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Individual critical illness insurance: What to know in 2024

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6 mins

If you or a loved one have ever experienced a major health setback, such as a heart attack, cancer, or stroke, you are aware of how devastating a critical illness can be. A prolonged illness profoundly affects not only the suffering individual but also their friends and family members.

During this time, both emotional and financial stress can take their toll. It’s not only disheartening to struggle or watch another struggle with a critical illness but seeing medical bills mount is extremely stressful during a challenging time. Unfortunately, many families don’t escape unscathed from the high healthcare costs they face.

That's where critical illness insurance can help. In this article, we'll cover what you should know about critical illness insurance for individuals:

Read on to learn more.

What is individual critical illness insurance?

Individual critical illness insurance is a supplemental insurance plan to protect yourself against the high costs associated with cancer, heart attack, stroke, and other life-threatening diagnoses.

An individual critical illness insurance policy pays a one-time lump sum benefit for a covered illness, with benefit amounts usually ranging from a few thousand dollars to tens of thousands of dollars. Many people select an individual critical illness insurance policy as a means to lessen or eliminate the financial stress resulting from a major illness.

The process for buying individual coverage begins just like any other type of insurance nowadays: getting a personalized critical illness insurance quote online.

Apply for individual critical illness insurance online.

Individual critical illness insurance benefits

Critical illness policies are not designed to offer you financial protection from minor ailments, such as the flu or bronchitis. Their purpose is to provide you with payment made directly to you when you need it most: after a major illness is diagnosed or a catastrophic medical event occurs.

Critical illness policies commonly cover:

  • Heart Attack
  • Coronary artery bypass surgery
  • Angioplasty
  • Stroke
  • Invasive cancer
  • Non-invasive cancer
  • Kidney (renal) failure
  • Major Organ Transplant
  • Advanced Alzheimer’s disease
  • Paralysis
  • Coma

(You should consult your policy for specific covered conditions and details.)

Even if you have an individual or group health insurance policy that will pay benefits for your policy’s covered illnesses, there are many other expenses associated with a critical illness. An individual critical illness insurance policy can help you:

  • Pay insurance deductibles and co-pays
  • Replace lost income from missed work
  • Pay everyday living expenses (mortgage, utilities, childcare)
  • Cover experimental medical treatments and medications
  • Pay for providers not covered by your health plan
  • Pay for travel and lodging when seeking treatment away from home
  • Replace a spouse’s income while they’re by your side

The lump-sum payment you receive can be used in any way you see fit.

Reasons to buy individual critical illness insurance

Strengthen your financial safety net

At this point, you may be asking yourself:

“Why should I purchase a critical illness policy if I have a group health policy and a Healthcare Savings Account (HSA)?”

There are several reasons it still may make sense for you to have a critical illness policy:

  • You have limited emergency fund savings
  • There is a history of critical illnesses in your family
  • You don’t already have group insurance

These are all very good reasons for you to have a critical illness policy. Out of all of them, not having an adequate emergency fund is particularly problematic. reports the average cost of a 3-day hospital stay is around $30,000 and Comprehensive cancer care can cost hundreds of thousands of dollars. Coupled with one study’s findings that nearly 70% of Americans have less than $1,000 in a savings account, it becomes clear that a secondary source of money can be valuable in the event of a critical illness.

Lower your risk of medical bankruptcy

CNBC recently reported on the devastating financial impact healthcare costs have on American’s financial condition.

“A new study from academic researchers found that 66.5% of all bankruptcies were tied to medical issues — either because of high costs for care or time out of work. An estimated 530,000 families turn to bankruptcy each year because of medical issues and bills, the research found.”

Having individual or group health insurance doesn’t offer adequate protection in many cases. To keep monthly premiums affordable, many individuals and families choose to select high-deductible health insurance plans. Deductibles as high as $5,000 or $10,000 are not uncommon. With deductibles this high, a major illness can quickly erase a family’s savings and create a mountain of debt.

Another reason medical bills bankrupt so many individuals is they are not protected financially by disability insurance. In addition to being burdened by high healthcare costs, losing one’s income from being unable to work is a devastating combination. It becomes easy to see how a critical illness can lead to a financial catastrophe.

Enjoy greater peace of mind

Not only is there a financial benefit to having an individual critical illness insurance policy, but there is also an emotional benefit as well: peace of mind.

There is a great deal of personal stress involved when you or someone you care about is experiencing a major health situation. There is a need for emotional support, as well as financial support. Being able to take off from work and be with someone who is very ill is emotionally rewarding for both you and the person you care about. Having someone who cares and is physically present can provide much-needed emotional security for the ill and possibly hasten their recovery.

Getting better physically is not only something money can help with, but having life run smoothly will lessen the stress for you and your family should a critical illness occur. Being able to make the monthly mortgage payment, keeping a child in a private school or paying for child care, having your house cleaned while you spend extensive time at the hospital — these are all expenses that need to be taken care of each month.

Having a critical illness policy not only benefits the ill, but also helps their family members as well. It can provide much-needed funds to pay the doctors and the hospital, and it can provide money to keep your financial affairs in order as you convalesce.

While it makes good financial sense to have a comprehensive health insurance plan to cover catastrophic medical expenses, it also makes good sense to supplement that coverage with an individual critical illness insurance policy. It will provide you with the extra measure of security you’ll need in the event a major illness affects you and your family. Set aside a little bit of time today to run some critical illness insurance quotes and evaluate your options.

The information and content provided herein is for educational purposes only, and should not be considered legal, tax, investment, or financial advice, recommendation, or endorsement. Breeze does not guarantee the accuracy, completeness, reliability or usefulness of any testimonials, opinions, advice, product or service offers, or other information provided here by third parties. Individuals are encouraged to seek advice from their own tax or legal counsel.

— Published July 1, 2020
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