Should I Buy Critical Illness Protection Insurance? « Health Insurance Advisory

Should I Buy Critical Illness Protection Insurance?

Author: Pete S - Sr. Staff Writer | Jan 28 2012 | Critical Illness Protection

Recently, critical illness protection insurance has been heavily promoted by the insurance industry and financial consultants.  Is this supplemental type of health insurance a passing fad or really necessary? Do you need critical illness protection insurance? In order to answer that question, consider these statistics:

  • Nearly one in five Americans will become disabled for a year or more before the age of 65 – U.S. Census Bureau, 2010
  • Working age people are more likely to become disabled than die prematurely, even though twice as many people buy life insurance - The New York Times, 2011
  • Almost one-third of Americans entering the workforce today, three out of 10, will become disabled before they retire - Social Security Administration, 2007
  • Seventy-five percent of disabilities are caused by an illness rather than an accident - Commissioner’s Disability Table, 2011
  • At age 32, the chance of being disabled for 90 days is 6.5 times greater than the chance of death - National Association of Insurance Commissioners – 2010

Critical illness protection insurance is also referred to as “cancer insurance” or “heart attack insurance.” It pays a cash benefit upon the first diagnosis of a covered “critical” or “life-threatening” illness as defined in the insurance policy. It can be sold as a stand-alone insurance policy or purchased as a rider to a life insurance contract. Most individuals that purchase critical illness protection insurance buy a face amount (critical illness insurance benefit) of $20,000 to $50,000. Premiums are relatively inexpensive. For example, the monthly rate for an individual age 40 for a $30,000 cash benefit is roughly $30 per month.

If you are approaching retirement, have kids in college, a small business owner or entrepreneur, covered under a high deductible health plan, or unable to pay bills if you were unable to work because you lack an adequate cash reserve, then critical illness protection insurance can provide additional peace of mind.

“When so many families are living from one paycheck to another, even a short time out of work could be devastating. Most people would face devastating financial consequences if they were to suffer a disabling injury or illness,” said Marvin Feldman, president and CEO of Life Foundation, an insurance education organization based in Arlington, Va.

With premiums continuing to rapidly increase for individual medical health insurance, critical illness protection insurance can be used to help secure low cost medical insurance. Savvy consumers are turning to high deductible health plans paired with a Health Savings Accounts (HSA) and supplementing the coverage with critical illness protection insurance. According to the nonpartisan Employee Benefit Research Institute, enrollment in consumer-driven health plans (high deductible health plan paired with a tax-preferred savings account) continues to grow significantly and now represent roughly 21 million individuals in the private medical insurance market.

For more information about low cost medical insurance and critical illness protection insurance, call today at 800-403-8511.

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