Critical Illness Insurance “What If You Survive?”

“If you have a heart attack and your financial health is affected, your doctor cannot cure your financial problem.  I am not an insurance agent, I am a doctor.  I tell my patients that I will take care of them physically, but a critical illness policy is a net to help them when they need financial assistance.”  Dr. Marius Barnard

Dr. Barnard assisted in the first successful human to human heart transplant and founder of critical illness insurance.  On 6 August 1983 the first critical illness insurance policy was launched.

WE’VE ALL BEEN TOUCHED by someone who has been diagnosed with cancer, experienced a heart attack or suffered a stroke.

How did that person get through this serious life changing event?

In times of emotional worries and personal financial struggle, would a lump sum payment of $50,000 to $500,000 have helped this person to focus on healing and recovery without any additional financial stress?

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UNFORTUNATELY, WE’RE NOT INVINCIBLE.

WE’RE HUMAN!

The Numbers

Every 24 seconds…
Someone in the U.S. is diagnosed with cancer.

Source: American Cancer Society, Cancer Facts & Figures

Every 34 seconds…
Someone in the U.S. will suffer a heart attack.

Source: American Heart Association, Heart Disease and Stroke Statistics

Every 40 seconds…
Someone in the U.S. is having a stroke.

Source: U.S. Centers for Disease Control and Prevention

IN THE TIME IT TAKES YOU TO READ THIS SENTENCE, THE BILLS FROM A DIAGNOSED CRITICAL ILLNESS MAY HAVE FORCED YET ANOTHER AMERICAN TO FILE FOR BANKRUPTCY.

Increasing medical bills overwhelmed by medical debt are the main cause for more than 60 percent of personal bankruptcies in the U.S., according to a 2007 study conducted by Harvard University and the Robert Wood Johnson Foundation.

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In fact, the MAJORITY of personal bankruptcies today are due to unpaid medical bills with health insurance plans in place.

You may think it won’t happen to you, but 48% of all foreclosures in the United States are due to a disability or illness, not a premature death, according to the US Housing and Home Finance Agency.

Nearly 20% of all Americans will suffer a critical medical illness before age 65.

Safety Net

Critical Illness Insurance Strengthens Your Financial Safety Net

Waited Too Long

Unfortunately, most people are unfamiliar that critical illness insurance exists and simply wait too long to get a policy.

Sadly when you feel a lump and your doctor runs tests only to find out you have been diagnosed with cancer.

The anxiety over this life-changing event can be prevented with a critical illness policy.

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(1) HESITATION and (2) PROCRASTINATION are the two biggest reasons why people end up without this important financial protection.

Remember proper insurance planning has to always occur in advance of the need. 

How much do you spend on that cup of coffee each day?  For the cost of that cup of coffee each day you can purchase some peace of mind if your concerns are being diagnosed with a dreaded illness like cancer, heart attack or stroke.

What is Critical Illness Insurance?

A critical illness insurance policy provides a lump-sum payment upon DIAGNOSIS  of a medical condition such as heart attack, stroke, cancer or other specifically covered medical conditions listed in the policy.

A lump sum of money is paid you, the insured, and you can use it however you choose without any limitations.

How Can Critical Illness Insurance Help You?

Americans are vulnerable to serious financial stress for any health crisis. Critical illness insurance can ease the financial burden by providing a lump-sum cash benefit that you can use however you see fit.

The potential financial stress of a serious illness, on top of the emotional stress, can be considerable. Critical illness insurance provides you with financial protection that can help you focus on what matters most your RECOVERY.

As the world of modern medicine, technology, and medical care continue to save lives, most people will survive and can recover from their illnesses. 

If you are diagnosed and a survivor of a critical illness, who needs extra financial worries when you are already dealing with the questions of life, survival, and recovery?

Why People Buy Critical Illness Insurance

Having a source of cash from a critical illness policy prevents you from having to take a hardship loan, withdrawals from retirement accounts or have to liquidate investments.  Plus these options require repayment of the loan with interest along with taxes and other fees.

The diagnosis of critical illness is in itself a life-changing event that can shatter one’s best plans.  Here’s a medical fact that further justifies the wisdom in getting critical illness insurance.   The vast majority of people suffering a heart attack survive, but take a long time to recover financially.  The figures are strikingly parallel for stroke and cancer patients.

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Who Can Benefit From A Critical Illness Insurance Policy?

Anyone who is concerned about the emotional and financial stress of a critical illness diagnosis, and desires a lump sum of money to cover costs not covered by traditional health insurance, other medical treatment or help pay for other living expenses so you can focus on what matters most your recovery.

