Q: What is critical illness insurance?
A: Critical illness insurance is a type of medical coverage that pays a lump-sum benefit to the insured upon the diagnosis of a critical illness. For example, if a policy covers a specific form of cancer, the insured will receive cash from the insurance company if she is diagnosed with this covered form of cancer. This is especially convenient as the cash payout can be used completely at the insured’s discretion.
Most comprehensive major medical insurance policies do not cover all expenses related to serious illness (e.g. lost income, recovery assistance, etc.). This is where critical illness insurance shines. These policies can help cover these additional expenses, allowing the insured to focus on recovery without the added stress caused by these expenses.
Critical illness policies appear to be growing in popularity in the U.S. The average benefit amount for middle-income policyholders is approximately $15,000 – $25,000. Policies can be purchased with larger benefit amounts as well.
American General Life Insurance Company (AIG) is currently offering critical illness insurance policies to consumers who have recently purchased term life insurance from the company. If qualified, new policy owners can add this benefit with no additional underwriting or medical review. Ask us about this offer if you are a new American General Life policy owner. If not, you can still purchase this coverage separately.