anything you want with this money. The purpose of these funds is to decrease your stress in a time that you need to focus on treatments and overcoming the illness. Most people use these funds to pay for out of pocket medical costs, replace income that is lost during this period of time, and stay on top of household bills so you don’t get behind on house payments, etc.

How Does Critical Illness Insurance Work?

Critical illness policies are quite simple and straight forward. If you get a diagnosis of a critical illness that is listed as part of the definitions of your policy, then you open a claim with the insurance company. They will of course pull medical records to verify the diagnosis. Then they send you a check for the appropriate amount of money. You can use the funds however you want, it’s your money. It’s kind of like life insurance, but you get the benefit while you are alive to help you and your family financially during this tough time.

Do I need it?

Everyone should have some sort of financial protection in place just in case they come down with a critical illness. According to the American Cancer Society, the odds of you getting cancer in your lifetime is a coin flip. Cancer is just one of many critical illnesses. The majority of people will be diagnosed with some sort of critical illness in their life.

The financial impact of a critical illness can be devastating, adding insult to injury. Even if you have good health insurance, you still have your out of pocket costs like deductibles and copays each year. If you want to try alternative treatments, then you have to pay for those on your own. If you haven’t retired yet, then you will have lost income. You still need to stay on top of your household bills or you risk losing your house, cars, going bankrupt, etc. Unless you have zero debt, passive income, and $50,000 extra in your bank account that you won’t miss….then you need a critical illness policy to protect your personal finances.

How do I buy it?

How you buy a critical illness insurance policy is fairly simple. We can help you with the entire process from start to finish. The first step is to request a quote. From there we will contact you to go over the options and recommend a critical illness plan that is best suited for your needs and budget.

Some plans are what is call “guaranteed issue” which means there is no underwriting and you automatically qualify for the policy. However, most critical illness plans, especially higher value plans, will have some underwriting in the form of health questions during the application. There usually is no need for a medical exam, just the questions during the application which we handle over the phone with you.

What is a Critical Illness?

The Big 3 Illnesses

Out of all the critical illnesses, there are three which people are generally concerned about the most. As we age, the odds of being diagnosed with a critical illness increases, however; it is possible at any age unfortunately.


For people between the ages of 15 and 30, the odds of getting cancer is 2.7 times that of getting it in the first 15 years of your life. The overall median age of a cancer diagnosis is 66, which means half of the cases happen older than 66 and the other half happen younger than 66.

Heart Attack

The odds of having a heart attack increase drastically after age 45 for men and after age 55 for women. However, studies show that cases for people in their 20’s and 30’s has been increasing in recent years.


The majority of stroke victims are age 65 or older, but approximately 10% are below the age of 45.

Critical Illnesses

In addition the big 3 critical illnesses: Cancer, Heart Attack, and Stroke; there is a long list of other diagnosis’ that are sometimes considered a critical illness. Whether or not these are considered a critical illness under your policy depends on the definitions of the policy you get. Here is a list of other critical illnesses:

  • Invasive / Non-Invasive Cancer
  • Heart Attack
  • Stroke
  • Kidney Failure
  • Comma
  • Blindness or Deafness
  • Major Organ Transplant
  • Paralysis
  • Loss of Limb
  • Major Burns
  • Coronary Artery Bypass Graft
  • Advanced Alzheimer’s
  • Heart Valve Surgery

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