Self- employed individuals, executives, doctors, professionals and other high-income earners who have purchased or reached their maximum personal disability income limits.

Excellent for higher income earners, executives, doctors or other professionals.

Spouses of high-income earners – if a doctor, lawyer or executive has to spend time away from work to care for and be with a sick spouse, the business suffers. If the spouse has critical illness coverage, the family can immediately afford to hire in-home care, or other service providers to keep the home running smoothly and provide peace-of-mind for all concerned.

People in high-risk jobs often do not qualify for disability insurance. Remember there are no occupation or income requirements to purchase critical illness insurance.

Common Covered Critical Illnesses

These common critical illnesses are usually covered with 100% payment upon diagnosis and survival.

Heart attack

Aortic Surgery

Heart Valve Replacement

Stroke

Cancer

Major Organ Transplant

Advanced Alzheimer’s Disease

Renal (Kidney) Failure

Motor Neuron Disease

Benign Brain Tumor

Accidental Loss of Speech

Deafness

Paralysis (not as a result of a stroke)

Blindness

Coma (not as a result of a stroke)

Loss of Limbs

Occupational HIV

Severe Burns

Reduced benefits are paid for Carcinoma in Situ, Coronary Bypass Surgery and Angioplasty.  VERY IMPORTANT!  Please see the specific benefits, provisions, limitations, and exclusions indicated in the policy you are considering.

Cash Benefits

A LUMP SUM OF MONEY MAKES THE DIFFERENCE IN MANY WAYS

The lump sum benefit of your critical illness policy can help you cover many unexpected expenses and ongoing financial responsibilities.

PERSONAL LIVING EXPENSES / LIFESTYLE:

— Mortgage or rent to prevent against having to move at an inconvenient time.

— Auto or lease payments.Insurance premiums.

— Maintain household bills, utilities food and everyday living expenses.

— Credit card payments.

— Hiring a housekeeper, child care for your children, home health care provider or nutritionist.

— Home and auto modifications.

— Continuing college education costs.

— Maintaining your family’s everyday quality of life.

— Take a relaxing vacation with loved ones.

MEDICAL EXPENSES:

— Covers your deductibles, coinsurance or any other added expenses not covered by your health insurance.  You also selected the best doctor for your care and they were out-of-network with limited to no payment for their services. These medical expenses can quickly pile up.

— Notice medical deductibles on individual or group health plans are INCREASING to justify lower premiums.

— Experimental medical treatment that may save your life, which health insurance won’t cover and can be financially devastating to you, your savings, investments, retirement accounts, or worse yet, didn’t have to begin with.

— Transportation costs to seek desired medical treatment.

BUSINESS PROTECTION:  

— Protects your business and keeps your business going in your absence.

DISABILITY INCOME PROTECTION:

— Lump sum income protection during your waiting period for disability insurance benefits to start.

— Lump sum income replacement while you’re recuperating and off work for 3, 6 or 12 months.

— Lost income from spouse while being together.

— It can also replace income while not working. A disability policy more often won’t fill that need as much as a lump sum policy could.

What To Look For In A Good Critical Illness Policy

Look for the widest range of benefits as coverage will differ from group to individual and company to company.

Pay attention to the fine print on any waiting periods, and how benefits are paid out.

What is the renewability period of the coverage?  How long will the company allow you to renew the policy?

Pay attention to when the benefits reduce under the policy.  Normally around age 60 or 65.

Guaranteed renewable policy.  As long as premiums are paid on time, the policy cannot be canceled or changed by the insurance company.  The company can, however, change the premium rates, after approval by the state department of insurance in your state for all policies in the insured person’s class of policies.  You cannot be singled out individually for a premium rate increase.

What are the cancellation provisions in the policy?

If the policy is employer-sponsored group coverage, is the coverage portable?

What is the return of premium provision in the policy?

Peace of mind knowing if you never need the coverage your family will get all the premiums* you paid for it back at your death.  *Premiums returned will equal the total premium paid from original effective date less any policy benefits previously paid.

VERY IMPORTANT!  Not all illnesses are covered.  Make sure you understand the fine print including the benefits, provisions, limitations, and exclusions in the policy.  It is important to know what is included as well as excluded from coverage.

Typical exclusions include critical illnesses that are diagnosed during your policy’s waiting or elimination period (typically within 30 to 90 days after the policy effective date), self-inflicted injury, suicide or illness resulting from illegal activity.  Other exclusions may include balloon angioplasty surgery, pre-malignant conditions or conditions with malignant potential, and most skin cancers.

