A critical illness insurance plan is a supplemental health insurance policy that pays you a fixed lump sum if you are diagnosed with a critical illness. Critical illness insurance plans cover a wide variety of illnesses, including lung cancer. The lump sum payment can be used for what you need, whether it’s medical bills, groceries, childcare or mortgage payments.
Many people assume that their primary health insurance plan will be enough to cover medical expenses as they arise. However, many people face huge financial burdens when paying for their medical and living expenses while undergoing treatment. Critical illness insurance can supplement your medical coverage and help pay for what your main plan doesn’t cover.
The stipulations of critical illness insurance plan coverage vary from plan to plan. Some plans will cover certain illnesses or medical emergencies, while others will not. If you’re considering buying critical illness cover, read on for more information to help you make your decision.
How does critical illness insurance work?
Thanks to medical advances, survival rates for many types of cancer have increased. This is great news, but the costs associated with treatment and missed work can be financially devastating. About 60% of bankruptcies in the United States are caused by medical debt.
Your health insurance will cover many of your lung cancer treatment costs, but you may still have expenses that you did not anticipate. Critical illness insurance, also known as critical care insurance, is designed to protect you and your family from financial hardship in the event of a serious diagnosis. It works by paying a predetermined lump sum benefit following the diagnosis of a covered illness.
After being diagnosed with lung cancer, for example, you will submit a claim for benefits that will be paid directly to you so that you can spend what you need. The amount you receive can be used to cover health care or personal expenses, it’s up to you. This benefit can give you peace of mind so you can focus on what matters most: getting better.
There are a wide variety of critical illness insurance plans, with lump sum payments ranging from $5,000 to $500,000. As with standard health insurance plans, you will pay a monthly premium. The amount you pay each month will depend on several factors, including your age, gender, medical condition, family medical history, and the amount and extent of coverage you seek.
What does critical illness insurance cover?
Critical illness insurance coverage varies from plan to plan. Each policy will include a list of conditions covered, so it is important to read the details of the plan(s) you are considering before purchasing. In order to receive your benefit, you must be diagnosed with one of the conditions described in your policy details.
The most basic plans cover the most common critical illnesses, including cancer, heart attack, and stroke. More comprehensive critical illness insurance policies may also cover:
Each policy varies, so make sure you know what yours does and does not cover.
Who is eligible?
Eligibility for Critical Illness Insurance benefits and amounts will vary based on your personal circumstances and insurer exclusions and limitations. Some policies require health screenings for risk factor assessment before providing coverage. This may include a medical examination and answering questions related to your health and family history.
If you use the same health care provider with whom you have your primary health insurance policy or if you purchase the plan through your employer, you may not need to undergo an exam medical or to answer health questions.
Am I eligible if I already have a diagnosis of lung cancer?
Those with an existing diagnosis are not eligible to purchase a critical illness plan.
Some critical illness insurance plans do not cover pre-existing conditions (eg asthma, diabetes). Other plans have a pre-existing condition provision. This means that if a condition is treated before the effective date of critical illness coverage, it is considered pre-existing unless the person has had coverage for 12 consecutive months or more.
If you have already been diagnosed with lung cancer, you cannot purchase a critical illness insurance policy and get paid. That’s why it’s best to have a policy in place before you receive a serious diagnosis.
Do I need critical illness insurance?
It can be difficult to predict if you need critical illness insurance. After all, none of us can see into the future. Some people can pay their premium for years without ever needing to file a claim and receive the benefit. Others may pay for a plan and end up needing it in a few years.
You may want to consider these factors when making your decision:
- How comprehensive is your standard health insurance plan?
- What are your out-of-pocket expenses for medical care? Consider your deductible, your co-payments and your coinsurance.
- What is your risk for certain diseases in the next 5 to 10 years?
- Will you have enough money to maintain your standard of living if you can no longer work?
- Do you have a family history of diseases like cancer, heart attacks and/or strokes?
- Do you have enough savings to cover unexpected health care costs?
When you have a serious diagnosis like lung cancer, medical bills and other expenses related to your cancer care can add up quickly. Even with a comprehensive health insurance plan, out-of-pocket expenses can wreak havoc on your personal finances and mental well-being.
A critical illness insurance plan will pay you a lump sum benefit if you are diagnosed with a covered condition. You can use these funds as you wish. For example, to help you pay your bills, compensate for lost wages and maintain your standard of living.
Different critical illness plans have different benefit levels, and some have strict eligibility criteria. If you qualify for a critical illness insurance plan, you may want to consider it an investment in your future. Having this plan can give you peace of mind so you can worry less about your finances while you are being treated for and recovering from lung cancer.
A word from Verywell
Being diagnosed with lung cancer can be an overwhelming experience. You may be facing treatments that are detrimental to your physical and mental health. Worrying about finances on top of these challenges can be devastating. A critical illness insurance plan can give you peace of mind while you undergo treatment and recover.
Frequently Asked Questions
What is the difference between cancer insurance and critical illness insurance?
The main difference between cancer insurance and critical illness insurance is that cancer insurance covers the costs associated with the treatment of all types of cancer. Critical illness insurance is a lump sum benefit paid after a diagnosis of various critical illnesses.
Critical illness benefits can be used for all expenses, and cancer insurance can only cover direct and indirect costs related to cancer care.
Who is eligible for critical illness insurance?
Eligibility requirements for critical illness insurance vary depending on the health care provider and plan you are looking for. Your personal circumstances, such as your age, medical history and family history) will be taken into account and you may be required to undergo a medical examination to determine your eligibility.
People with pre-existing conditions are not eligible for critical illness insurance.
How much money does critical illness insurance offer for qualifying conditions?
Critical illness insurance benefits range from $5,000 to $500,000, depending on the plan you have. You will pay a monthly premium for the policy and receive benefits if you are diagnosed with an eligible condition.