Critical Illness Insurance
A cancer diagnosis, heart attack or other unforeseen health crisis could leave you unable to earn an income, adding financial stress to an already emotionally stressful situation. Unfortunately, your mortgage or rent payment and other monthly expenses will still need to be paid. On top of those obligations, medical bills can quickly pile up. If you aren't able to work, you may not have the means to pay those bills.
Critical illness insurance is a policy that will pay out a benefit as a lump sum if you are diagnosed with a critical illness or condition specified in the policy. This can relieve or lessen the financial strain that can come with critical illnesses, so you can focus on getting better.
Why Do I Need Critical Illness Insurance?
None of us knows if or when we will contract cancer, have a heart attack or stroke, or be diagnosed with another critical illness. These diseases and conditions can have devastating effects on our health, requiring dedicated treatment and recovery periods. When a critical illness strikes, the financial consequences can be just as catastrophic as the health ramifications in their own way. Consider this: an estimated 56 million Americans under age 65 have trouble paying medical bills, and medical bills are the number one reason for bankruptcies.
Even with a good health insurance policy, you may still be required to pay a sizable deductible before your health insurance kicks in, and then you may need to continue paying co-insurance to cover a portion of your own health care costs.
Critical illness insurance is designed to help alleviate the financial strain that comes with critical illnesses. The lump sum benefit paid out under a critical illness insurance policy can be used to pay your medical bills, mortgage and other expenses. Policy benefits can also be used to pay for experimental treatments not covered by your health insurance policy, or for travel to obtain treatments somewhere other than your current location.
How Does Critical Illness Insurance Work?
Critical illness insurance requires you to make periodic premium payments to keep the policy in force. Every policy is a little different, but critical illness policies may offer payouts ranging from $10,000 all the way to $1 million. The policy itself specifies what conditions are covered. Typically, these include cancer, heart attacks and strokes. Some policies may also cover heart disease, kidney failure, organ transplant, paralysis and other conditions.
If you contract a covered condition while the policy is in force, the insurance company will pay you the face amount of the policy, typically in one lump sum payment which is generally tax-free (talk to your tax professional to confirm tax treatment for your specific situation).
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What is the difference between mortgage protection insurance and homeowners insurance?Mortgage Protection Insurance: • Makes your premiums in case of job loss* • Money goes to your family • Pays your mortgage if you become sick or injured • Money your family receives is tax free • Is portable – new home? It travels with you *Available in most states. Limitations may apply. Benefits and carriers will vary for coverages and are subject to underwriting approval, product limitations and availability. Home Owner's Insurance • Damage to your home in severe weather and water conditions • Theft of your belongings • Vandalism of your house and property • Fire damage to your home • Personal injury lawsuits if someone gets hurt on your property
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Do I qualify for mortgage protection insurance?In most cases, yes! Mortgage protection insurance has a very high acceptance rate as most plans are offered with simplified underwriting (you won’t have to take a medical exam to qualify).
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When should I buy mortgage protection insurance?If you have a mortgage on your home, or if you are in the process of obtaining a mortgage, you should consider buying mortgage protection insurance.
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Can I afford mortgage protection insurance?Mortgage protection is one of the most inexpensive types of insurance, and it’s often a more affordable option than purchasing a separate whole life policy to pay off your mortgage in the event of your death.