Critical Illness and Hospital Indemnity Insurance

The value of a critical illness policy might not be as easy to understand as life insurance or a Medicare Supplement plan, but for many people it can help defray the cost of a life-threatening illness or a hospital admission.

Critical Illness policies come in few different variations, but they are primarily designed to pay the insured a lump-sum benefit upon diagnosis of a particular condition. Most commonly found to provide this benefit for cancer, heart attack, and stroke; there are some policies that also cover blindness, deafness, kidney failure, Alzheimer’s disease, major organ transplant, and paralysis. The cash provided by this policy can be used for whatever the policyholder wishes, but it is designed to help pay for the cost of deductibles, co-payments, and co-insurance associated with certain types of health insurance policies. This can be valuable to people who carry a Medicare Advantage plan that has a maximum out-of-pocket limit that is more than they could easily pay.

Even people with a Medicare Supplement plan may wish to consider adding this type of coverage to their insurance portfolio.  More cancer treatments are being administered orally through a prescription from a doctor and may not fall under the Medicare Part B drug coverage people relied on in the past. As treatments for these conditions often use costly medications, the cash benefit you receive from the policy can help you cover your cost share through the Part D prescription drug plan you have.

Hospital indemnity policies pay you a daily benefit for each day you are confined to a hospital. Medicare Advantage plans in particular frequently have a daily co-payment for the first 5 to 7 days of a hospital stay. One way to help ease the financial burden of this cost is through the use of a plan that can provide a cash benefit to you when the hospital bills come due. Several plans are available that bundle both the hospital indemnity and critical illness components together creating a cost-effective way to manage your out-of-pocket risk when considering Medicare Advantage plans.