Critical Illness Insurance

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Medical Advisor Journals
http://medicaladvisorjournals.blogspot.com

All About Insurance
http://all-about-insurances-info.blogspot.com/
Present Written By Kyle J. Norton

Critical Illness Insurance – What Do You Know About?

I. What is Critical Illness Insurance?
Recommended Reading Long Term Care Insurance Consumer Buying Guide. Annuities: The hoc!ing ecrets "e#ealed. Critical illness insurance is a ty$e o% insurance &hich &ill $ay a lum$ ta' %ree (ene%it to the insured i% he is diagnosis o% one o% the critical illnesses co#ered (y the $olicy. The (ene%it is intended to hel$ insured $ersons maintain their )uality o% li%e and %inancial inde$endence a%ter su%%ering a li%e*threatening illness. Be sure to understand that critical illness insurance is not +. (ased on the ina(ility to &or! or the death o% the insured. ,. needed to (e a s$eci%ic e'$ense that is incurred to )uali%y %or the (ene%it. It is designed to $ay a lum$ sum (ene%it &hen a $erson is diagnosed &ith a co#ered condition and su(-ect to a &aiting $eriod. This ty$e o% insurance creates a great deal o% %inancial %le'i(ility %or insured &ho su%%ers a ma-or illness. Critical illness insurance can %ill the ga$ le%t (y more traditional %orms o% insurance. such as +. Li%e Insurance is designed to $ro#ide %inancial assistance to sur#i#ing %amily mem(ers a%ter the death o% the insured. Payment o% the (ene%it is made as a lum$ sum. ,. /isa(ility Insurance is designed to re$lace income loss that results %rom a disa(ility arising out o% an accident or sic!ness. 0a1 It $ays a $ercentage o% the insured2s income. 0(1 It $ays a%ter a &aiting $eriod. 0c1 It $ays %or a de%ined (ene%it $eriod. Not e#eryone )uali%ies %or this ty$e o% co#erage. 3. 4edical Insurance is designed to reim(urse s$eci%ic medical e'$enses incurred (y the insured. 4edical Insurance usually contains (oth 0a1 /educti(les and 0(1 A co*insurance re)uirement. The e%%ect o% these %actors is that insured are re)uired to $ay $art o% these e'$enses. No& you can see that critical illness insurance is a need %or insurance that $aid a li#ing (ene%it to the insured &ho sur#i#ed a ma-or illness to o%% set the lost o% income and $ay additional e'$enses.

II. The Coverage o Critical Illness Insurance

As &e mentioned in $re#ious article. critical illness insurance is a ty$e o% insurance &hich &ill $ay a lum$ ta' %ree (ene%it to the insured i% he is diagnosis o% one o% the critical illnesses co#ered (y the $olicy. The (ene%it is intended to hel$ insured $ersons maintain their )uality o% li%e and %inancial inde$endence a%ter su%%ering a li%e* threatening illness. Critical illness insurance co#ers o#er +5 im$airments including the %ollo&ing +. 6eart disease. ,.Coronary artery (y$ass gra%t. 3. Cancer 7."enal or !idney %ailure 8.4ulti$le sclerosis 9.4a-or organ trans$lant :.Blindness ;./ea%ness <.Al=heimer2s disease +5.Paralysis ++.Par!inson2s disease +,. >ccu$ational 6I? In-ury We &ill try to discuss the $r@cised de%initions o% a(o#e conditions in the ne't article. (ut in this article &e &ill try to %ocus on the &aiting $eriod and $olicy e'ce$tion. a1 Waiting $eriod or elimination $eriod In order to )uali%y %or the (ene%it. the insured must sur#i#e the diagnosis o% the illness %or 35 days. I% the insured dies &ithin 35 days o% the diagnosis. the (ene%iciary is entitled only to a re%und o% the $remiums $aid. (1 A'ce$tions to the &aiting $eriod i1 I% the insured is diagnosed &ith cancer &ithin <5 days o% the &hen the $olicy &as issued the claim &ill (e denied. 4any insurers &ill terminate the insurance and re%und the $remium i% cancer is diagnosed &ithin this <5 day $eriod. This reduces the chances o% the insurer (eing selected against (y insured &ho may ha#e reason to sus$ect the onset o% cancer. c1 Pre*conditions are not co#ered in the $olicy. unless a$$ro#ed (y insurance under&riter and included in the $olicy co#erageBs. ii1 4any insurers also re)uire either

