What is Critical Illness Insurance, and how can it help you?

Part of our “Be Ready” series of articles exploring workplace Supplemental Health Benefits — and how they can help you be better financially prepared when the unexpected happens.

Sometimes, no matter how well you take care of yourself, the worst happens: You get diagnosed with cancer. You have a stroke or a heart attack. Maybe it’s genetics, or maybe it’s just bad luck. Whatever the cause, a critical illness diagnosis isn’t just hard on your health: It can also have an effect on your finances.

Fortunately, Critical Illness* Insurance is an option that could help by paying a benefit if you are diagnosed with a covered illness or condition.

What is Critical Illness Insurance, and how can it help me?

While your primary health insurance may cover some of the costs of your treatment, it likely has things like copays or deductibles that you pay for out of pocket. Then there are the expenses that don’t go away just because you’re ill: mortgage and car payments, child care, tuition, utility bills — the list goes on. That’s where Critical Illness Insurance can be helpful.

Critical Illness Insurance is a type of optional coverage (known as “supplemental health insurance”) that pays a benefit when you are diagnosed with a covered illness or condition. It doesn’t replace your health insurance but rather complements it.

If you are diagnosed with a covered illness or condition on or after your coverage effective date, the paid benefit can be used however you see fit. Critical Illness Insurance can lessen the financial impact of the out-of-pocket expenses you may experience if you become seriously ill.

Like most kinds of insurance, there are usually exclusions and limitations to coverage, so be sure to check with your employer or review your Certificate of Insurance and any riders. Critical Illness Insurance is not health insurance and does not satisfy the requirement of minimum essential coverage under the Affordable Care Act.

What does Critical Illness Insurance cover?

Coverage will vary by plan, but as an example, we’ll show you some of the diagnoses and conditions that could be covered by Critical Illness Insurance:

• Heart attack
• Cancer
• Stroke
• Coronary artery bypass
• Major organ transplant
• Pacemaker placement
• Parkinson’s disease

Benefits are paid at 100% of the Critical Illness benefit amount unless otherwise stated in your certificate. A pre-existing condition limitation and other exclusions may apply. For a complete description of your benefits — along with applicable provisions, conditions on benefit determination, and exclusions and limitations — you would want to reference your certificate of insurance and any riders.

How can I get Critical Illness Insurance?

Like other kinds of supplemental health insurance, Critical Illness Insurance is offered through your employer. You can usually enroll when you start a new job and make your other benefits selections or, after that, during your employer’s annual enrollment period. Critical Illness Insurance premiums are then paid by you through payroll deductions, which are often made post-tax.

Who can be covered under my plan?

In addition to yourself, Critical Illness Insurance can also cover your spouse and your children. The definitions of “spouse” and “children” may vary by plan or by state, so talk with your employer to verify who can be covered on your plan. You will likely need to be enrolled in order to cover your spouse and children.

How much does it cost?

Supplemental health insurance is considered cost-effective, but you’ll want to look into your company’s offering for specifics about premiums — especially if you’re wanting to cover your spouse or your kids.

One more thing to consider: the workplace benefits and savings connection

Whether you’re just learning about supplemental health benefits like Critical Illness Insurance or actively planning to enroll in them, have you ever thought about how these coverages have the potential to impact your retirement savings?

Critical Illness Insurance is a separate insurance product with a distinct purpose and a benefit that is paid for the diagnosis of a covered illness. However, when eligible, it may help lessen the financial impact of a serious illness diagnosis, and perhaps it will help you maintain your savings or potentially avoid having to take a hardship withdrawal as you encounter out-of-pocket costs. Considering your workplace benefits and retirement savings together could help you make more informed financial decisions, for today and tomorrow. Take our quick online assessment to see if you’re maximizing your benefits and savings options.
 

Check with your HR department to find out if you have the option to enroll in Critical Illness Insurance during your employer’s next open enrollment period.