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How Does Critical Illness Insurance Work?

How Does Critical Illness Insurance Work?

Posted Jun 09, 2016 by Jenifer Dorsey


You may have heard of critical illness insurance, but you may be less familiar with how critical insurance works. To help you better understand this coverage as you decide which supplemental health plans are right for you, we’ve put together a quick primer that answers some frequently asked questions.


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What does critical illness insurance do?

Critical illness plans provide supplemental benefits, which means they are not major medical insurance. They are not subject to a copay or deductible; however, their benefits may be used to help pay your health insurance plan’s copay and deductible—but more on that a little later. These policies are intended to provide additional financial relief in specific situations.

How are critical illness plan benefits paid?

Upon diagnoses of certain critical illnesses, which are listed in the policy and may include stroke, cancer, heart attack, coma, paralysis and severe burn, a lump-sum cash benefit is paid to the policyholder.



How can payments be used?

The funds paid to you can be used for virtually anything. As stated above, they can be applied toward your health insurance deductible or copay. The cash may also be used for household expenses such as your mortgage, childcare, your child’s college tuition, as well as medical costs not covered by your major medical plan such as medical specialists, specialty drugs, and transportation to and from appointments.

The cash benefit paid may truly be applied to any expense?

Yes. It is yours to use based on your individual needs. Critical illnesses mean time off work and the rapid accrual of unexpected expenses. Critical illness plans are designed to help relieve financial strain. The plans are available through healthedeals.com have benefit options ranging from $10,000 to $50,000.[1]



What if I am diagnosed with multiple conditions?

Many critical illness plans offer a multiple payment benefit, which allow the insured person to make claims and receive benefits in more than one critical illness category.

What are typical critical illness insurance rates?

Plan rates will vary by applicant and the coverage selected. Sample rates for plans sold through Healthedeals.com[2]:

Applicant: 40-year-old woman living in the Phoenix area

Benefit amount selected: $20,000

Monthly billing rate: $25.69


Applicant: 40-year-old male living in the Phoenix area

Benefit amount selected: $20,000

Monthly billing rate: $25.90

A health insurance producer can help you determine which critical illness policy is right for you. Call the number at the top of your screen to speak with a certified advisor who can answer your questions and explain your options—no pressure to buy, just helpful, friendly service.


Find out what a critical illness plan will cost


I have preexisting health conditions, will I qualify for a critical illness policy?

Critical illness plans are subject to underwriting. Applicants typically answer a few medical questions, provide their height and weight, and consent to a Medical Information Bureau report. Because critical illness policies are not guaranteed issue, you may be denied coverage.

What are other criteria for enrolling in a critical illness plan?

The critical illness plans available through healthedeals.com are available to eligible applicants between the ages of 18 and 64; their lawful spouse or partner, as defined by each state; and their children through age 24. Applicants must be permanent, legal residents of the United States.

It is important to note that critical illness coverage is meant to complement, not replace, an Obamacare plan. Critical illness does not fulfill the individual shared responsibility provision.

We are living longer these days. Life expectancy at birth is now 78.8 years, according to a CDC National Vital Statistics Report released in February 2016.[3] People survive serious medical situations at higher rates than in the past. While this is something to be grateful for, it also means we need to plan ahead to make sure our health and finances are protected.

As such, critical illness insurance may make sense as part of your personal health benefits. Call the number at the top of your screen to speak with a certified advisor, or get a critical illness quote on your own at healthedeals.com.


Originally published July 18, 2013. Revised and reposted June 9, 2016.

[1] Critical Illness brochure. The IHC Group. Accessed June 7, 2016.

[2] Quotes accessed on June 8, 2016.

[3] Xu, Jiaquan, et al. “Deaths: Final Data for 2013.” National Vital Statistics Reports. Volume 64, Number 2. Feb. 16, 2016. http://www.cdc.gov/nchs/data/nvsr/nvsr64/nvsr64_02.pdf


About The IHC Group
Independence Holding Company (NYSE: IHC) is a holding company that is principally engaged in underwriting, administering and/or distributing group and individual disability, specialty and supplemental health, pet, and life insurance through its subsidiaries since 1980. The IHC Group (including through its 92% ownership of American Independence Corp. (NASDAQ: AMIC)) owns three insurance companies (Standard Security Life Insurance Company of New York, Madison National Life Insurance Company, Inc. and Independence American Insurance Company), a majority of Ebix Health Administration Exchange, Inc., a fully insured third party administrator, and IHC Specialty Benefits, Inc., which is a technology-driven insurance sales and marketing company that creates value for insurance producers, carriers and consumers (both individuals and small businesses) through a suite of proprietary tools and products (including ACA plans and small group medical stop-loss). All products are placed with highly rated carriers.

About IHC Specialty Benefits, Inc.
IHC Specialty Benefits, Inc., doing business as Health eDeals Insurance Solutions is a full-service marketing and distribution company that focuses on small employer, individual and consumer products. Health eDeals markets products via general agents online, telebrokerage, advisor centers, private label and directly to consumers. For more information about Health eDeals visit http://www.HealtheDeals.com.