C a <5*day C a +;5*day &aiting $eriod a%ter the onset o% $aralysis (e%ore they &ill ma!e a $ayment under the Critical Illness $olicy. >nce a $olicy $ays out a critical illness (ene%it. the $olicy is terminated.

III. !nderstand the De initions o Critical Illness Insurance
As &e mentioned in $re#ious article. critical illness insurance is a ty$e o% insurance &hich &ill $ay a lum$ ta' %ree (ene%it to the insured i% he is diagnosis o% one o% the critical illnesses co#ered (y the $olicy. The (ene%it is intended to hel$ insured $ersons maintain their )uality o% li%e and %inancial inde$endence a%ter su%%ering a li%e* threatening illness. In this article. &e &ill gi#e you the de%initions o% illness that are co#ered in the $olicy. Precise medical &ording is im$ortant %or an o(-ecti#e claim assessment and consistency in $ricing the $roduct. /iagnosis o%ten re)uires s$eciali=ed tests inter$reted (y medical e'$erts and the de%initions o% co#ered conditions are technical and e'act. The %ollo&ing inter$retations o% conditions may #ary %rom the $olicies and insurance com$anies +. 6eart Attac! Peo$le &ho su%%er a heart attac! &ill sustain damage to the heart muscle. These causes a1 The changes in the electrocardiogram 0ACG1 and (1 The ele#ation o% cardiac or heart en=ymes. The chance %inding o% ACG changes suggesti#e o% a $re#ious silent heart attac! is not co#ered.

,. Coronary Artery /isease "e)uiring urgery 0Coronary By$ass1 The undergoing o% heart surgery to correct narro&ing or (loc!age o% one or more coronary arteries &ith (y$ass gra%ts. This e'cludes any non*surgical treatment.

3. Cancer A malignant tumor characteri=ed (y the uncontrolled gro&th and s$read o% malignant cells and the in#asion o% tissue. This includes leu!emia and 6odg!in disease. tage A $rostate cancer &ill (e co#ered only i% the diagnosis is made (e%ore the $olicy anni#ersary nearest to the li%e insured2s age o% :8. No (ene%it &ill (e $aya(le i% A diagnosis o% any ty$e o% cancer is made &ithin <5 days o% the e%%ecti#e date o% co#erage or the date o% the latest reinstatementD or any sym$toms o% medical $ro(lems commence &ithin <5 days o% the e%%ecti#e date o% the co#erage or the date o% the latest reinstatement that initiate any in#estigations that lead to a diagnosis o% any ty$e o% cancer.

7. tro!e It co#ers all 3mechanisms that cause stro!es. including: a1 Throm(osis caused (y a (loc!age (y a clot that has (uilt u$ on the &all o% a (rain arteryD (1 Am(oli=ation caused (y an em(olus 0usually a clot1 that is s&e$t into a (rain artery causing (loc!ageD c1 6emorrhage * caused (y the ru$ture o% a (lood #essel in or near the (rain2s sur%ace. Any incident &ith sym$toms lasting less than ,7 hours is re%erred to as a transient ischemic attac! and it does not )uali%y %or co#erage under this de%inition. 8. Kidney Eailure And stage renal disease. due to &hate#er cause or causes. &ith the li%e Insured undergoing regular $eritoneal dialysis or hemodialysis or ha#ing had renal trans$lantation. 9. 4ulti$le clerosis Benign. chronic and acute %orms o% multi$le sclerosis are co#ered under this de%inition. 4ulti$le clerosis is an e'tremely di%%icult condition to diagnose and usually ta!es a num(er o% tests to

e'clude other $ossi(ilities (e%ore it is con%irmed. Neurological a(normalities in this conte't must (e e#idenced (y the ty$ical sym$toms o% demyeli=ation &ith resultant im$airment o% the (rain stem or s$inal cord.

