Understanding Critical Illness Insurance: Coverage for Serious Medical Conditions

Donna Nichols | Sep 27, 2023 | minute read

Critical Illness SmallHealth insurance has undergone major changes over the last decade or so, and the changes have evolved in a way that’s sparked interest in critical illness insurance. The emergence of high-deductible health plans means that many people are having to pay more out-of-pocket costs for medical expenses than in the past.

Uninsured medical expenses can put an enormous financial drain on individuals and families. Critical illness insurance can lessen the financial impact if you have a critical illness. To help inform your health insurance choices, we’ll explain what critical illness is, why you may want or need it, what it covers, and the pros and cons.

What Is Critical Illness Insurance?

Critical illness insurance is a health policy that pays a lump sum for certain catastrophic illnesses.

Each critical illness plan provides a list of the types of illnesses the policy will cover. For example, critical illness plans may cover some of the following types of illnesses:

  • Cancer
  • Heart attack
  • Organ transplant
  • Coronary bypass
  • End-stage renal failure
  • Arteriosclerosis
  • Parkinson’s disease
  • Alzheimer’s disease
  • Multiple sclerosis
  • Paralysis

Upon getting a formal diagnosis of a covered illness, a critical illness will pay a lump sum in the amount of the benefit.

You can use the payment in any way you want such as paying a deductible or copay. Funds can also be used for rehabilitation expenses, in-home care, a wellness program, or anything else you choose. Personal expenses such as paying bills, paying for childcare, or getting other services that will help you recuperate can also be paid for using the benefit.

How do you get critical illness insurance? You can purchase a critical illness insurance plan as a standalone policy or it may be available as a voluntary benefit through your employer. If you have a life insurance policy, you may be able to add it as a rider to your life policy for a small additional premium.

Overall, a critical illness policy can bridge a crucial gap between your health insurance policy and your out-of-pocket expenses.

What Are the Chances I Will Need Critical Illness Insurance?

All insurance policies cover sudden, unexpected incidents, yet there is no way to know if you’ll ever need to file a claim. You could pay the premiums only to find you’re quite healthy into your older ages, yet critical illness gives you the peace of mind of knowing you have extra funds to help you get through a difficult time with your health.

Will you need critical illness insurance? Until the pandemic, life expectancy was increasing. The World Health Organization reports that life expectancy increased by over 6 years between 2000 and 2019. The Centers for Disease Control notes there has been a slight decrease in life expectancy since 2019 which is largely due to the large number of COVID deaths. The American Cancer Society predicts that over 1.9 million people will be diagnosed with cancer in 2023.

Many types of illnesses are hereditary. Individuals who have a high rate of cancer, heart problems, or other critical illnesses may benefit by purchasing critical illness coverage.

Lastly, many people now have high-deductible health plans. While the premiums are affordable, the out-of-pocket expenses are higher than other types of health plans. Critical illness insurance can help cover high deductibles and other non-covered expenses.

Given these statistics, the chances are fairly high that you’ll need critical illness insurance at some time in your life.

How Does Critical Illness Insurance Work?

If your doctor diagnoses you with a critical illness that’s covered under your plan, you will need to submit proof of the diagnosis. The plan will outline exactly what documentation you need to submit.

You will be entitled to the full amount of the benefit and can expect to receive a payment fairly quickly. Unfortunately, if the disease returns or you suffer a second incident of the same illness, the policy may not pay another benefit.

Critical illness policies sometimes also limit or eliminate coverage for seniors.

Unless you have access to a group plan, the premiums for critical illness insurance are based on a variety of factors such as gender, age, health, family medical history, and the amount of coverage.

Critical Illness Insurance: The Pros and Cons

If you’re on the fence about purchasing critical illness insurance, it can be helpful to weigh the advantages and disadvantages.

We’ve listed the main pros and cons of critical illness insurance for you here:


  • Funds critical medical services you may need
  • Pays for treatments other health plans exclude
  • Eases the financial burden for individuals and their families so the insured can focus on their health
  • Funds are flexible and can be used for any need or purpose with no strings attached
  • Premiums are largely affordable


  • You may never need it
  • Doesn’t cover all critical illnesses
  • May be exclusions for seniors
  • Doesn’t cover pre-existing conditions
  • May not cover all your expenses

Get Peace of Mind With Critical Illness Insurance

There’s no way to predict whether you will need the benefit of having critical illness insurance at some point in the future. Nonetheless, you will certainly breathe a sigh of relief if you purchase a critical illness policy and find you need it later on.

Our licensed insurance agents at the Leap Carpenter Kemps Insurance Agency are happy to answer all your questions about critical illness and other types of insurance for your home or business. Give us a call today at
209-384-0727 today!

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About The Author

Since 2005, Donna has been a Life & Health Benefits Advisor with Leap | Carpenter | Kemps Insurance Agency, where she uses her three decades of insurance experience and knowledge to ensure her clients get the best policies for their budget.

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