Key Details

What to Know About Critical Illness

• Purpose: Pays a lump sum directly to you after a covered diagnosis (e.g., cancer, heart attack, stroke). Spend it on anything—not tied to medical bills.
• Covered conditions: Varies by carrier. Common: invasive cancer, heart attack, stroke, coronary bypass, major organ transplant, end-stage renal failure, ALS; many plans list 20–30+ conditions.
• Benefit amount: Typical ranges $10k–$100k+; some higher. Partial benefits often paid for early-stage cancers or “carcinoma in situ.”
• Waiting/survival periods: Policies often require diagnosis after a waiting period and survival for 14–30 days. Pre-existing condition look-backs may apply.
• One-time vs multi-pay: Some plans pay once; others allow multiple payouts for different conditions or recurrent events separated by a reset period.
• Riders & perks: Return-of-premium, recurrence benefits, wellness screening benefits, and child coverage options exist on select plans.
• Underwriting: Usually simplified (health questions); amounts and age can trigger additional requirements.
• Taxes: Individual policies paid with after-tax dollars are generally tax-free; employer-paid benefits may be taxable—confirm with a tax pro.
• Coordination: Complements your health plan and disability income insurance; ideal with HDHPs to offset large OOP costs.
• Exclusions/definitions: Carefully read how each condition is defined and staged; severity thresholds matter.

Fast Next Steps

• Estimate a benefit equal to 6–12 months of expenses + your plan’s deductible/OOP max + travel/lodging for care.
• Confirm the diagnosis definitions, survival period, and whether partial/recurrent benefits are included.
• Decide on standalone vs adding as a rider to life/health (where available).
• If self-employed, size the benefit to cover lost revenue, payroll, and fixed overhead during recovery.