:. 4a-or >rgan Trans$lantation The actual undergoing as a reci$ient o% a trans$lant o% a heart. lung. $ancreas. !idney and (one marro& &ill (e co#ered under $olicyF ;. Blindess Permanent loss o% sight in (oth eyes. as con%irmed (y an o$hthalmologist registered &ith go#ernment. The (ene%it &ill (e $aid regardless the cause. disease or degeneration o% the eye (all. the o$tic ner#e or the ner#e $ath&ays connecting to the (rain or the (rain itsel%. <. /ea%ness Total. $ermanent and $ro%ound loss o% hearing in (oth ears &ith an auditory threshold o% more than <5 deci(els and con%irmed (y an registered otolaryngologist.

+5. Al=heimer2s /isease The diagnosis (y a doctor 0&ho is either a certi%ied neurologist or a certi%ied $sychiatrist1 that the Li%e Insured has Al=heimer2s /isease. and su$$orted (y e#ident o% a $rogressi#e degeneration o% the disease. The Li%e Insured must e'hi(it the loss o% intellectual ca$acity in#ol#ing im$airment o% memory and -udgment. The disease $rogresses to se#ere loss o% memory and death usually &ithin +5 years. ++. Paralysis It is de%ined as a com$lete and $ermanent loss o% use o% t&o or more lim(s %or a continuous $eriod o% days %ollo&ing the

$reci$itating e#ent. during &hich time there has no sign o% im$ro#ement.

+,. Par!inson2s disease The disease is $rogressi#e. degenerati#e o% the central ner#ous system and characteri=ed (y muscular rigidity. tremor and slo& mo#ements. This de%inition only co#ers idio$athic2 Par!inson2s /isease. GIdio$athicG means that the disease must ha#e originated %rom an un!no&n cause Par!inson2s disease originating %rom ta!ing certain drugs or to'ic chemicals. etc. &ill not (e co#ered. +3. >ccu$ational 6I? In-ury The diagnosis o% 6uman Immunode%iciency ?irus 06I?1 resulting %rom accidental in-ury during the course o% insured2s normal occu$ation. &hich e'$osed the insured to 6I? contaminated (lood or (ody %luids. Payment under this co#ered condition re)uires satis%action o% all o% the %ollo&ing: +. The accidental in-ury must (e re$orted to the com$any &ithin +7 days o% its occurrenceD ,. An 6I? test must (e ta!en &ithin +7 days o% the accidental in-ury and the result must (e negati#eD 3. An 6I? test must (e ta!en (et&een<5 days and +;5 days a%ter the accidental in-ury and the result must (e $ositi#eD 7. 6I? tests must (e $er%ormed (y %acilities a$$ro#ed (y the Com$anyD 8. All the accidental in-ury must ha#e (een re$orted. in#estigated and documented in accordance &ith &or!$lace guidelinesD 9. The accidental in-ury must ha#e occurred &hile the li%e insured &as &or!ing in Canada or the Hnited tates. No $ayment &ill (e made i%: +. The Li%e Insured has elected not to ta!e any a#aila(le licensed #accine o%%ering $rotection against 6I?D or

,. A licensed cure %or 6I? in%ection has (ecome a#aila(le $rior to the accidental in-uryD or 3. 6I? in%ection has occurred as a result o% non*accidental in-ury 0including. (ut not limited to. se'ual transmission or intra#enous drug use1

I". T#$es o Coverage o Critical Illness Insurance

Generally two types of critical illness insurance are available: 1. Basic coverage: It is Covered a limited number of conditions such as cancer, heart attack and stroke. 2. Comprehensive coverage: It is covered all of the conditions in the basic coverage, plus additional conditions. he actual number and types of conditions covered can differ between insurers. !ithin these two plans, most companies offer " types of plans: #$ year renewable, level premium to age %& and permanent plan. 1. #$ year 'enewable (lan: 'ates are guaranteed in the policy but they do increase every #$ years until the policy ends, usually at age )&, %$ or %&. *ne common use is to provide cash to complete retirement plans should the insured become ill.

