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What is Critical Care Insurance? Do You Need It?

Published January 25, 2021

4 minute read

Cora Walker

By Cora Walker

Critical care insurance (also known as critical illness insurance or catastrophic coverage) is a supplementary type of health insurance plan. It’s designed to help you financially in the event of a serious disease diagnosis. Some common examples include cancer, stroke, or a heart attack. Critical care insurance (CCI) usually comes in the form of a single payout upon diagnosis and approval. Then, you are generally free to spend the money however you need to. This differentiates it from many standard health insurance models.

It’s the sort of thing you hope to never need. However, it’s important to know that your standard health insurance may not cover all the costs of a serious illness. You may be asking if you even need CCI. The only correct answer is “it depends.”

Bad things can happen whether we plan for them or not. If you have a history of heart disease or cancer in your family, CCI is something you may want to fit into your budget. Keep in mind that if you have certain risk factors, your CCI may cost more.

When considering paying for CCI, it’s important to know what it is, what it covers, and what to look out for when considering a specific plan. Here’s our basic primer.

What Is A Critical Illness?

What a critical care plan defines as a critical illness is determined by the plan itself. However, the three big conditions that all critical care plans should account for are heart attack, stroke, and cancer. It’s worth noting that some plans cover more diseases too. Before getting your payout, you will have to make sure your diagnosis is actually covered.

However, the common diseases that CCI is designed to support you during are not insignificant. Cardiovascular diseases are the leading cause of death globally in a normal year. Research shows that almost 40% of all people receive a cancer diagnosis over the course of their lives.

A Lump Sum

One thing to remember about CCI is that it’s designed to cover the indirect costs that you may experience as a result of your critical illness. That’s different from other types of coverage that might pay medical providers directly for the full cost of your treatment.

For instance, your health insurance is not typically designed to pay you for wages that you may lose while you are recovering and out of work. On the other hand, CCI is designed to provide support for those costs that may be invisible to your standard health insurance.

What this means is that as part of your CCI, you would receive a lump sum of cash upon diagnosis of a critical illness. You select this amount when you sign up. The typical dollar amounts range from $5,000 to $25,000. As any other insurance plan, you’ll pay a higher premium for a larger potential payout.

Critical Care Insurance vs. Terminal Illness Insurance

It’s very important not to get CCI confused with another thing we hope never, ever need — terminal illness insurance. Terminal illness coverage is specifically for diagnoses that are incurable and expected to result in death. Likewise, CCI cannot be used for chronic conditions which last more than a year and will likely require treatment throughout that time. As an example, CCI would pay out in the event of a heart attack, but would not pay out for the final months of a fatal cancer diagnosis or diabetes.

Whether You Need It (or Not) is a Game of Statistics

Whether you need CCI or not comes down to likelihood. Should the worst happen, it can ease the financial burden of a serious disease so you can focus on getting better. With cancer, stroke, and heart attack being leading debilitating diseases around the world, CCI can be a solid trump card to have in your pocket. However, deciding to pay for CCI is often a question of likelihood vs. cashflow. Your age, family history, and medical history are all important factors to consider when you are thinking about adding CCI to your plan.

The Bottom Line

Critical care insurance should not be seen as a substitute for standard healthcare — especially if you’re currently not insured at all. Like many things though, it’s better than nothing. However, it will not function the way a standard health insurance plan will. It won’t cover all of the associated costs on its own. It’s still important to secure regular healthcare insurance.

If you have to choose between CCI and a more traditional healthcare plan, you should always pick the traditional healthcare plan. It will cover more of the common costs associated with your healthcare. If you can afford the extra premiums, CCI is usually an add-on for your standard plan.

Critical Care Insurance


Cora Walker


Cora is a Northwest-based writer and editor who wants to make information as accessible as possible in the internet age. Video games are this writer’s primary vice. With a degree from the University of Washington as well as 5+ years of experience in web writing and publishing, Cora is here to share financial tips from experts and talk about good habits.

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