How much to buy and how much do you want to spend?

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The National Association of Critical Illness Insurance recommends determining the amount of coverage by adding these two amounts:

One to two years worth of your mortgage payments or rent and the total of your outstanding credit card debt.

More importantly, premiums should be determined by your budget and how much you actually want to spend?  I can also help by backing the solution into this amount with you.

UNDERWRITING

Critical illness underwriting for an individual policy can be challenging.  There are no OCCUPATIONAL CLASSIFICATIONS or INCOME CONCERNS as is required in processing an individual disability insurance policy.   However, it is just as comprehensive as in the evaluation process for an individual life insurance policy.

If you are buying an individual policy, critical illness insurance is priced with several factors in mind.  Your age, height, weight, family’s health history, tobacco, marijuana use and conditions you have now that could lead to more serious conditions will be considered in the evaluation process.  Here is what might be required.  A medical examination, blood, and urine tests, if you or family history indicates a heart condition an ekg might be required as well as a phone interview from the underwriting department.

While individual policies are medically underwritten, meaning the price is based on your individual risk factors.  Coverage from a group plan is usually considered “guaranteed or simplified issue” with the price determined by your age and the number of people who work for the company with no medical questions or a simple catch-all question is required for acceptance.

REMEMBER:  The easier the underwriting the less in benefits and usually more limitations in the coverage.  Employer-sponsored group critical illness coverage tends to fall in this category with no medical exams or medical records.  Regardless if it’s an individual policy or group critical illness coverage you’re interested in purchasing, complete the application thoroughly and always provide full disclosure of any required medical questions.  For more info, see “Understanding Underwriting”.

Questions That Matter

Click the “+” to reveal the answer!

Yes. However individual policies tend to provide more comprehensive benefits and higher dollar amounts but require more extensive medical underwriting to qualify for coverage.

There are a few points of difference between them.   

Health insurance reimburses doctors and hospitals for covered medical expenses to treat your illness and is absolutely essential. 

All medical insurance has limitations and exclusions.  Take a look sometime.  You might be amazed at what is not covered. 

It does not pay for experimental treatments, not covered by the policy or charges incurred if you go outside the plan’s preferred network to the doctor of your choice for special treatment.  Plus it is always your responsibility to pay your deductible and co-insurance amounts to the stop-loss in the policy. 

A critical illness policy pays you a lump sum of money to use as you choose upon diagnosis of a covered critical illness.

Consider life insurance insures your life and pays upon death.  Major illnesses like heart attacks, strokes and cancer used to kill people.  Now they survive because of advances in medical technology and new types of modern treatments.  CRITICAL ILLNESS PAYS UPON SURVIVAL and was developed to help you pay for the significant costs associated with a critical illness while easing the financial burden associated with this unforeseen medical diagnosis.

Critical illness also has no restrictions due to your occupation, income, too much unearned income, high net worth, or other coverage that is so important and factors into underwriting a disability insurance policy. It is also provides an additional layer of financial protection when you have reached the maximum amount of disability insurance coverage based on your current level of income.

Generally if the policy is an individual policy where premiums are paid with after-tax dollars and not deducted from income for income tax purposes. The benefits received by you from the insurance are not taxable.

If the critical illness coverage is part of a group plan and the premiums have been paid by your employer on your behalf normally the benefits received would be taxable to you. Note if you pick up the premium as income your benefits are not taxable.

This is very general tax information. Please discuss your personal situation with your CPA or tax advisor.

Critical Care Insurance Can Be Linked To An Umbrella

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You hope it doesn’t rain, but if it does rain, aren’t you glad you have an umbrella with you?  Critical Illness insurance is like that.  You hope you don’t have to use it but will surely feel relieved if diagnosed with a dreaded illness, and a lump sum of money is paid to you. 

Facing a serious illness is difficult enough without having to worry about the added financial stress.  No one plans on being diagnosed with a dreaded illness.  However, this is why it’s smart to have a critical illness insurance contingency plan.   In addition, it works well with your life and disability insurance to create a more secure future for you and your family.

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Marc Maretsky Personal Insurance Services based in Beverly Hills, serves all of California and the United States.  I help my clients acquire life, disability, long-term care, and critical illness insured solutions, as well as enroll them into Medicare when eligible.

“No matter how fast technology changes our world and everything around us.  I believe the personal touch and a human voice are more important than ever.”

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