Hollay Ghadery Last Updated On: June 27, 2023

Here’s Everything You Need to Know About Critical Illness Insurance Plans

When faced with a life-changing illness, the last thing you want to worry about is how you’re going to be able to afford being sick, but for millions of people, this is one of the biggest concerns. 66.5% of bankruptcies in the US are related to medical bills and the stress caused by this financial devastation can severely impact one’s ability to heal.

Thankfully, a critical illness health insurance plan can help you and your family worry less about money so you can focus on what really matters: your health.

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Table of Contents

What Does a Critical Health Insurance Plan Cover?

A critical health insurance plan can cover any number of serious illnesses, depending on the exact nature of your plan. However, the most common critical health insurance covers cancer, heart disease, and stroke, since these three conditions are among the most fatal worldwide. Having this financial reservoir to draw from while you’re healing is one of the easiest and most effective ways to gain the peace of mind required to get better. Critical health insurance plans cover other illnesses and chronic conditions aside from the big three, including (but not limited to):
  • Organ transplants
  • Cystic fibrosis
  • Alzheimer’s disease
  • Multiple sclerosis
  • Angioplasty
  • Severe burns
  • Kidney failure
One of the most incredible benefits of critical health insurance is that it pays cash directly to you—not to hospitals or doctors. You can use this money to pay for treatment, sure, but you can also use these funds for whatever else you need, from groceries to other day-to-day expenses.  

How Does Critical Illness Insurance Work?

Critical illness insurance is pretty straightforward. Like many other types of insurance, critical illness insurance requires that you pay a monthly premium. In exchange for this, you get the knowledge that if you become ill, you’ll be financially comfortable.

Simple as that!

Of course, the amount you pay for your plan and the amount you’ll receive for your payout depends on several factors. Let’s look at them.

Your critical illness insurance payout depends on your plan and illness. Coverage can range from $5,000 to $500,000.

The cost of your policy will depend on the amount of coverage you decide to purchase and hinges on the following factors:

  • Your age
  • Your overall health and other personal risk factors
  • Whether or not you are insuring just yourself or other members of your family as well
  • The number of illnesses included under the plan’s coverage
  • If you are purchasing the plan as stand-alone or supplemental insurance
  • If you smoke or use other tobacco products

It’s important to note here that some insurance providers will require a health screen before you can qualify for voluntary critical illness insurance, while others won’t, particularly if you already have insurance through that insurance company or through an employer.

Another important note: Your critical insurance plan should come with an exhaustive list of all the illnesses that are covered, including definitions for the conditions and diseases covered.

Other information that should be provided by your insurance provider includes:

  • Information on when you qualify for your payout.
  • Information on waiting periods, if there are any.
  • Information on what portion of the total benefit will be paid.
  • Information on what happens if the illness reoccurs, if applicable.

Once you have your payout, there are no restrictions as to what you can spend that money on. You can use it for your medical expenses, your household expenses, or a much-needed vacation: Whatever you require to help you heal.

Something to keep in mind as you shop around: if you are thinking about getting critical health insurance through your employer, be sure to inquire as to whether your coverage will continue if you leave your job.


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What Do You Need to Know About Group Critical Illness Insurance?

Roughly 1/4 of all US employers are now offering critical illness insurance plans to protect employees (and their dependents) from the expense of extended illnesses. Some of these employers will cover all the costs, while others will cover a portion. Also, there’s an option for employees to opt into the insurance and pay the full amount themselves, albeit at a discounted group rate.

Another thing: There are a handful of group insurance providers who offer a wellness benefit as a way to encourage both employees and dependents to get preventative care.

Insurance companies accommodate these group insurance plans with affordable group rates and may even allow employers to tailor the plans to match the specific needs of their workforce. What’s more, many group critical illness insurance plans are paired with group disability or high deductible insurance plans to further protect employees.