2. +evel to ,ge )$, )& or %$ or to age %& (remium remain unchanged throughout the policy period. Clearly there is a greater likelihood of a covered illness occurring between age )& and %& so the longer-term

policies will cost a little more. .or levels premium to age %&, the premiums are reasonable in relation to the #$-year renewable plans, and significantly lower than the permanent plans. he premiums payable for lifetime coverage are significantly higher than for plans to age %&.

". (ermanent (lan hese policy covers the life time of the insured as the chances of an insured claim occurring are high, the premium will be higher. ,lso, some policies terminate coverage at age #$$. In order o /ualify as a non-smoker, the insured must have abstained from the use of tobacco products for the #2 months preceding the application. !hen the insured has purchased a policy at smoker rates and subse/uently stops smoking, most insurers will amend the policy to reflect the lower non-smoker rate after having received satisfactory evidence of the good health and insurability of the insured.

". %$tion and Rider o Critical Illness Insurance

,s we mentioned in previous article, critical illness insurance is a type of insurance which will pay a lump ta0 free benefit to the insured if he is diagnosis of one of the critical illnesses covered by the policy. he benefit is intended to help insured persons maintain their /uality of life and financial independence after suffering a lifethreatening illness. In this article, we will discuss the most common options and riders offered with critical illness insurance. 1ome insurers may not offer all of these options and the coverage may differ somewhat from those discussed here. #. 'eturn of premium

Generally, this rider provides for a return of all premiums to the beneficiary when the insured dies. here is often no additional charge for this rider. 2owever, some insurers may charge a small additional premium. 2. (ay back of premium his rider provides for a refund of all premiums at the end of the policy if there is no claim. 3any policies offer this option only where there is a level premium to age )&, %$ or %&. *ther types of policy may re/uire to $ay an additional $remium %or this rider and it can usually only (e $urchased at the time o% issue o% the $olicy. ome insurers &ill $ay a sti$ulated rate o% interest on the $remiums. in addition to the re%und o% $remiums $aid. 3. Children "ider ome insurers o%%er co#erage to children o% the insured (et&een the ages o% , * +:. In some cases. insurers may o%%er co#erage %or children o% the insured &ho &ill (e (orn in the %uture. &ith co#erage starting at (irth. The rider &ill $ay a lum$ sum 0usually I,8.5551 on the diagnosis o% a critical illness %or a child. Generally. there is a single $remium charge &hich insures all children in the %amily.

"I. !nderstand !nderwriting Re&uirement o Critical Illness Insurance

Hsually. there is a $re*screening )uestionnaire that &ill (e com$leted. This )uestionnaire contains a list o% uninsura(le medical conditions. The use o% the $re*screening )uestionnaire hel$s eliminate a$$lications %rom those &ho are sure to (e re-ected. The a$$lication %or critical illness insurance is similar to an a$$lication %or li%e insurance ho&e#er. there are more )uestions a(out the a$$licant2s %amily medical history.

