Critical Illness Insurance – The Complete Guide & Best Companies

Critical illness insurance pays you a lump sum if you’re diagnosed with certain illnesses – like cancer, stroke or a heart attack. You’ll occasionally see this called critical care insurance.

You can use this cash for whatever you want. Most people use it to either cover medical bills not covered under their insurance or to replace their income while they recover.

Other common uses include:

• Out-of-pocket medical expenses
• Alternative therapies
• Childcare
• Groceries
• Rent/mortgage
• Insurance
• Specialized medical equipment
• Daily hospital stay costs

Quick Summary

Critical illness insurance prevents families with specific medical emergencies from depleting their savings, possibly even going into debt.

It pays out a lump sum amount upon diagnosis of certain diseases and medical events.

How Critical Illness Works – The Details

Critical illness can be either a stand-alone policy or a life insurance rider.

The face amount generally ranges from $10,000 to $500,000.

Policies vary dramatically in the medical conditions they cover, the amount available, and the premium amount.

Some policies have restrictions, like the number of days the insured must survive after the diagnosis before the insurer processes a claim.

Your doctor will make the diagnosis. It doesn’t need to be someone who works for the insurer. The best companies will process the claim upon diagnosis. Then the insurer will pay the lump sum amount. You can use the money for whatever you wish.

What Does Critical Illness Insurance Cover?

The triggering conditions vary between companies. All critical illness policies from reputable companies cover the following:

• Heart attack
• Cancer
• Stroke

Most will also cover many (if not all) of the following conditions. Just be sure to check the quote. It will list which conditions the insurer will cover.

• Alzheimer’s Disease
• Aortic Surgery
• Aplastic Anemia
• Bacterial Meningitis
• Benign Brain Tumor
• Blindness
• Coma
• Coronary Artery – Bypass Surgery
• Deafness
• Heart Attack
• Heart Value Replacement
• Kidney Failure
• Loss of Limbs
• Loss of Speech
• Major Organ Transplant
• Major Organ Failure – On Waiting List
• Motor Neuron Disease
• Multiple Sclerosis
• Occupational HIV Infection
• Paralysis
• Parkinson’s Disease
• Severe Burns

Is Critical Illness Insurance Worth It?

Critical illness exists to help out with the insane expense of medical surprises. By adding it as a rider to your life insurance policy, you can make your life insurance policy useful while you live. As a stand-alone product, it costs many times less than disability insurance.

A critical illness policy gives you some financial breathing room. Instead of dipping into your savings, you have a cushion.

The main drawback is you may be perfectly healthy your entire life. The less obvious disadvantage is you may be better off with disability insurance instead.

The Need for Critical Illness Insurance

Health insurance can be a mess. Plus, medical costs keep going up.

With most Americans struggling to cover any $1,000 emergency, an illness can wipeout any savings in no time.

The most recent data by the National Cancer Institute shows that 38.4% of Americans will be diagnosed with cancer at some point in their lives.

The good news is that the fatality rate from cancer has fallen 25% since 1991. Which means that while the prognosis tends to be more promising as technology advantages, medical bills are also increasing. This leaves survivors buried in medical debt.

At the same time, the Society of Critical Care Medicine says that 5.7 million Americans will find themselves in intensive care units each year. Common reasons are:

• Intensive or invasive monitoring
• Support of airway, breathing or circulation
• Stabilization of acute or life-threatening medical problems
• Comprehensive management of illness or injury
• Restoration to stable health status

Many of the scenarios triggering the reasons above will also trigger the payout on a critical illness policy, avoiding co-pays or surprises charges that health insurance doesn’t cover.

2 Best Critical Illness Insurance Companies

Both Assurity and Mutual of Omaha have a couple plans to accommodate different needs.

The underwriting for both is similar. Both companies are stable in their financial outlooks.

Assurity Life Insurance Critical Illness Plans

Assurity is one of our favorite critical illness providers for a couple of reasons. 

First, they have a multi-benefit payout. Many critical illness policies are one-and-done policies. After the diagnosis and payout, the policy dissolves. Instead, Assurity will payout multiple times over the policy’s life, provided the diagnoses are different and at least six months apart. 

For example, if someone with an Assurity policy gets cancer and receives their critical illness benefit, they will get another payout if they suffer a stroke 8 months later. 

Assurity also offers some of the lowest rates for people between 25 and 55 years old. Assurity also focuses on providing dependable, affordable coverage for people with household incomes between $35,000 and $150,000 a year.

Assurity has two types of CI policies, simplified and fully underwritten plans.

Simplified only means that there is minimal underwriting involved. You answer a couple health questions and get your policy a few days later.

