Critical Illness & Disability Insurance

Critical illness and disability insurance coverage are not the same, but they are both very beneficial.

While you have the option of one or the other, it is in your best interest to consider both, because both pay out in different ways.

Disability insurance, for example, provides income for a person when he or she is unable to work because of an illness or injury.

Critical illness insurance, on the other hand, pays a tax-free lump sum payout following a diagnosis of a serious illness, as long as it is covered by the policy.

Both policies work in tandem, not against each other. They allow the critical illness sum to cover what the disability insurance does not; therefore, persons with severe illnesses that cannot work or will have reduced hours have full coverage.

In general, disability insurance covers an estimated 50-70% of lost wages. Disability insurance does not cover 100% of the loss because the payout is tax-free, thus requiring less monthly income.

The critical illness insurance pays out where the disability insurance fails to do so. So with the proper critical illness policy in place, a person does not have to worry about losses. The insurance covers those necessary gaps, and help a person out financially to ensure that he or she has enough funds to survive.

Another important component of having a good critical illness policy is that critical illness insurance covers those medical expenses that are usually not covered by general health insurance plans: things such as deductibles, copays, and non-covered options. A good critical illness plan also provides enough money to pay for non-medical expenses, such as a person’s rent or mortgage, a car payment, other insurance payments, and even utilities.

There are instances when a person can still work part-time, which means their disability insurance benefits are cut dramatically based on the fact they are still working. Critical illness insurance, on the other hand, still pays out that lump sum regardless if the insured is working part-time, full-time, or not at all. Therefore, it is an important supplement to the loss of income when one becomes severely ill and must miss work for treatments.

It is important to take your time when picking these types of policies. Both can be highly complex, and sometimes the payouts are difficult to understand. These policies ultimately dictate the futures of persons that choose to pay for them and so they should not be selected quickly. Working with the right agent who will take the right approach to get you into the right disability and/or critical illness plans is the best way for a person to keep from “going under” financially should one face a major health crisis!