When people hear the words “critical illness” they usually think of a heart attack, cancer, stroke, or some other horrible medical condition. Of course with every medical condition comes a huge medical bill. For most people their health insurance will cover their treatments after they pay their deductible. While this deductible may be anywhere from $500 to $10,000 neither of these numbers come close to the amount of money that will be spent, not earned, or just plain lost while battling a critical illness.
For example. Let’s say a husband and wife have three kids and they wife stays at home with the children while the husband is the bread winner. Let us assume the husband brings home $6000 a month income. Once the mortgage, homeowner, life, and health insurance, car payments, electric, gas, phone, food, and credit card bills are paid the family is left with $2000 extra money each month. Some of this money goes toward a 529 college savings plan and some goes toward a Roth IRA, and lastly about $1000 a month is left for going out to eat and entertainment.
Now let’s say the Husband develops prostate cancer at age 58. He learns that this invasive cancer is very serious and he must have his prostate removed. The husband has multiple visits to the doctors and then a surgery date is decided. Once the surgery is finished he learns he will be out of work for two months time. The concerned wife, who normally handles the finances, reviews her husband’s disability policy and discovers it has a three month waiting period, so the disability policy will NOT pay them any money. The wife reviews their savings and discovers they have $5000 in savings, but the deductible on the health insurance policy is also $5000. Once all the math is figured out, the Wife realizes they are going to be short about $10,000 on their expenses and she does not know how they are going to pay their mortgage.
With the high rates of cancer, heart attack, and stroke in our country, this situation could happen to a number of families in the United States. While this family is now in a horrible situation, it all could had been prevented for $25-$50 a month by simply purchasing a Critical Illness Insurance policy.
If the family had critical illness coverage the insurance would had paid the family a lump sum benefit once the cancer was diagnosed. Most families who buy critical illness insurance do an amount from $10,000 – $100,000 depending on what the family situation may be. Had the Husband and Wife purchased a $20,000 critical illness policy, they would have had enough money to cover all the bills and still have a great deal of money left over to pay the deductible and even have extra money to pay for extra help around the house like a lawn service to take care of the yard, or a baby sitter to help with the childcare or to pick the kids up from soccer practice, etc.
It is very important to realize, a critical illness plan does not reimburse your hospital or medical bills. If you come down with a critical illness, the insurance company sends a check straight to you. The insured is free to use the money however he or she decides. Once all the treatments are finished it is possible the family may even have extra money left over to enjoy their lives, and go out to a nice dinner or even plan a nice family vacation.