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April 5, 2020

Do I need critical illness insurance?

critical illness insurance


Many people today have health insurance coverage through their place of employment. Employers who offer health insurance may have several plans from which employees can choose according to their needs, and premium and deductible amounts. While these plans will generally cover ‘average’ medical expenses for illnesses and injuries, they may fall short when it comes to paying expenses associated with critical or catastrophic illnesses.

What is a critical illness?

‘Critical illness’ refers to a broad range of conditions and diseases. The category includes things like heart attack, stroke, end stage renal failure, major organ transplant, loss of sight or hearing, and more.1

What is critical illness insurance?

Critical illness insurance is supplemental insurance coverage that, for the most part, pays the policy owner a lump sum when they are first diagnosed with a specific illness as listed in their policy. Supplemental critical illness coverage is purchased separately by an individual, and is not tied to one’s employment, so it doesn’t end if employment changes or is terminated.

Unlike regular health insurance, which pays directly to providers, most supplemental critical illness insurance pays you; you get to decide how the money is used. Often, people use this payout to help cover services and out-of-pocket expenses, such as deductibles, copayments, and coinsurance, where regular health insurance may fall short. The money can also be used for non-medical costs related to the illness, including transportation, child care, etc.2

Do you really need this extra coverage? Compare the cost of the policies you are considering with how much you would pay out of pocket for a critical illness, and decide if you would be able to absorb those costs without it. If not, then critical illness coverage may be a good option for you.3

How do I choose critical illness insurance that’s right for me?

When shopping for any type of insurance, it’s important to do your homework, and critical illness insurance is no exception.

Not all critical illness insurance coverage is the same. Some is very limited and covers only a few specific illnesses, while others offer coverage for a broader range of conditions. The most basic critical illness coverages are cancer, heart attack, and stroke.4 In any case, there are always certain conditions which must be met before any critical illness insurance will pay out. Consider the payout amounts and the range of illnesses that qualify, as well as the criteria that must be met in order for the payout to take place.


Being diagnosed with a critical illness can mean being faced with financial hardship even with comprehensive health insurance. Ask your financial advisor or a licensed insurance professional to help you decide if critical illness insurance is in your best interests and which coverage options will best fit your needs and your budget.

  1. The Balance, What is Critical Illness Insurance? (April 16, 2020)

  2. Investopedia, Critical Illness Insurance: What Is It and Who Needs It? (April 8, 2020)

  3. The Balance, What is Critical Illness Insurance? (March 30, 2020)

  4. The Balance, What is Critical Illness Insurance? (March 30, 2020)

Categories: Critical Illness Insurance, Insurance, Supplement Health Insurance

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