Health Insurance: Are You Covered for Catastrophic Illness?

By Compuquotes Team on April 27th, 2008
Health Insurance

What will happen to your family if you are diagnosed with cancer, or have a heart attack or stroke and are unable to work? Many people mistakenly assume that their health insurance will cover all of the medical costs associated with a catastrophic illness. The truth is that few traditional health insurance policies provide adequate coverage if you or someone in your family suffers one of the major illnesses, especially if that person is a primary breadwinner in the family.

You may have heard about cancer insurance, long term care insurance or catastrophic illness insurance. These policies will pay benefits if you are diagnosed with specific covered illnesses within the benefit period. In most cases, they work like a life insurance policy rather than like traditional health insurance. They will pay out a specified benefit if you are diagnosed with a covered illness during the time that you are covered. Many of them also offer specific benefits like payment for alternative health treatments or converting your home for wheelchair accessibility - benefits that are seldom covered by traditional health insurance policies.

What are the odds that you'll need catastrophic illness coverage? Here are a few sobering statistics:

  • You are six times more likely to be diagnosed with cancer before age 65 than you are to die before age 65.
  • Between the ages of 40 and 70, you have a 1 in 6 chance of having a stroke.
  • Between the ages of 40 and 70, you have a 1 in 6 chance of having a heart attack.
  • Your chances of being diagnosed with any cancer before age 70 range from 1 in 6 to 1 in 17.

The combination of high deductibles on traditional insurance policies and treatments that are not covered by most health insurance, along with the loss of income and unexpected expenses that come along with catastrophic illnesses can completely devastate your family budget, and even drive you into bankruptcy or cost you your family home.

Catastrophic illness insurance is a form of supplementary health insurance that can pick up many of the costs associated with a serious illness that are not covered by your traditional health insurance. Should you pay for supplemental health insurance for catastrophic illness? You should consider it if:

  • You have children and are the primary breadwinner in your household.
  • You are paying off the mortgage on a family home.
  • There is a history of cancer, stroke or heart disease in your family.
  • You are over 40 and any of the above apply.

The decision to carry catastrophic illness or long term care insurance should be a financial one, not one based on fear. If you are having trouble making mortgage payments or meeting monthly expenses, there are certainly better uses for your money. If, on the other hand, you need to protect your family home and insure that bills will be paid if you should become ill, catastrophic illness insurance is worth consideration.

If you do decide that catastrophic illness insurance is a worthwhile investment, there are some things to consider to help you make a choice between different types of catastrophic illnesses.

  • What illnesses are covered? Can you get a policy that will pay out for a number of different circumstances?
  • Are the premiums affordable?
  • Will the policy cover living expenses with a payout (income insurance) or does it pay medical costs, or both?
  • What is the term of the policy?
  • Are the premiums refundable if you don't make any claims against the policy?

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