In situations &here the a$$licant %ails to meet all the under&riting guidelines the com$any may o%%er the insured the non*standard rate. In these cases the insurer may: +. Add a surcharge to the regular rates to re%lect the increased ris! %or that a$$licant. ,. Issue a $olicy &hich contains s$eci%ic e'clusions . such as $re conditions e'clusion. certain illnesses or conditions can (e e'cluded 3. Basic Plan co#erage only to the a$$licant When under&riting a critical illness $olicy. the insurer &ill re#ie& the %ollo&ing areas: +. Eamily 6istory 6ereditary %actors ha#e a strong in%luence on the a$$licant su%%ering certain diseases in resulting o% dis)uali%ication o% the a$$licant i% one or more %amily mem(ers has (een diagnosed or has died %rom a co#ered disease. ,. Personal 6ealth a1 Pre#ious instances o% hy$ertension &ill (e closely re#ie&ed since there is a close relationshi$ (et&een hy$ertension and the su%%ering o% a critical illness. (1 6eight and &eight Hnder&riters ha#e esta(lished guidelines as to &hich height and &eight com(ination are acce$ta(le %or the issuance o% the critical illness insurance $olicies. c1 $hysician2s statement d1 >ther re$orts. such as medical e'aminations. (lood tests. urine test. e1 >ccu$ation. a#ocations and dri#ing ha(it (ecause these can ha#e an im$act on the incidence o% critical illness occurrences. A': a $ro%essional dri#er may (e more e'$osed to accidental dismem(erment or $aralysis than a $erson &ho dri#es only occasionally. 3. Einancial In%ormation The amount o% co#erage a#aila(le under critical illness insurance can (e a million dollars or more. There%ore. the insurer must determine &hat amount o% co#erage is reasona(le. 4any insurers &ill normally allo& co#erage u$ to 8*: times o% the a$$licant2s salary.

"II. Ta'ation o Critical Illness (olicies

,s we mentioned in previous article, critical illness insurance is a type of insurance which will pay a lump ta0 free benefit to the insured if he is diagnosis of one of the critical illnesses covered by the policy. he benefit is intended to help insured persons maintain their /uality of life and financial independence after suffering a lifethreatening illness. In this article, we will discuss the ta0ation of critical illness insurance. Critical Illness policy is considered to be an accident and sickness policy. #. If the policyholder, the insured, the payer of the premium and the beneficiary are all the same person, the premium are not ta0 deductible and the benefits are ta0 free. 2. In a key person If premiums are not deducted as business e0penses then the benefit is ta0 free if the key person insured is designated as the beneficiary. If the business is the beneficiary of the policy then premium is ta0 deductible and benefit is ta0able. ". 1mall business owners purchased critical illness insurance on themselves. !hen setting up ownership in a private corporation, one significant concern is that there is no mechanism similar to the capital dividend account to permit the benefits to be paid out on a ta0-free basis to shareholders. ,s a result, critical illness benefits payable to a private corporation can only be paid out as either ta0able employment income or ta0able dividends.

herefore, it could be significant implications where the critical illness benefit is intended to be used by the shareholders as part of a buy4sell arrangement, or to fund personal e0penses arising from the critical illness. 5. Corporation critical illness insurance 1ome employers have incorporated Critical Illness coverage into a wage loss replacement plan If the premiums for such coverage are deductible as a business e0pense to the employer then the benefit are not ta0able to the employee because they are not payable on a periodic basis. If the employee suffers a critical illness, benefits will be paid directly to the employee under the critical illness policy. 1ome insurers are now offering one policy that includes both critical illness coverage and life insurance. he application is underwritten for both benefits at the time of sale. *ne premium is paid and it funds all the benefits under the policy and it makes even more complicated to the ta0ation of the policy.

Recommended Reading Long Term Care Insurance Consumer Buying Guide. Annuities: The hoc!ing ecrets "e#ealed. Written By Kyle J. Norton All rights reser#ed. Any re$roduction in $art or in &hole o% this e* (oo! must ha#e &ritten Permission o% the &riter. /isclaimer: The e*(oo! is %or in%ormation and education only. $lease consult &ith your doctor and related %ield s$ecialists (e%ore a$$lying. GLet Jou Be With Jour 6ealth. Let Jour 6ealth Be With JouG Kyle J. Norton I ha#e (een studying natural remedies %or disease $re#ention %or o#er ,5 years and &or!ing as a %inancial consultant since +<<5. 4aster degree in 4athematics and BA in World Literature. teaching and tutoring math at colleges and uni#ersities (e%ore -oining

insurance industries. Part time 6ealth. Insurance and Antertainment Article Writer.

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