Even in the medical community, the definition of critical illness or critical care is more about the patient’s condition than the diagnosis.1 It is defined as a serious illness but is subjective to diagnosis rather than the prognosis of the condition. It means some physicians will diagnose an illness as critical while others may not.
Does this affect a person who has a critical illness insurance policy when clinicians and medical physicians don’t always agree on what defines a critical illness?
Terminal illness is more easily defined by the medical community: It is a disease or condition which cannot be cured and most likely will lead to death.
This article discusses the difference between a critical illness supplement insurance and an accelerated death benefit rider due to terminal illness.
Understanding the two types of insurance and the benefits of both can help the consumer decide what steps to take in insuring future health conditions and possibilities for filing a medical insurance claim.
Critical illness is a supplemental insurance
What it provides:
- Critical illness insurance provides a lump-sum amount usually for one event to help defray the costs incurred while under medical care.
- This could be for additional out-of-pocket medical costs not covered by an individual’s medical insurance plan. The lump-sum payment can be spent on anything the policyholder needs. There are no limitations or rules on how the insurance benefit is used.
What it does not cover:
- It is not meant to be your main resource for medical care. The amount a critical illness insurance policy provides is supplemental only and generally is less than the entire cost of critical illness care.2 Critical illness insurance is not required to be compliant coverage with the Affordable Care Act and should not be used as primary medical insurance coverage.2
- It does not provide coverage for chronic illnesses, for example: diabetes, asthma, etc.3
- Provides a lump-sum cost for one event
- Covers out-of-pocket costs
- Not a main resource for medical care
- Does not cover chronic illness
Critical illness insurance definitions for coverage
For the insurance industry, critical illness is usually defined within a set list of critical illnesses:
- Cancer;
- Heart attack;
- Stroke;
- Major organ transplant;
- End stage renal failure; and
- Coronary artery bypass surgery.
Other medical conditions may also be included in the critical illness policy.
Review and confirm what list of critical illness are covered on the insurance.
Other critical illness that may be covered:4
- ALS (Lou Gehrig’s disease);
- Blindness;
- Coma;
- Cystic fibrosis;
- Deafness;
- Lupus;
- Malaria;
- Paralysis;
- Sever burns;
- Sickle-cell anemia; and
- Tetanus.
Keep in mind that critical illness insurance is a one-time, lump-sum payment for a critical illness.
Once proof of the medical diagnosis and condition have been submitted to the insurance company as a claim, the insurance company will distribute the lump-sum amount to the policyholder.
Accelerated death benefit rider on a life insurance policy
The insurance definition of terminal illness is, “a benefit paid upon the diagnosis or condition which cannot be cured and is likely to lead to death.”5
An accelerated death benefit is part of a life insurance policy known as a rider. It allows the policyholder, upon proof set by the policy terms and conditions, to receive money from the life insurance policy before death to use as the policyholder needs or sees fit to use.
In order for the benefit to be used, a Licensed Physician certifies in writing a medical condition reasonably expected to result in a life expectancy of 12 months or less. If the insured policy lives longer than 12 months, the person is not required to pay back the accelerated death benefit.
Not all life insurance policies automatically have riders. Term life insurance commonly does not carry an accelerated death benefit though some policies may. If you have a joint life insurance policy, bear in mind that the accelerated death benefit is only paid out once.
Benefits of both insurances
What’s helpful to know about critical illness and accelerated death benefit riders is both forms of insurance protect you against financial hardship brought on by illness.
Speaking with a licensed insurance agent who provides both products and services allows you to understand and make decisions about how best to protect yourself and your loved ones from possible unexpected future medical needs.
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NCBI. https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9445819/, accessed 2023.
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Health Insurance.org https://www.healthinsurance.org/glossary/critical-illness-plan/, accessed 2023.
- Health Insurance. Org Glossary. https://www.healthinsurance.org/glossary/aca-compliant-coverage/, accessed 2023.
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Policy Genius. https://www.policygenius.com/disability-insurance/critical-illness-insurance, accessed 2023.
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Money to the Masses. https://moneytothemasses.com/quick-savings/insurance-2/life-insurance/what-is-terminal-illness-benefit-and-is-it-the-same-as-critical-illness-cover, accessed 2023.
Categories: critical illness insurance, life insurance, supplement health insurance