What has a more affordable premium than individual disability insurance, is perfect for spouses of high wage earners, and allows the insured to receive a lump sum benefit to use as needed – no strings attached?
If you guessed Critical Illness, you’re more enlightened than most. In the quest to offer a variety of clients asset protection, Critical Illness insurance is an important solution to have in your tool belt. It’s a big differentiators too, since many producers don’t offer this valuable coverage.
Below you’ll find everything you need to know to serve clients better and build your income by adding Critical Illness to your product suite.
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What is Critical Illness insurance?
Critical Illness insurance provides financial protection when a major illness occurs and a person is unable to work and earn an income. This medical insurance helps cover medical expenses that are typically not covered by other insurance policies. Paid in lump sums, it gives clients the freedom to use the money where it is needed most – from medical bills to the mortgage.
This coverage comes into play as traditional health insurance leaves consumers with more and more gaps in their coverage. As a result of high deductibles, coinsurance and limited coverage on nontraditional treatments, individuals may incur large medical bills that are not covered by their traditional insurance policy.
Critical Illness insurance works by paying for expenses that result from a long-term recovery from a covered illness. It does not pay for each medical bill, but instead provides a payment that can be used toward any condition listed on the policy.
Who is Critical Illness insurance best suited for?
The coverage is best suited for:
• Spouses of high wage earners – if a doctor, lawyer or executive has to spend time away from work to care for a sick spouse, the business suffers. If the spouse has critical illness coverage, the family can immediately afford to hire in-home care, a nanny or other service providers to keep the home running smoothly.
• Self employed clients and other high wage earners who have capped out their DI limits.
• People in high-risk jobs often do not qualify for disability insurance. However, those occupations – such as firefighters, long-haul truck drivers or police officers – may qualify for critical illness insurance.
• Anyone who is concerned about not having an adequate income to absorb the critical illness costs not covered by traditional insurance.
Is Critical Illness insurance sold in addition to DI or instead of DI?
Disability insurance, sometimes referred to as “income replacement” insurance, provides a monthly payment if a person becomes disabled and can no longer work. DI policies pay a monthly income during a predetermined period that the insured is unable to work. In general, DI benefits are limited to a percentage of the insured’s regular income and stops once the disabled person is able to earn an income or he no longer meets the definition of disability as described in the policy. Disability policies often have a waiting period from the onset of disability. Also, unlike critical illness benefits, disability benefits may be affected by any other income the insured receives.