As with individual health insurance, the payment will be delivered in one lump sum. Unlike accident critical illness insurance, which may or may not require a medical exam or underwriting, employees who are enrolled in group plans are automatically approved and covered.

Understanding Individual Critical Illness Coverage

If you can’t get or don’t want the group critical illness insurance offered by an employer, you can get critical illness coverage for individuals. These policies are offered by many of the same companies that offer life, health and disability insurance, so you don’t have to go to a specialty provider.

You do, however, need to shop around to ensure you’re getting the best critical illness insurance quote.

As you shop, you can select the illnesses you want to be covered. Just bear in mind that while multiple critical illness insurance policies automatically cover a few illnesses and conditions, the more illnesses you add, the more it will cost in monthly premiums.

Premiums can vary widely between companies, and—if you already have insurance with a particular company—you can likely get supplemental critical illness insurance as an optional rider at a lower cost.

While you won’t get automatic approval from individual critical illness insurance, underwriting is often not extensive. In most cases, you’ll just need to answer a few yes or no questions and disclose pre-existing conditions. This said, should you require lots of coverage, then you may need to go through the complete underwriting experience: medical exam and all.

Individual critical care insurance plans vary in the benefit amounts, starting at around $5,000 and going as high as $500,000—through the higher the benefit, the higher the premium.

Your individual critical illness coverage is usually guaranteed renewable for life, granted the policy is instated prior to age 70. Once you turn 70, the policy’s benefit will be reduced by half.

What does this mean?

It means that the critical care insurance you purchased for $60,000 coverage before you were 70 will only pay out $30,000 after you’re 70.

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Is Critical Illness Insurance Necessary?

Absolutely! That’s why it exists. So many people benefit from critical illness health insurance. However, you may not need a critical illness insurance plan.

Here’s how to decide if critical illness insurance is a smart choice for you.

Ask yourself these questions:

  • How likely are you to develop a critical illness in the next five to 10 years?
  • What does your regular insurance cover, if you have it?
  • Is anyone in your family at risk of developing a critical illness?
  • Do you think you’ll be able to support yourself and any dependants if you are unable to work?
  • Are you prepared for unexpected expenses?

We know that ultimately, every type of insurance is a bit of a gamble. Will you need it? Or will you pay premiums and never actually use the coverage?

At the end of the day, all you can do is make the best decision you can with the information you have. If you or a dependant has an existing condition or a genetic risk of inheriting certain diseases or conditions in the foreseeable future and/or you have no way to support yourself if you do become ill for an extended period, then whether or not you should get health insurance is less of a coin flip and more of a wise investment.

How much critical illness insurance coverage you’ll need depends on what you think you’ll require. A less comprehensive plan will mean more affordable premiums. It will also mean that you may not receive adequate coverage. More robust coverage will cost you more in premiums, but if you become ill, you will have more of a financial cushion.

Consider the questions posed above seriously, and make the decision you think is best for you.



Yes, critical illness insurance is worth it—especially if you have a medical history or family history of certain conditions or illnesses. Critical illness insurance can literally save your life, giving you the financial support to heal well while you are ill.

The cost of critical illness insurance varies depending on factors like your medical history, where you live, your age, and how much coverage you require. To give you a general ballpark idea of cost, however, $20,000 of coverage would cost a healthy, middle-aged woman about $20/month. Again, this is a rough estimate. If you want to know how much critical insurance coverage would cost you, contact us for a free comparison quote from top providers.

Get a free comparison quote from us and then you don’t have to wonder. Our insurance experts curated a list of the best critical illness insurance providers and then whittled that list down to the very top providers, basing our ranking on coverage, customer service, transparency, and of course, price.

You bet! That’s one of the best things about critical illness insurance coverage: you are paid out in one lump sum and can spend the money on whatever you wish. The money goes directly to you: not to doctors or hospitals. This leaves the power in your hands—which is so important in vulnerable times when we can often feel so powerless.


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