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Is Critical Illness Insurance Worth It?

Is Critical Illness Insurance Worth It?

Posted Jun 29, 2016 by Jenifer Dorsey


Consider this: Out-of-pocket costs for inpatient hospitalization have increased 37 percent since 2009 for those people who get their health insurance coverage at work and average just about $1,000.[1] For consumers who buy their own health insurance on the Federal Exchange, the out-of pocket-costs are likely higher. Regardless of whether or not $1,000 sounds like a lot to you, a recent Federal Reserve report found that nearly half of Americans (46 percent) would struggle to meet an emergency expense less than half than amount: $400.[2]

Fortunately, there are additional health insurance products available to consumers who have Obamacare plans but still wonder how they would pay unexpected medical bills. Critical illness insurance plans are one such product that may be worth your consideration.

What is critical illness insurance?

Critical illness plans are a type of supplemental insurance coverage. While they are not a replacement for an Obamacare plan and will not prevent you from owing a tax penalty if you are not exempt from the individual shared responsibility provision, they can work in tandem with your Obamacare plan ( i.e., major medical insurance) to help lessen your out-of-pocket expenses when you need healthcare.

Here’s how it works:

  • You apply for and enroll in critical illness policy, either online or through a health insurance producer.
  • You are diagnosed with a covered critical illness such as cancer.
  • A lump-sum benefit amount is paid to you, the policyholder. These funds may be used in whatever way is most useful to you—to pay medical bills and meet your health insurance deductible or coinsurance responsibility, for household expenses such as a mortgage or car payment, or even your child’s college tuition.

When purchasing critical illness coverage, you can choose different options to customize your plan. Benefit options available through healthedeals.com critical illness plans range from $10,000 to $50,000.[3] Your monthly premium rate will vary based on the plan design selected. In 2013, the average annual premium amount for $25,000 in critical illness coverage (also known as critical care insurance) was $283—that’s about $24 per month.[4]


Get a custom critical illness quote

No contact information required unless you apply

What does a critical illness plan cover?

Standalone critical illness plans pay benefits upon diagnosis of critical illnesses as specified in the policy. Plans sold through healthedeals.com provide benefits if you experience one of the following—coverage will vary by state[5]:

  • Cancer
  • Heart attack
  • Stroke
  • Major organ failure
  • Coronary artery bypass
  • Angioplasty
  • End stage renal disease
  • Coma
  • Paralysis
  • Severe burn

Depending on the plan you buy, you may be able to select a multiple payment benefit. A multiple payment benefit provides benefits for more than one critical illness category.

When shopping for a critical illness plan, be aware of limitations associated with the policy. Some plans may include waiting periods and may not be guaranteed issued, which means you can be denied coverage based on preexisting conditions. The standalone critical illness plan available through healthedeals.com does not have pre-existing condition limitations or waiting periods; however, there may be a reduction in benefits for cancer depending on whether there has been more or less than 90 days of coverage.

Bundled plan options

You may also purchase a bundled gap plan with critical illness coverage. The CA Premium plan available through healthedeals.com offers lump-sum benefits in the event of a covered accident or critical illness. It includes the following five benefits:

  1. Critical illness coverage
  2. Accident medical expense insurance
  3. Term life insurance
  4. Accident death and dismemberment insurance
  5. Accident disability insurance

Critical illness coverage included in CA Premier provides benefits upon the diagnosis of the following:

  • Cancer
  • Heart attack
  • Kidney (renal) failure
  • Stroke
  • Coronary artery bypass
  • Coma
  • Loss of sight, speech or hearing
  • Major organ transplant
  • Paralysis
  • Severe burn

A pre-existing condition waiting period and limitations on certain medical techniques may apply to the CA Premier plan; see the policy and discuss these details with a health insurance producer.

The monthly cost for CA Premier depends on the level of coverage you select; however, plans range from $24.95 per month to $54.95 per month for individuals and $41.95 per month to $99.95 per month for families.[6]



Is a critical illness insurance plan worth having?

Only you can determine whether or not critical illness insurance is worthwhile for you and your family. However, critical illness plans often appeal to those who want some added financial protection from out-of-pocket medical bills related to unexpected and catastrophic health conditions. Critical illness plans may be especially appealing to small business owners, those nearing retirement and parents of college students.

Work with a health insurance producer to determine whether or not critical illness coverage and other supplemental health plans make sense for your healthcare needs and financial situation. Call the number at the top of your screen to speak with a certified advisor and get answers to your questions. These individuals can also assist you with Obamacare coverage options.


[1] Ashford, Kate. “Out-of-Pocket Hospital Costs Up 37%, Study Finds.” Forbes. June 27, 2016. http://www.forbes.com/sites/kateashford/2016/06/27/hospital-costs

[2] Ibid.

[3] Critical Illness brochure. The IHC Group. Accessed June 27, 2016.

[4] Andrews, Michelle. “Are Health Plans That Pay A Lump Sum For Critical Illnesses Worth It?” NPR. Jan. 5, 2016. http://www.npr.org/sections/health-shots/2016/01/05/461950814/are-health-plans-that-pay-a-lump-sum-for-critical-illnesses-worth-it

[5] Critical Illness brochure. The IHC Group. Accessed June 27, 2016.

[6] Quote accessed from healthedeals.com on June 24, 2016. 

This document is for general informational purposes only. While we have attempted to provide current and accurate information, this information is provided "as is" and we makes no representations or warranties regarding its accuracy or completeness. The information provided should not be construed as legal or tax advice or as a recommendation of any kind. External users should seek professional advice from their own attorneys and tax and benefit plan advisers with respect to their individual circumstances and needs.


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.