Critical Illness & Cancer Plans

critical illness and cancer plans text overlaying image of a patient with a bandana on looking at the doctor's clippboard It is impossible to predict the future, and because of that there are many different types of supplemental insurance available. One type of supplemental insurance is critical illness insurance (sometimes called catastrophic illness insurance) or cancer insurance, does exactly that. If you are diagnosed with a serious illness, like cancer, or have a heart attack or stroke, these two types of insurance can be what helps keep you afloat financially while you recover. 

It’s a common misconception that a conventional health insurance plan will provide complete protection if you are seriously ill, but in reality, the cost of treating life-threatening illnesses is typically more than any plan will pay for. That means purchasing the extra protection offered by a critical illness and cancer plan might be the right move for you.

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What Are Critical Illness and Cancer Insurance Plans?

Fortunately, the odds of surviving serious illnesses have increased thanks to advances in medicine. But unfortunately, the cost of treating these illnesses can be crushing, particularly given the rising cost of healthcare. This is especially true if you have a high deductible health plan.

But as mentioned above, there are two types of insurance you can purchase to protect yourself against these expenses: critical illness, or catastrophic illness, and cancer insurance. Both of these types of insurance will pay a lump-sum benefit amount following the diagnosis of a covered condition. You simply submit a claim and will have the benefits paid directly to you. Cancer plans also have a more traditional insurance policy option. 

A critical illness or cancer policy’s payout can be used to pay for medical costs, your mortgage, your utilities, or even your groceries. These benefits can also ensure that you have the funds available to look into experimental treatments. Additionally, they might assist in covering your travel and lodging costs if you have to travel for treatments or doctor visits. These insurance policies give you the opportunity to concentrate on your recovery when you are dealing with a life-threatening illness or major health crisis.


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What Is Covered?

The most common serious illnesses and conditions are covered by critical illness insurance. Making a claim for common, minor ailments like stomach aches or chest pains won’t result in payment, but depending on your coverage, making a claim after a diagnosis of one of the following conditions will most likely result in a benefits payout:

  • Heart attack
  • Coronary artery bypass surgery
  • Angioplasty
  • Stroke
  • Invasive or non-invasive cancer
  • Kidney (renal) failure
  • Major organ transplant
  • Advanced Alzheimer’s disease
  • Paralysis
  • Coma

A variety of riders are also included in many critical illness insurance policies to supplement or strengthen existing coverage. If you’re not familiar with this term, a rider is an additional option you can add to improve your insurance. For example, if you choose to add a Return of Premium rider to your policy, your loved ones will receive a portion of your premium payments back in the event that you pass away from a cause other than one of the covered catastrophic illnesses.

In addition, you can include your spouse or children in the policy’s coverage or increase its range to cover more critical conditions by adding a rider. Adding a rider might allow you to get coverage for some of the following critical illnesses:

  • Advanced ALS
  • Advanced Parkinson’s disease
  • Loss of sight
  • Loss of hearing
  • Benign brain Tumor
  • Severe burns

While critical illness covers a variety of diseases, cancer insurance only covers you in the event of a cancer diagnosis. Any type of cancer will be covered with this plan. The payout from these plans can go towards anything from medical costs to daily living expenses. 


The Cost

Critical insurance policies are often inexpensive, especially when obtained through an employer, making them a good option for a supplement to your existing health insurance policy. For example, some less comprehensive plans have monthly premiums as low as $25. You will pay more in premiums the more illnesses your plan covers. 

When it comes to cancer insurance plans, an individual cancer-only plan for a 45-year-old woman may cost $40 per month for $25,000 in coverage. If the same woman extended the coverage to include cardiac ailments, organ transplants, and certain other conditions, she might spend twice that amount each month.

There are several factors that affect the cost of cancer insurance. These include the insurance provider you choose and your age: the older you are, the higher your premiums will be. Generally, people in their 30s will pay $20 a month for cancer insurance, those in their 40s will pay $40, and those in their 50s will pay $60. The price jumps to an average of $90 per month for those in their 60s.


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Critical illness insurance policies are subject to a variety of restrictions, just like any other insurance policies. They not only cover just the conditions specified in the policy, but they also only do so under the particular criteria outlined in the policy. A cancer diagnosis, for instance, might not be enough to begin the policy’s payment process if the disease has not progressed past the point of discovery or is not life-threatening. Or payment may not be made following a stroke diagnosis unless neurological impairment lasts longer than 30 days. In addition, you might need to be sick or survive following a diagnosis for a certain number of days, among other requirements.

