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Should I Offer My Employees Critical Illness Insurance?


Critical illness insurance is designed to compensate policyholders in a lump payment if they are diagnosed with a range of illnesses as listed in the policy. These policies can also be structured to make a series of payments based on the policyholder’s condition and ongoing medical treatments. Also known as catastrophic illness insurance, it covers major health emergencies, such as heart attack, cancer, or stroke. Critical illness insurance has pros and cons that you will want to weigh before deciding whether to offer it to your employees.

What Are The Benefits Of Critical Illness Insurance?

In the event of a major medical emergency, critical illness insurance can help protect your employees and their families financially. Most people who have standard health insurance assume they are protected. The truth is the excessive healthcare costs associated with a life-threatening illness typically exceed what any health plan would cover. A critical illness insurance policy can pay out cash to help your employees cover the balance when traditional health insurance falls short. These policies are also relatively inexpensive to purchase. Smaller plans may run as low as $25 per month. The more illnesses covered on the plan, the more the employees will pay in premiums.

One critical illness can impose a terrible financial burden on a family, even if they have good health insurance. Critical illness insurance provides additional coverage if an employee or family member suffers:

  • Stroke
  • Heart attack
  • Coronary bypass
  • Organ transplant
  • Cancer

Workers generally bear the entire cost of critical illness insurance, which makes it a money saver for employers as well as employees. For employees with high-deductible health plans who are worried about high out-of-pocket expenses, critical illness insurance can bring peace of mind.

One thing that makes critical illness insurance attractive is that the payout can be used to cover a variety of things, including:

  • Critical medical services
  • Treatments not covered by traditional health plans
  • Daily living expenses, to compensate for time away from work
  • Transportation expenses, including retrofitting vehicles
  • Installing lifts in homes for critically ill patients
  • Vacation with family or friends for a terminally ill patient, or one in need of restful recuperation

What Are The Disadvantages Of Critical Illness Insurance?

One major disadvantage of critical illness insurance is that some illnesses, including some types of cancer, may not be covered. Chronic illnesses are also often exempted. If an employee suffers a second heart attack or stroke or if a disease recurs, he or she may not be able to receive a payout. In some cases, coverage ends once the insured reaches a certain age.

The illnesses that are covered under a critical illness policy are subject to stipulations and only covered under specific circumstances. For example, a diagnosis of cancer may not qualify a person for coverage if it has not spread and has not become life-threatening. Having a stroke may not qualify a person for coverage unless neurological damage persists for more than 30 days.

Our experienced agent can review the pros and cons of critical illness insurance with you and help you decide whether to add it to your employee benefits package.

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