Fully underwritten plans tend to offer higher benefits at lower rates. The tradeoff is more extensive health questioning and a medical exam.

Assurity Simplified Issue (Critical Outlook)

Qualifying for the simplified issue plan only involves being 18 to 75 years old and answering 5 medical questions on the application. No exam is necessary.

The simplified issue plan offers flexible lump payments. You can choose anywhere from $5,000 to $75,000 in face value – the amount that gets paid out.

Critical Outlook also has a multi-benefit payout. Instead of one payment one time, Assurity has different categories of medical issues. You can make a claim once per category.

Category 1

• Invasive Cancer – 100% payout
• Carcinoma in situ (non-invasive cancer) – 25% payout once per lifetime

Category 2

• Heart Attack – 100% payout
• Major organ transplant – 100% payout
• Stroke – 100% payout
• Coronary Bypass Surgery – 25% payout, once per lifetime
• Angioplasty – 25% payout, once per lifetime

Category 3

• Advanced Alzheimer’s Disease – 100% payout
• Coma (not as a result of a stroke) – 100% payout
• End Stage Renal (Kidney) Failure – 100% payout
• Major Burns – 100% payout
• Paralysis (not resulting from a stroke) – 100% payout

Unlike some companies, there are no survival period requirements.

Finally, you can attach riders to this plan to customize it for your family’s needs. The options available are:

• Return of Premium – refunds premiums if you pass from a reason not covered by the CI policy
• Disability Waiver of Premium
• Accidental Death Benefit
• Spouse Critical Illness
• Dependent Child Critical Illness

Assurity Critical Outlook Rates (Simplifed Issue)

Assurity is the one critical illness company that allows you to customize your rate and apply online. Click here to view rates and apply online.

There is only lifetime available, no terms.

The table below are all monthly rates for non-smokers. Your rates may vary depending on what state you live in.

Age 30

Age 40

Age 50

Age 60

Assurity Critical Illness – Fully Underwritten Policy

The fully underwritten policy offers much larger benefits, between $75,001 and $500,000 for each category. They also allow benefits to be paid out multiple times, although the conditions must occur at least 180 days apart.

Qualifications require the same application age range as the simplified policy, 18 to 70. However, they are more health questions on the application, and Assurity requires a medical exam.

Also, like the simplified policy, there are three categories of payouts.

Category 1

• Invasive Cancer – 100% payout
• Carcinoma in situ (non-invasive cancer) – 25% payout, once per lifetime

Category 2

• Heart Attack – 100% payout
• Major Organ Transplant – 100% payout
• Aortic Surgery – 100% payout
• Heart Valve Replacement/Repair Surgery – 100% payout
• Stroke – 100% payout
• Coronary Bypass Surgery – 25% payout, once per lifetime
• Angioplasty – 25% payout, once per lifetime

Category 3

• Advanced Alzheimer’s disease – 100% payout
• Accidental Loss of Speech – 100% payout
• Benign Brain Tumor – 100% payout
• Coma (not resulting from stroke) – 100% payout
• Blindness – 100% payout
• Deafness – 100% payout
• End Stage Renal (Kidney) Failure – 100% payout
• Loss of Limbs – 100% payout
• Major Burns – 100% payout
• Major Organ Transplant (other than heart) – 100% payout
• Paralysis (not resulting from a stroke) – 100% payout
• Motor Neuron Disease – 100% payout
• Occupational HIV Infection – 100% payout

The fully-underwritten policy has more triggering events than the simplified issue policy. Keep those in mind when reviewing family health history to choose which may be best.

Also, if you continue to hold the policy once you hit 70, the face amount drops to 50% of the original.

Mutual of Omaha Critical Illness Policies

Mutual of Omaha takes a different approach to critical illness insurance than Assurity. Instead of two products that cover multiple health issues, they separate their products into different areas.

The products are:

• Critical illness Insurance
• Cancer Insurance
• Heart and Stroke Insurance

Critical Illness Insurance

Mutual of Omaha’s CI comes in term coverage or lifetime. For their term, you must be between the ages of 18 and 54 to apply. Term lengths are for 10, 15, 20, or 30 years.

They’ll issue lifetime CI to people between 18 and 64.

Benefits range from $10,000 to $100,000. It’ll be a lump sum payment, depending on the health problem. They also return the premiums if the insured person passes away without making any claims.

Most covered issues payout 100% of the benefit, but a few will only be 25%.

