What Is It and Who Needs It?

If you’re lucky, you’ve probably never had to use critical illness insurance (sometimes called catastrophic illness insurance). You’ve maybe never even heard of it. But in the event of a big health emergency, such as cancer, heart attack or stroke, critical illness insurance could be the only thing protecting you from financial ruin. Many people assume they’re fully protected with a standard health insurance plan, but the exorbitant costs of treating life-threatening illnesses are usually more than any plan will cover. Read on to learn more about critical illness insurance and whether it's something you and your family should consider.

KEY TAKEAWAYS

• Critical illness insurance provides additional coverage for medical emergencies like heart attack, stroke, or cancer.
• Because these emergencies or illnesses often incur greater than average medical costs, these policies pay out cash to help cover those overruns where traditional health insurance may fall short.
• These policies come at a relatively low cost. However, the instances that they will cover are generally limited to a few illnesses or emergencies.

Critical Illness Insurance 101

As the average life expectancy in the United States continues to increase, insurance brokers are finding ways to make sure Americans can afford the privilege of getting older. Critical illness insurance was developed in 1996, as people realized that surviving a heart attack or stroke could leave a patient with insurmountable medical bills.

“Even with excellent medical insurance, just one critical illness can be a tremendous financial burden,” says CFP Jeff Rossi of Peak Wealth Advisors, LLC. Critical illness insurance provides coverage if you experience one or more of the following medical emergencies:

• Heart attack
• Stroke
• Organ transplants
• Cancer
• Coronary bypass