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Critical Illness Insurance 101, cont.

Here are some basics:

  • Should you be diagnosed with a critical illness or suffer a stoke or heart attack, you will have to continue paying your health insurance premiums – and it is very likely you will not be working for a while.  The premiums will have to come from savings or another source.  Say it takes 12 months to recover and the premium is $300 a month.  That’s $3,600 right there.
  • Your health plan will have a deductible – $1000, $3000, $5000 per year or maybe more.  Very high deductible plans are common today.  Then there are co-pays.  Drug costs are very high, especially for serious illness.  Sometimes generics just don’t work.  You could be looking at $5,000 or $10,000 worth of uncovered expenses even with a good health plan.  Keep in mind that nearly 2/3 of US bankruptcies result from health-related problems (and some 80% of these people have health insurance!)
  • And, of course, all the other bills – mortgage, utilities, phone and cable, car, car and homeowner’s insurance, and so on – are still due.

None of this is to scare you! But it should make you see that maybe this critical illness coverage isn’t such a bad idea after all!

If you are beginning to consider it, then, here are some other ideas:

  • One way to figure out how much to buy is to take your monthly mortgage payment and multiply it by 24 (2 years) and then add $5,000 to cover health premiums and uncovered expenses. You can also factor in any credit cards you might want to pay off.
  • You can buy as little as $5,000 in CI coverage, or as much as $1 million.   The insurance can be a stand alone policy or added as a rider to a disability plan or other insurance product.
  • There are fully underwritten plans and simplified issue plans.  Your current health is certainly a factor in deciding the cost and availability: height and weight matter; tobacco use very significantly increases the likelihood of your incurring a critical illness.  And of course, check with your employer to see if a group plan is an option.
  • Now, get yourself a basic quote.  Go here for a quick estimate.

Next, we will look at policy language and details.

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