100% Payout:

• Cancer
• Heart Attack
• Stroke
• Alzheimer’s Disease
• Blindness
• Deafness
• Kidney Failure
• Major Organ Transplant
• Paralysis

25% Payout:

• Coronary Bypass Surgery
• Coronary Angioplasty

There is only one rider you can add to the CI policy, Intensive Care Cash Value Rider. However, you have several options for how many family members you want to cover. You can insure an individual, and individual plus children, or the whole family.

Cancer Insurance

This policy offers 100% coverage upon diagnosis of cancer, both internal and malignant melanoma.

You can choose between lifetime coverage or term.

For lifetime, the issues ages are between 18 and 89 years old.

If you choose a term policy, then you must be between 18 and 54. The term lengths are the same as the CI policy: 10, 15, 20, or 30 years.

Also, you can choose form plan options covering an individual, individual plus children, or the whole family.

Benefits options range from $10,000 to $100,000 and are always paid in a lump sum.

You can customize this policy to act more like the general critical illness with a heart attack and stroke rider, or add the intensive care cash value rider.

Heart Attack and Stroke Insurance

Mutual of Omaha’s Heart Attack and Stroke insurance policy is similar to their cancer policy, including the options for an individual, individual plus children, or family.

Term lengths of 10, 15, 20, or 30 years require that you’re between the ages of 18 and 54. Whereas lifetime will issue to anyone over 18 up to 89 years of age.

Mutual of Omaha pays out 100% of the benefits for a heart attack or stroke. They’ll pay out 25% of the face amount for coronary bypass surgery or coronary angioplasty.

The intensive care cash value rider is also available for this policy.

Sample Quotes for Mutual of Omaha

All of the following tables are monthly, non-tobacco rates. These can vary based on the state you live in. Mutual of Omaha also puts both men and woman at the same rates.

Just look for the category nearest your age. For rates specific to your state and age, give us a call at (888) 905-0333.

Age 30

Age 40

Age 50

Age 60

At age 60, terms are no long available. So the table below shows lifetime rates.

Questions to Ask Yourself About Critical Illness

Critical illness insurance is unfamiliar to most people. They look at it, and before knowing the details think, “I am healthy – this won’t happen to me,” or “It’s too expensive.” 

Those are normal. It’s anxiety-inducing to contemplate one’s own eventual decline in health. 

On the flip side, when 43.2% of Americans have a high-deductible health plan and 60% don’t have the savings to cover an unexpected $1,000 in emergencies, how does the health insurance help when someone can’t afford the deductible? 

Knowing the risks, the stats, and comparing your current healthcare to the premiums will give you a good financial picture of risk. 

As part of the consideration process, ask yourself or talk with your spouse about the following questions: 

1. Do I know someone who was diagnosed with cancer, heart attack, or stroke?
2. Did their diagnosis come as a surprise?
3. How did it affect their finances, their family, and daily living?
4. What is the maximum out-of-pocket amount on my healthcare plan?
5. Do I have a health savings account?
6. Would I feel better with a return of premium rider that refunds some of the expense if I never use the policy?

The questions above will give you a good idea of your risk tolerance for health concerns. 

Alternatives to Critical Illness Insurance

Critical illness insurance provides an immediate, lump sum payout upon diagnosis of certain diseases.

Whether this is a good fit for your family or not depends on your financial needs, current health, and income.

If you want the peace of mind that comes with a little extra help, critical illness is an excellent choice to look into. However, if you’re more concerned about replacing your income, disability insurance might be a better option.

Disability insurance pays you every month to replace your income while you cannot work. The diagnosis doesn’t matter as much as your ability to work. Someone could develop musculoskeletal pain, preventing them from performing a physically demanding job. It would also cover someone going through chemo who is too sick to work.

The policies are more expensive and complicated than critical illness. However, it also covers more. As long as your doctor says you can’t do your job, the company pays you.

The other option is to add a critical illness or disability income rider to your life insurance. These are less expensive than a stand alone policy. Also more limited.

Conclusion

Every family will have different insurance needs. Critical illness insurance is a good safeguard against sub-par health insurance. It prevents you from destroying any emergency fund you have if there is a medical emergency.

However, a disability insurance policy can cover the same risks, but it’s much more expensive.

How Abrams Insurance Solutions Can Help

Critical illness insurance helps prevent debt in a medical emergency. Even with great health insurance, there are still out-of-pocket expenses and lifestyle adjustments when major medical intervention becomes necessary.

At Abrams Insurance Solutions, we work with over 70 of the top-rated life insurers in the country. This allows us to customize option to fit the needs of our clients and their families perfectly.

Give us a call at (888) 905-0333 to learn more. There is never any obligation to buy, and we’re happy to help.