It’s sad but true: Being young doesn’t make you immune to health issues. Cancer, heart disease, multiple sclerosis, diabetes, you name it — recent research has found that young people are increasingly at risk for health problems. But how is a generation besieged by student loans and credit card debt supposed to be able to pay for all that, even with health insurance?
Not easily. Hospital bills, missed work and high deductibles can put a huge dent in your finances — unless you’ve planned ahead with critical illness insurance.
First, the Basics: What Is Covered by Critical Illness Insurance?
These policies pay a fixed amount if you get qualifying illnesses, like cancer or meningitis. You can use that cash for anything, from medical bills and medications to utilities and rent. It’s a safeguard that even the healthiest, most active people should consider, but especially those with a family history of disease.
The best part? Depending on your situation, it could cost you about the price of a monthly Netflix subscription.
Before you shop for policies, you’ll want to make sure you’re picking the right plan for you. Don’t overlook these six questions — they might just be the difference between a plan that pays off and one that puts you further in the red.
1. Which Illnesses Count?
Critical illness plans come with a list of eligible illnesses and payout amounts for each one. The three most commonly covered illnesses are cancer, heart attack and stroke. But check your policy to see what else might be covered, like organ transplants or heart surgery.
Don’t expect coverage if the illness comes as a direct result of attempted self-harm, alcohol use or drug abuse. But you may qualify if the illness happens as a result of (or in tandem with) another big life event, like pregnancy. Read the fine print and ask your insurance agent to be sure.
2. How Will Lifestyle Habits Impact My Premiums?
Lots of factors go into calculating your premium, and for many insurers, lifestyle habits — particularly smoking — play a role. Ask how those habits affect your premiums and payouts, and what your options are if they do.
3. Does It Matter If I Have a Pre-Existing Condition or a Family History of Disease?
Policies can vary between “underwritten” and “guaranteed issue” plans. For underwritten policies, which tend to pay higher lump sums, the insurer will likely consider your whole health picture (including pre-existing conditions) and that of your blood relatives before you’re eligible.
However, some policies may have a designated “pre-existing condition waiting period” of a few months or more after buying the plan. Keep track of how long this period lasts under your plan — you might not be able to file a claim for a pre-existing illness until it ends.
4. How Long Will I Have to Wait Before Getting the Payout?
After you buy a plan, some policies may have a waiting period before you can file a critical illness claim — and even after that’s over, you may have to wait to get the check after filing an eligible claim. Ask your insurer about timing to ensure it lines up with your needs and expectations.
5. What Happens If the Disease Comes Back?
In the case of recurring diseases — like if your cancer went into remission but then returned two years later — payouts may vary by insurer. Some may require that the recurrence take place at least 12 months after the initial diagnosis. Ask whether or not you can get the same coverage for the same diagnosis years apart, or whether there are special rules surrounding disease recurrence.
6. Can I Get a Benefit If I Complete Annual Health Screenings?
Sometimes, critical illness plans may offer discounted premiums or better payout benefits if you get recommended checkups, like Pap tests or cholesterol blood work. It’s not always the case, of course, but it could be a nice bonus — and an extra incentive to get the preventive care you need to stay healthy.
Between high deductibles and coinsurance, major health events can set you back a pretty penny. If you don’t think you could afford your out-of-pocket costs in the case of a critical illness, assess your financial situation and consider your comfort level with the unknown. Regardless of what you choose, know this: A little planning today goes a long way tomorrow.
What is covered by critical illness insurance? While each plan can vary, check out a critical illness policy in action with Charlotte’s story.