For cancer plans, only the costs of cancer diagnosis and treatment are covered by some cancer insurance policies. However, there are no restrictions on how you can spend the money with a lump sum plan. Additionally, cancer insurance must be purchased before the diagnosis.

There will also likely be a waiting period between the time that you purchase coverage and the time when the policy will begin paying out; if you are diagnosed with cancer during this time, your insurance won’t pay. Additionally, even if you receive a cancer diagnosis after the waiting period has passed, you can still be denied benefits if it is determined that you exhibited cancer symptoms prior to purchasing the plan.

To see health insurance costs and information specific to your state click here!


Types of Critical Illness Plans

As mentioned above, both critical illness and cancer plans have a lump sum payout option. With this option, once a claim is made and accepted, you will receive a set amount of money that can be used to pay for medical care, copayments, and deductibles, as well as any daily expenses such as groceries and bills.

Cancer plans also offer a traditional policy option. The traditional policies come in two types: expense incurred plans and indemnity policies. An expense incurred plan will pay up to a certain percentage of medical care costs for the specific cancer diagnosis. An indemnity policy will pay out a set amount for each of the benefits that your specific policy outlines.


How to Choose a Critical Illness Policy

If you believe a critical illness or cancer policy would be appropriate for you, you’ll need to find the best plan for your needs. But unlike with many other types of insurance, there isn’t a simple formula to determine how much you need, because every diagnosis will have unique difficulties and expenses, and no two situations are the same.

There are several things you should consider when looking at this type of insurance. For instance, how much money do you have in savings? How high is your medical insurance deductible? You should have sufficient critical illness insurance to cover your out-of-pocket expenses, such as your deductible and coinsurance, up to the maximum allowed by your plan, at the very least. More coverage could help pay for several years’ worth of uncovered expenses.

You may also want to include the costs of travel or experimental therapies in your coverage, since you can use the benefits from a critical illness policy to pay for anything you need. 

The bottom line is, you’ll need to think about your financial needs to figure out how much coverage you’ll require before searching for the best critical illness policy. For example, typical coverage amounts for a critical illness policy range from $10,000 to $50,000. For cancer plans, the typical payout can be anywhere from $5,000 to $200,000. Your premiums will vary based on how much coverage you choose, so work out how much you can afford, as well as how much you think you might need. 



  • What is a critical illness plan?

Critical illness insurance is a plan that will protect you if you get a serious illness in the future. This type of plan supplements your regular health insurance by giving you extra money to pay for anything that comes from a critical illness.

  • What illnesses qualify for a critical illness plan?

Most of the time, coverage is only for medical emergencies like a heart attack, stroke, kidney failure, cancer, paralysis, and a few others. Each plan has its own list, which differs from one plan to the next.

  • Is cancer insurance worth it?

Cancer can be very bad for your finances. Even if you have the best health insurance in the world, you may still have to pay for things that your insurance won’t cover.  This could mean that you have to use your savings and run out of the money you have worked your whole life to earn. So cancer insurance is a peace-of-mind plan that you hopefully won’t need.  It is a great way to keep your finances safe in case you get a bad diagnosis.

  • Does cancer insurance offer a return in premium or cash value?

Yes, you can pay extra in most states to get your premium back after a certain amount of time.  Most policies have a 25-year limit. For example, if you have the policy for 25 years and the return of premium coverage, you will get all of that money back at the end of the 25th year.  The monthly cost of the policy goes up by 50–75% because of this return of premium coverage.


The Bottom Line

Critical illness and cancer insurance policies might be worth looking into. Especially since medical bills are a common reason for bankruptcy in the US. With this in mind, if you have a family history of any of the above-mentioned diseases, having one of these policies is an excellent idea. These policies offer a lot of freedom, because in many cases you can choose how to use the benefits to meet a range of potential needs. 

But it’s important to keep in mind that these plans have several limitations and flaws. Even if there is a history of a certain disease in your family. You might discover that other insurance policies might better suit your needs. For example, disability insurance may be a preferable option for you, because of its greater range and duration of payment. As with all insurance types, you should compare options to select the one that best meets your needs and circumstances. To get started, simply put your zip code into the box below or give one our licensed agents a call at 877-670-3557.

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About The Author:
Cassandra Love

With over a decade of helpful content experience Cassandra has dedicated her career to making sure people have access to relevant, easy to understand, and valuable information. After realizing a huge knowledge gap Cassandra spent years researching and working with health insurance companies to create accessible guides and articles to walk anyone through every aspect of the insurance process.

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