Critical Illness Protection
In the U.S., there are three main categories of Critical Illness:
Critical Illness: This includes serious conditions such as heart disease, stroke, cancer, kidney failure, major organ transplants, muscular dystrophy, blindness, paralysis, and other illnesses that significantly reduce life expectancy.
Chronic Illness: A condition that severely impacts the insured’s ability to perform daily activities, making self-care impossible. According to the U.S. Department of Health, this applies when an individual cannot independently complete at least two out of six essential life tasks: bathing, toileting, dressing, eating, mobility, or managing incontinence.
Terminal Illness: This is defined by a licensed physician’s diagnosis that the insured has a life expectancy of 12 to 24 months due to an illness or injury.
Many people assume that mandatory health insurance in the United States will cover the costs of treating serious illnesses. However, a significant number of individuals end up losing their homes due to medical expenses. Statistics reveal that 62% of Americans file for bankruptcy because they are unable to pay their medical bills.
In the U.S., many life insurance policies include a provision for critical illness claims, commonly referred to as the Accelerated Benefit Rider. This feature allows the insurance company to pay a portion of the life insurance benefit in advance—up to 50% or a maximum of $1 million—if the insured is diagnosed with a severe illness or experiences a serious accident. The remaining benefit is then paid to the beneficiaries upon the insured's death. This rider covers conditions such as critical, chronic, and terminal illnesses, and is often referred to as living benefits.
The coverage offered by these pre-existing benefits is extensive, encompassing a wide range of conditions from terminal and chronic illnesses to major diseases. While this supplemental insurance is not a direct replacement for medical coverage, it provides additional financial support for various expenses related to illness. This allows the insured to manage potential extra costs or loss of income due to health issues by transferring that risk to the insurance company. For those without dependents, accessing these benefits during their lifetime can truly enhance the value of their insurance.
