No one wants to believe that they will develop a critical illness that will prevent them from paying their bills. But let’s face it – anything can happen. That is why having plans in place, such as critical illness insurance, can help with your risk management planning. Critical Illness insurance allows you to avoid spending your retirement savings or liquidate investments in the event of a medical issue.
Frequently Asked Questions
Why Critical Illness Insurance?
Believe it or not, critical illness insurance is often an overlooked planning tool. Critical illness insurance was initially developed as many foreclosures, and loan defaults resulted from an individual experiencing a significant health event that prevented them from paying their bills. That is where critical illness insurance plays a role.
Critical illness insurance can help:
- Replace lost income to maintain your current standard of living
- Pay of existing debts or mortgages
- Provide enough liquidity to look at better health care options
- Businesses when funding a buy/sell agreement
What is Critical Illness Insurance?
Critical illness insurance provides you with a tax-free lump sum payment 30 days after a major health event. Most policies cover what is called ‘The Big 3’:
- Heart Attack
The option is also given to cover up to 30 or more significant health occurrences such as:
- Multiple Sclerosis
- Parkinson’s Disease
- Coronary Bypass Surgery
How do Critical Illness Premiums Work?
Like many insurance plans, your critical insurance plan premium will be based on your current health status and age. You have two options when purchasing your policy:
- Guaranteed Rate – Purchasing a policy with a guaranteed rate for a specific period of time, such as a 10-year term
- Lock-In – Purchasing a policy with a locked-in premium up to age 100.
Many providers that cover critical illness offer an ROP option (Return of Premium). This means that if you keep the policy for a longer duration and select the ROP option, you have the opportunity to surrender your policy and receive a refund of all premiums at a future date. This date is typically 15-20 years from the inception date of your policy.
Manage Your Risk
When planning your risk management, it is important to address all forms of income replacement in a life-changing event that leaves you or your family without the proper income. Speak with a Wealth Strategist today about your options for critical illness insurance.