What Is Catastrophic Illness Insurance?

A catastrophic illness can, even with full medical insurance, wipe out a family’s savings. The high deductibles and expenses associated with illnesses like cancer, heart attacks and strokes can quickly drain savings accounts and retirement accounts and make it difficult to pay for necessary care. Catastrophic illness insurance can help cover the necessary medical expenses and provide needed funds for care.

Many catastrophic illness policies are specific to a particular illness. There are policies that will pay benefits if you are diagnosed with cancer, have a heart attack or a stroke, or require long-term care because of age or disability. None of these policies will cover you for conditions that were pre-existing, but they can be invaluable if you are ever diagnosed with a covered illness.

What is the likelihood that you’ll need catastrophic illness coverage? Your likelihood of being diagnosed with cancer before the age of 60 is about six times greater than your likelihood of dying before the age of 60. You’re more likely to need cancer insurance than life insurance – but far more people carry the latter. Approximately 60% of those who reach age 65 will eventually require long term care – but less than 10% of us have insurance that will cover the costs.

The benefits from a catastrophic illness policy can be used to cover expenses that are not normally covered under medical insurance policies. Those may include the cost of in home nursing, or of converting a home to make it wheelchair accessible. They can pay for alternative and supplementary treatments that traditional insurance policies won’t cover, including nutritional counseling, therapeutic massage and complementary medical treatments. A catastrophic illness policy may cover the costs of experimental treatments or treatments like organ transplants that are only partially covered by typical health insurance policies.

How important is critical or catastrophic illness insurance? According to Dr. Marius Barnard, brother of Christian Barnard who performed the world’s first successful heart transplant, 37% of home foreclosures in Canada are the result of heart attacks, strokes and cancer. By contrast, less than 7% of home foreclosures were the result of the death of a family breadwinner. The settlement from a catastrophic illness policy could save your home, and save your family from years of debt to pay off the high bills associated with your illness.

There are many different types and configurations of catastrophic illness policies. Some can be purchased like whole life policies. Others offer term coverage for terms up to ten years. There are policies that will return the entire premium paid if you don’t make a claim against them before the age of 65. Some insurers even offer a referral service as part of their critical illness insurance package.

Pricing on critical and catastrophic illness policies varies from insurer to insurer and from policy to policy. Some policies only cover one stated illness. Others may cover up to thirty possible diagnoses, with a schedule of benefits for each diagnosis. Obviously, the cost varies according to the benefits and the conditions covered. To learn more about catastrophic illness coverage and long term care coverage, speak to an insurance agent.